WEBVTT - Why Do People Store Art in Freeports? 0:00:01.920 --> 0:00:07.040 Welcome to Brainstuff, a production of iHeart Radio. Hey brain Stuff. 0:00:07.120 --> 0:00:13.120 Lauren Vogelbaum here Delaware Freeport founder and president Frets Deedle 0:00:13.400 --> 0:00:18.040 won't identify any of the artistic treasures stored inside this nondescript, 0:00:18.120 --> 0:00:21.040 flat roofed building that he operates not far away from 0:00:21.040 --> 0:00:24.720 the Inner State in Newark, Delaware, except to say that 0:00:24.880 --> 0:00:28.040 thirty six thousand square feet of storage space that's about 0:00:28.080 --> 0:00:33.440 three thousand three square meters contains a wide assortment of paintings, sculptures, 0:00:33.479 --> 0:00:37.480 and other objects ranging from ancient to modern. He said, 0:00:37.920 --> 0:00:41.880 if you can call it art, it's in my warehouse. Died, 0:00:42.360 --> 0:00:45.720 a native of Austria, is careful not to reveal too 0:00:45.760 --> 0:00:50.120 much detail about the facility. His clientele, which includes art 0:00:50.159 --> 0:00:54.600 collectors and upscale investors as well as galleries, artists, and institutions, 0:00:54.880 --> 0:00:58.640 are paying for safe, discrete storage, and that means a 0:00:58.720 --> 0:01:02.320 high degree of physical and cyber security, as well as 0:01:02.320 --> 0:01:06.200 a carefully monitored interior environment that strives to maintain a 0:01:06.200 --> 0:01:09.760 temperature of seventy degrees fahrenheit or twenty one celsius with 0:01:09.800 --> 0:01:14.200 fifty relative humidity, which scientists and art conservators have determined 0:01:14.240 --> 0:01:18.000 is ideal for preserving artwork. Even the loading dock is 0:01:18.040 --> 0:01:22.920 heated and cooled with precision. The warehouse has what Deeedle 0:01:23.000 --> 0:01:27.800 calls museum like conditions, except even better. He said, when 0:01:27.800 --> 0:01:30.760 you have thousands of people walking into a museum, the 0:01:30.800 --> 0:01:34.679 climate becomes very unstable quickly, especially on a rainy day. 0:01:35.120 --> 0:01:38.959 You have spikes and humidity and temperature in our environment. Obviously, 0:01:39.080 --> 0:01:43.640 we don't have any people just walking in. To the contrary, 0:01:43.840 --> 0:01:46.600 when clients want to look at their artwork, they're ushered 0:01:46.640 --> 0:01:50.440 into a special lounge with a climate controlled viewing room. 0:01:50.480 --> 0:01:53.080 Their art, which is tracked digitally with bar codes and 0:01:53.120 --> 0:01:56.600 to secure database, is retrieved and displayed for them to see. 0:01:58.640 --> 0:02:02.520 Besides preservation, all Aware Freeport has other advantages for art 0:02:02.520 --> 0:02:06.240 investors and anyone else looking for a temporary tax loophole. 0:02:07.080 --> 0:02:10.880 Unlike New Yorker California, Delaware has no sales tax and 0:02:10.880 --> 0:02:14.760 it's located in a federally designated foreign trade zone, so 0:02:14.919 --> 0:02:19.720 purchasers of, for example, Chinese antiquities or German lithographs don't 0:02:19.800 --> 0:02:22.800 have to pay the tariffs imposed by the Trump administration. 0:02:23.720 --> 0:02:27.000 That is, as long as the artworks don't leave the freeport. 0:02:28.480 --> 0:02:31.600 Delaware Freeport is just one of many such high security 0:02:31.600 --> 0:02:35.600 repositories scattered across the globe in far flung locales from 0:02:35.600 --> 0:02:39.920 Switzerland to Singapore. Much of the world's valuable art is 0:02:39.960 --> 0:02:43.040 not on display in museums or on the mansion walls 0:02:43.080 --> 0:02:46.720 of wealthy collectors. Instead, it's kept out of view in 0:02:46.840 --> 0:02:51.000 nondescript storage facilities located in these special trade zones, where 0:02:51.000 --> 0:02:53.680 the owners of paintings and sculptures can avoid having to 0:02:53.680 --> 0:02:57.760 pay taxes and import duties, and if they wish, shield 0:02:57.800 --> 0:03:02.600 themselves from unwanted attention as well. But we spoke with 0:03:02.720 --> 0:03:05.760 John Zarabell, a former museum curator who is now a 0:03:05.760 --> 0:03:08.560 professor and Chair of International Studies at the University of 0:03:08.560 --> 0:03:12.679 San Francisco. He said that in some ways, quote, free 0:03:12.760 --> 0:03:16.600 ports are the equivalent of the Swiss bank account. He 0:03:16.680 --> 0:03:20.519 explained that freeport users are quote people who simply don't 0:03:20.600 --> 0:03:23.440 want others to know that they have these assets. If 0:03:23.440 --> 0:03:26.040 they showed it off in their apartments, someone might say, 0:03:26.400 --> 0:03:28.480 isn't that a Picasso on the wall? How did you 0:03:28.520 --> 0:03:33.320 get fifty million dollars. The concept of freeports dates back 0:03:33.360 --> 0:03:35.600 to the eighteen hundreds, when they were developed as a 0:03:35.600 --> 0:03:38.560 way to delay the expense of paying duties and taxes 0:03:38.600 --> 0:03:42.760 on stockpiles of imported wares until the goods actually had 0:03:42.800 --> 0:03:47.640 a profitable use. Zarabell said. The idea was, you have 0:03:47.720 --> 0:03:49.880 a good you can't take to market right now for 0:03:49.920 --> 0:03:52.200 some reason, and so you store it in a place 0:03:52.240 --> 0:03:54.480 where it will hold its value, but you won't get 0:03:54.520 --> 0:03:57.000 taxed on it right now, and so when they take 0:03:57.000 --> 0:04:01.200 it out of the freeport, it gets taxed. In recent years, though, 0:04:01.320 --> 0:04:04.360 freeports have come to play an increasingly important role in 0:04:04.400 --> 0:04:08.160 the burgeoning business of buying, selling, and investing in high 0:04:08.280 --> 0:04:12.040 value works of art. One manager of art for wealthy 0:04:12.080 --> 0:04:16.440 collectors told NPR in that her clients stored three d 0:04:16.600 --> 0:04:19.960 million dollars worth of art in various freeports across the world. 0:04:21.680 --> 0:04:25.600 The Geneva Freeports reportedly contains more than a million artworks, 0:04:25.640 --> 0:04:28.599 several times more than the collection of the Louver in Paris. 0:04:29.640 --> 0:04:33.480 BBC Arts editor Will Gumparts has described the facility as 0:04:33.560 --> 0:04:37.800 quote the greatest art collection no one can see. Its 0:04:37.839 --> 0:04:42.040 inventory has contained works by artists ranging from Leonardo da Vinci, 0:04:42.160 --> 0:04:47.679 al Greco and Renoir to Andy Warhol, but the Geneva 0:04:47.720 --> 0:04:52.000 facility has also been used to conduct trafficking in archaeological treasures, 0:04:52.279 --> 0:04:57.880 including Phoenician, Etruscan and Roman objects. Once, a Swiss prosecutor 0:04:57.920 --> 0:05:01.320 seized a Morianni painting from the Geneva Freeport, a painting 0:05:01.320 --> 0:05:03.680 that's been the subject of an ongoing legal dispute in 0:05:03.720 --> 0:05:06.560 the US involving an allegation that it was stolen by 0:05:06.600 --> 0:05:09.600 the Nazis from a Jewish art dealer back in ninety four. 0:05:10.720 --> 0:05:13.640 Swiss officials now carefully scrutinize the art that goes in 0:05:13.839 --> 0:05:18.240 and out of the facility. The freeports across the world 0:05:18.320 --> 0:05:20.640 may contain many works of art that have vanished from 0:05:20.640 --> 0:05:25.840 public view and whose whereabouts are publicly unknown. Zarabell said, 0:05:26.080 --> 0:05:28.599 there are a lot of things that just disappear right 0:05:28.880 --> 0:05:31.360 and we don't know how many were destroyed in World 0:05:31.400 --> 0:05:34.560 War two or might actually be sitting in a freeport. 0:05:36.120 --> 0:05:39.520 At Delaware Freeport, Deetle says that there isn't any mystery 0:05:39.520 --> 0:05:42.240 about the inventory as far as the government is concerned. 0:05:42.920 --> 0:05:46.280 He said, anything in my foreign trade zone is recorded 0:05:46.320 --> 0:05:49.800 by US customs, and added that officials will follow up 0:05:49.800 --> 0:05:52.599 as well. A quote. They come into the warehouse and 0:05:52.640 --> 0:05:55.640 make sure those items are still there and haven't been removed. 0:05:56.800 --> 0:06:00.560 He said he's also careful about whom he does business with. Quote, 0:06:00.600 --> 0:06:03.039 if there was somebody really shifty trying to come into 0:06:03.080 --> 0:06:05.800 my warehouse, I wouldn't let them in. We do due 0:06:05.800 --> 0:06:08.919 diligence on who our clients are. I know my clients, 0:06:08.960 --> 0:06:13.760 they're legit people. The demand for freeports has been driven 0:06:13.800 --> 0:06:16.920 in part by the evolution of art into an alternative 0:06:16.960 --> 0:06:20.880 investment vehicle. Art confunction is a hedge against factors that 0:06:20.920 --> 0:06:26.000 affect stock market investments. However, Deetle says the art collectors 0:06:26.000 --> 0:06:30.440 and investors he knows all have a genuine passion for it. Quote. 0:06:30.800 --> 0:06:33.000 At some point you run out of space on walls, 0:06:33.160 --> 0:06:37.440 you need to store some of it, and to be fair, 0:06:37.680 --> 0:06:40.640 storage in a freeport protects artworks from fading in the 0:06:40.640 --> 0:06:43.919 sunlight that streams in a nearby window, or being accidentally 0:06:44.000 --> 0:06:48.200 damaged by home inhabitants or guests. It's a guaranteed way 0:06:48.240 --> 0:06:51.680 to keep it safe. Of course, that does mean that 0:06:51.720 --> 0:06:54.960 you don't have immediate access to that art to enjoy it, 0:06:55.240 --> 0:06:58.679 study it and learn from it, and neither does anybody else. 0:07:00.080 --> 0:07:06.159 M Today's episode was written by Patrick J. Keiger and 0:07:06.200 --> 0:07:08.720 produced by Tyler Clang. For more on this and lots 0:07:08.720 --> 0:07:10.600 of other topics that may or may not make you 0:07:10.640 --> 0:07:13.360 want to eat the rich, visit how stuff works dot com. 0:07:13.440 --> 0:07:15.720 Brain Stuff is production of I heart Radio. For more 0:07:15.760 --> 0:07:18.200 podcasts my heart Radio, visit the i heart Radio app, 0:07:18.280 --> 0:07:21.080 Apple Podcasts, or wherever you listen to your favorite shows.