Why Do People Store Art in Freeports?

Some of the world's most precious antiquities and works of art aren't in museums or private homes -- they're stored away in freeports. Learn how freeports work in this episode of BrainStuff.

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Episode Transcript

Speaker 1 (00:01):
Welcome to Brainstuff, a production of iHeart Radio. Hey brain Stuff.
Lauren Vogelbaum here Delaware Freeport founder and president Frets Deedle
won't identify any of the artistic treasures stored inside this nondescript,
flat roofed building that he operates not far away from
the Inner State in Newark, Delaware, except to say that

(00:24):
thirty six thousand square feet of storage space that's about
three thousand three square meters contains a wide assortment of paintings, sculptures,
and other objects ranging from ancient to modern. He said,
if you can call it art, it's in my warehouse. Died,
a native of Austria, is careful not to reveal too

(00:45):
much detail about the facility. His clientele, which includes art
collectors and upscale investors as well as galleries, artists, and institutions,
are paying for safe, discrete storage, and that means a
high degree of physical and cyber security, as well as
a carefully monitored interior environment that strives to maintain a

(01:06):
temperature of seventy degrees fahrenheit or twenty one celsius with
fifty relative humidity, which scientists and art conservators have determined
is ideal for preserving artwork. Even the loading dock is
heated and cooled with precision. The warehouse has what Deeedle
calls museum like conditions, except even better. He said, when

(01:27):
you have thousands of people walking into a museum, the
climate becomes very unstable quickly, especially on a rainy day.
You have spikes and humidity and temperature in our environment. Obviously,
we don't have any people just walking in. To the contrary,
when clients want to look at their artwork, they're ushered
into a special lounge with a climate controlled viewing room.

(01:50):
Their art, which is tracked digitally with bar codes and
to secure database, is retrieved and displayed for them to see.
Besides preservation, all Aware Freeport has other advantages for art
investors and anyone else looking for a temporary tax loophole.
Unlike New Yorker California, Delaware has no sales tax and

(02:10):
it's located in a federally designated foreign trade zone, so
purchasers of, for example, Chinese antiquities or German lithographs don't
have to pay the tariffs imposed by the Trump administration.
That is, as long as the artworks don't leave the freeport.
Delaware Freeport is just one of many such high security

(02:31):
repositories scattered across the globe in far flung locales from
Switzerland to Singapore. Much of the world's valuable art is
not on display in museums or on the mansion walls
of wealthy collectors. Instead, it's kept out of view in
nondescript storage facilities located in these special trade zones, where
the owners of paintings and sculptures can avoid having to

(02:53):
pay taxes and import duties, and if they wish, shield
themselves from unwanted attention as well. But we spoke with
John Zarabell, a former museum curator who is now a
professor and Chair of International Studies at the University of
San Francisco. He said that in some ways, quote, free
ports are the equivalent of the Swiss bank account. He

(03:16):
explained that freeport users are quote people who simply don't
want others to know that they have these assets. If
they showed it off in their apartments, someone might say,
isn't that a Picasso on the wall? How did you
get fifty million dollars. The concept of freeports dates back
to the eighteen hundreds, when they were developed as a
way to delay the expense of paying duties and taxes

(03:38):
on stockpiles of imported wares until the goods actually had
a profitable use. Zarabell said. The idea was, you have
a good you can't take to market right now for
some reason, and so you store it in a place
where it will hold its value, but you won't get
taxed on it right now, and so when they take
it out of the freeport, it gets taxed. In recent years, though,

(04:01):
freeports have come to play an increasingly important role in
the burgeoning business of buying, selling, and investing in high
value works of art. One manager of art for wealthy
collectors told NPR in that her clients stored three d
million dollars worth of art in various freeports across the world.

(04:21):
The Geneva Freeports reportedly contains more than a million artworks,
several times more than the collection of the Louver in Paris.
BBC Arts editor Will Gumparts has described the facility as
quote the greatest art collection no one can see. Its
inventory has contained works by artists ranging from Leonardo da Vinci,

(04:42):
al Greco and Renoir to Andy Warhol, but the Geneva
facility has also been used to conduct trafficking in archaeological treasures,
including Phoenician, Etruscan and Roman objects. Once, a Swiss prosecutor
seized a Morianni painting from the Geneva Freeport, a painting
that's been the subject of an ongoing legal dispute in

(05:03):
the US involving an allegation that it was stolen by
the Nazis from a Jewish art dealer back in ninety four.
Swiss officials now carefully scrutinize the art that goes in
and out of the facility. The freeports across the world
may contain many works of art that have vanished from
public view and whose whereabouts are publicly unknown. Zarabell said,

(05:26):
there are a lot of things that just disappear right
and we don't know how many were destroyed in World
War two or might actually be sitting in a freeport.
At Delaware Freeport, Deetle says that there isn't any mystery
about the inventory as far as the government is concerned.
He said, anything in my foreign trade zone is recorded

(05:46):
by US customs, and added that officials will follow up
as well. A quote. They come into the warehouse and
make sure those items are still there and haven't been removed.
He said he's also careful about whom he does business with. Quote,
if there was somebody really shifty trying to come into
my warehouse, I wouldn't let them in. We do due
diligence on who our clients are. I know my clients,

(06:08):
they're legit people. The demand for freeports has been driven
in part by the evolution of art into an alternative
investment vehicle. Art confunction is a hedge against factors that
affect stock market investments. However, Deetle says the art collectors
and investors he knows all have a genuine passion for it. Quote.

(06:30):
At some point you run out of space on walls,
you need to store some of it, and to be fair,
storage in a freeport protects artworks from fading in the
sunlight that streams in a nearby window, or being accidentally
damaged by home inhabitants or guests. It's a guaranteed way
to keep it safe. Of course, that does mean that

(06:51):
you don't have immediate access to that art to enjoy it,
study it and learn from it, and neither does anybody else.
M Today's episode was written by Patrick J. Keiger and
produced by Tyler Clang. For more on this and lots
of other topics that may or may not make you
want to eat the rich, visit how stuff works dot com.

(07:13):
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