Keynes – the economist with an eye for an art bargain

It’s well known that John Maynard Keynes was one of the 20th century’s most important practitioners of the “dismal science” of economics. Less well known is that he was also an avid collector of fine art – and quite a successful one at that.

The economist spent £12,847 on building up his art collection between 1917 and 1945. That collection, according to “Art as an Asset: Evidence from Keynes the Collector”, a study from the Cambridge Judge Business School, is today worth £76.2m, representing an inflation-adjusted return of 6.1% a year.

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True, if Keynes had sunk his money into British stocks and reinvested the dividends, his beneficiaries would be sitting on around £90.2m. But share certificates don’t look half as good on the wall; not compared with Georges Seurat’s Study for La Grande Jatte (1884), bought by Keynes for £400 in 1919 while he was writing The Economic Consequences of the Peace following World War I.

Keynes’ most expensive purchase was Paul Cézanne’s 1867 canvas L’Enlèvement (The Abduction – pictured below), bought for £3,500 in 1935, while he was working on The General Theory of Employment, Interest and Money. The ten most expensive paintings in his 135-piece collection accounted for 80% of his total expenditure.

Keynes's art investments performed better than bonds

Part of the reason for his success was that he shunned Old Masters’ paintings in favour of Impressionist and post-Impressionist works that, after a few years, became much more sought after. Not that he received much credit for it at the time. Keynes’s judgment of works of art had been decried as “lamentable” by Clive Bell, the art critic and brother-in-law of Virginia Woolf, as Patrick Hosking points out in The Times.

Yet Keynes’s collection made 9.2 times as much profit as a typical artwork portfolio and 20 times as much as it would have had the money been invested in government bonds.

“For the art collection to have performed far better over the period than government bonds, and to have nearly matched the total return on equities, is an extraordinary outcome,” say the authors of the Cambridge Judge Business School study.

“The collection performed especially well shortly after purchase, suggesting that Keynes was able to buy art at attractive prices.” Keynes clearly had an eye for a bargain. His search even apparently involved visiting auction houses in disguise.

Ever the public servant (he had been employed by the government), Keynes, with artists Roger Fry, Duncan Grant and Vanessa Bell, at one point convinced the Treasury to put up the funds to buy a bunch of Cezannes going cheap for the nation.

But in the end, the director of the National Gallery vetoed the decision, so Keynes bought them for himself. When he died in 1946, the collection went to King’s College, Cambridge, where Keynes had been a bursar. Some of the paintings are today on display at the university’s Fitzwilliam Museum.

This article was originally published in MoneyWeek