Term Paper on "Valuation of Priceless Historical Cultural Artifacts"

Term Paper 7 pages (2352 words) Sources: 7

[EXCERPT] . . . .

VALUATION of "PRICELESS" HISTORICAL CULTURAL ARTIFACTS

The objective of this work is to discuss the valuation of historical cultural artifacts that are from cultures for which there have been no market sales of said artifacts. The article should progress through the three traditional valuation techniques including comparable market value, asset value, and the income method, to applicable techniques..

The valuation of priceless historical and cultural artifacts is not process guided by specific rules or regulations and in fact is in reality an unstructured and unpredictable process based on various methods and techniques, which result in a comparable analysis technique, with each valuation process being somewhat different from those previously conducted. While traditional valuation of goods, properties, or items follow well designed rules and processes in assessing value, this is just not the case in valuation of ancient historical and cultural items. In fact, valuation of antiquities has many pre-requisites that must be satisfied in terms of regulations and laws on antiquities making it necessary for the owner to pass through all of the validation channels before even attempting to place a value on antiquity arts.

I. TRADITIONAL MEANS of VALUATION

The following terms describe the methods traditionally used for appointing value to property and items:

1) Comparable Market Value: Comparable market value may be obtained through "comparing the subject property with the 'comparable' properties that have recently been sold." (Financial Web, 2007) Comparables are stated to be "properties sold within the previous twelve months that are similar to the subject property in size, style, age and condition." (Financial Web, 2007)

2) Asset Value: The valuation of the ancient cultural item is based on "relative value models" which make a determination of the value of the item "based on the market prices of similar assets.

3) Income Method of Valuation: Valuation of an item or property through the income-analysis method of appraisal connects the item's value with the income that the item that is likely to be produced. (Financial Web, 2007)

II. MEANS of VALUATION of ANCIENT CULTURAL ITEMS

The treasury department of New Zealand states that the first step to assessing value of antiquities individually or a full collection is to "determine whether there is an active market for such assets. Where the fair value of an asset can be determined by reference to the price in an active market for the same asset or similar asset, the fair value of the asset is determined using this information." (2007) in cases where the value of an object cannot be determined in this manner "fair value of the asset is determined using other market-based evidence, such as recent auction prices and dealer catalogues." (the Treasury - New Zealand, 2007) in cases where value cannot be determined in the previously described manner, then the item's value may be determined through 'depreciated replacement cost (DRC). Stated specifically is: "For example, for specimens, the cost of mounting an expedition or field trip to re-collect the same specimens, together with the costs associated with their documentation and preparation represents the replacement cost for accounting purposes. The purpose for which the items are held will determine the appropriate form of replacement and thus valuation. For instance, an asset may represent a certain school of art, the clothes of a particular historical person, or an example of pre-war film production. It may be possible to replace the function that a unique item performs by the acquisition of another painting of that school, some other possessions of the historical character or a copy of another film of that period by a different producer. However, if the painting was held because it was by a particular artist, or because the clothes had been worn by a famous fashion model, or the film had been collected because it was the work of a particular producer, the replacement items used as a reference for valuation must relate to those specific persons." (the Treasury - New Zealand, 2007) in relation to 'unrealizable and irreplaceable items' it is stated that "reliable measurement using either fair value or DRC may be difficult for certain groups of items including: (1) unique items that have iconic status; (2) historic and irreplaceable library and museum collections; and (3) items that are sacred to particular communities." (the Treasury - New Zealand, 2007) the valuation of ancient cultural items is a determination made through various methods of comparison. A great deal of research and authentication is required before a value can be appointed to an ancient cultural item and specifically for those which there is no previous market on which to base the value of the items. The work of Jeremy MacClancy entitled: "A Natural Curiosity, the British Market in Primitive Art" relates that "Certain objects today are dubbed 'primitive art'." (MacClancy, 2006) the primitive market experienced a boom in the late 1960s to 1980 due to the "rapid increase in the American market." (MacClancy, 2006) Since that time "the market has remained soft or skittish...there are fewer auctions today." (MacClancy, 2006) in today's market, "Appraisers complain of the difficulty of finding good piece-owners" and therefore the reluctance exist for selling in what is a "depressed market." (MacClancy, 2006) MacClancy reports that the range and meaning of primitive art has been extended and as well new markets "have been created for Indonesian and Naga art..." (MacClancy, 2006) Value of these objects of art greatly depends on the originating tribe of the art instead of the individual creating the art. MacClancy describes art valuation of primitive arts as follows: "...a dealer with good eye is one who can identify -pieces that will sell well: that is to define eye as the ability, whether or not articulable, to apply consistently and successfully the current canons of taste to any object they regard. Most serious collectors and long-established dealers will say that they think that they have eye and, revealingly, will admit that they either gained or developed their eye by looking at hundreds of objects, by reading widely about them, by seeing what sold well, by talking to others more knowledgeable than they -in short, as one said, by learning the consensus. The circle closes, the neophyte becomes an adept by a slow process of nonverbal, visual education." (MacClancy, 2006) Another factor placing value on ancient art is whether the object has been used in the traditional manner to its creation. MacClancy states: "Since many collectors seek evidence of an object's use, they will often pay well for a damaged piece fixed by its original tribal owners. Western restoration would remove this further sign of its native origin. So old Benin bronzes, which, restored, would look like modern imitations, are often left as they are just as the death of a Western artist fixes the number of goods labeled with his name on the market, so the demise of a tribal tradition stabilizes the number of goods manufactured within that tradition. Decay, misuse, and destruction only aid the process." (MacClancy, 2006) Another factor noted to contribute to value is the "provenance of an object" because the more complete the record of an object the more value that is attributed to the object. Fashion also incredibly influences the market in that "certain types of objects suddenly become much sought after for short periods until the popularity of some other kind of piece begins to rise. " (MacClancy, 2006) MacClancy also notes that the dealer is a very important aspect in relation to valuation of objects of art due to the fact that demand has created supply, and that much of the art supplied on today's market is not authentic therefore, the trusted and established reputation of a dealer goes far in bringing a larger valuation to an object of art on the market. The work entitled: "Antiquities to Grow Old With" published in Business Week Magazine (2005) states that: "Antiquities are a tiny part of the giant art market. But they are starting to attract new interest from collectors and investors - especially for artifacts from Rome, Greece and Egypt that date back from the Stone Age to about the 1st century a.D." (Business Week Magazine, 2005) the reason stated for this is due to the "crackdown on the black market for art and antiquities - a close third to drugs and weapons trafficking " resulting in tighter regulations "on the flow of what is already a finite supply..." (Business Week Magazine, 2005) Further related is that countries are more conscious about preserving their heritage resulting in stricter export rules." (Business Week Magazine, 2005) There are new tracking services being instituted in order to assure the provenance or ownership history in the tracking of an art object from the archaeological site all the way to the market.

Specific information is offered by Dodge (2007) related to collecting ancient art and understanding the value factors of ancient art. Those factors as stated by Dodge include: (1) Quality of the Art; (2) Condition of the Item; (3) Size of the Item; and (4) Provenance.… READ MORE

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