EARLY LIFE SHAPES YOU
Jim Bernard Callahan II, born in 1953, was originally called Jim after his father’s first name. This abruptly stopped after his 10th birthday. The family (minus the elder Jim) changed their first and last names in the winter of 1963. Being a Callahan was no longer a good thing. Their last name became his mother’s maiden name, Phillips, and Jim Jr. became Bernard James Phillips. At 10, young Bernard was too young to understand exactly what had gone wrong, but old enough to realize that outsmarting others was an essential building block for a successful life.
The name change occurred the same year that Bernard’s father, Jim Bernard Callahan I, was convicted of securities fraud. His punishment: Attica State Correctional Facility, a 20-year sentence. A particularly harsh punishment for a white-collar crime, but the judge had friends who had been swindled by the notorious Jim Callahan, so a pound of flesh was extracted. No one knew exactly why the stiff sentence, except the judge and his Sunday bridge group. Young Bernard realized his father had been taken for a chump.
It was an extreme reversal of fortune. Jim Callahan I had been a successful investment advisor for some of the rich and famous in New York City. To get Jim Callahan to handle your money was golden. He only handled large funds, usually for old money, and was known for his ability to constantly achieve steady yearly returns. The Callahan family lived in a nice brownstone across the street from Hunter College in Manhattan. The proximity to the college ultimately was the demise of the successful and ambitious Callahan. His undoing was a small but tasteful group of Pablo Picasso paintings that were exhibited at the college. Jim Callahan had stumbled upon the show and found the Picassos exhilarating. He visited the exhibit every day during its two-month run. Callahan was hooked on art and particularly Picasso. After the show he spent the next year visiting art galleries and museums around the city. Callahan became a fixture at all the galleries that featured modern art. Often he would drag his young son Jim Jr. around with him, exposing him to all the great artists of Europe and emerging contemporary artists around New York City. He explained to Jim Jr. that nothing in the world was more special than art and what it could bring to you. As a businessperson, he wanted his son to understand art was also an investment and a commodity.
After a year of looking at paintings and learning the market, Jim Callahan felt he knew enough and started to collect small, inexpensive examples of Picasso’s work, his favorite artist. Little drawings and ceramics, those pieces he felt he could afford. Picasso was still alive and nice recent works could be had at fairly reasonable prices. Major works, especially older paintings, were extremely rare in the States.
As his collection grew, Callahan would upgrade to larger examples, making a nice profit on the pieces he had previously purchased. Known as a value buyer in financial circles, he found the pricing of art to be frustrating, the one aspect of the art world he hated. Being forced to pay the extra premium to get a desirable painting meant the piece had to go through two or three different dealers’ hands before he wound up with it.
Because the art market is an imperfect market, price fluctuations of extremes are possible and often normal. Who’s to say a piece is worth two times more? It is in the eye of the beholder. Most of Picasso’s paintings were coming directly from Europe, generally Paris. When a desirable painting came out it would go to a New York dealer, then at least one more dealer’s hands, before Callahan was able to buy the painting. It was as if the Picassos were a drug and each dealer stepped on the product to get their little taste before it made its way to the ultimate buyer. The true collector was stuck with the top price. The price doubling or tripling was not something a man who was known for being an astute businessman could easily brook.
Callahan decided the art world, like the financial world, was not that difficult to understand. Buy only established artists for subjects they are known for, and then find a buyer at two times the price. Callahan decided to travel to Paris and become his own buyer, with no more middleman run up.
Jim Callahan, who had spent a significant amount of his yearly salary in Manhattan art galleries, used his leverage with these same New York City art dealers as a guide to the Paris art scene. He gently extracted the names of European dealers who were the main source for all the New York galleries. A few of the dealers seemed to freely give out names of individuals who were known in the trade. One name that came up was Picasso Louie. He was supposed to be a great source for Picassos, thus the name. He was an American who had made his home in Paris to deal art. Louie’s name had come from two separate dealers as being “a person who came up with things.” They told Callahan if he wanted to be an art dealer then he should find Louie and see what he had; he could occasionally come up with amazing pieces.
One of the largest and most successful dealers in New York was very closed-mouth about his family’s European contacts, and when Callahan mentioned Picasso Louie’s name, the owner, Brit Currency, a tall, distinguished-looking man who always wore a tweed suit and black bowtie, curtly retorted, “Mr. Callahan, my recommendation is you would be well advised to let professionals deal in art. It can be quite a tricky business when it comes to acquiring the right piece. It is much safer and more fun to collect art from those who have been trained to understand its intricacies and pitfalls. I understand you’re well heeled in the banking profession, but being an art dealer takes an entirely different skill set—in my opinion, not one you’re capable of navigating. Stick to what you know: pushing money, not locating fine art.”
If Currency’s tongue lashing wasn’t humiliating enough, he then looked Callahan straight in the eyes and took off his glasses for added emphasis to make sure he, the mere mortal, understood that he was no art dealer and never would be. The thought that Callahan didn’t have the expertise to buy and sell art was ridiculous. Callahan began to stew: “Didn’t Currency understand that he was one of the top money managers in New York and he made daily multifaceted decisions regarding large amounts of money? He was an art dealer; soon enough Brit Currency would eat his words.” It was at that moment that Callahan’s life changed.