Do Rare Books Appreciate in Value?

I was recently asked by a reporter to comment on this question, and I offered some specific examples. As is often the case, my comments in the article, as well as an explanation of the examples, were very much cut for space (no hard feelings, I understand how these things go). But I thought I would provide the examples here, as well as a fuller answer to this question of how much rare books appreciate in value.

First, some examples. The exact SAME COPY of:

Author	Title	Old Price	2004 Price
Ernest Hemingway	Three Stories and Ten Poems	$6000 in 1977	$150,000
Jack Kerouac	The Town and the City	$2500 in 1978	$40,000
Mark Twain	Life on the Mississippi	$4800 in 1988	$19,000
Oscar Wilde	Lady Windemere’s Fan	$1700 in 1982	$32,500

But are these good examples? And what do these numbers really mean?

The journalist asked me to address several specific questions (some of which I’ve edited out to avoid repetition).

1) Can you please give an introduction to books as an investment option?
The antiquarian book market, like any collectible market, is fueled by supply and demand of specific objects. In the case of books it largely consists of first editions of important works, although there are other types of collectible books as well. As with other collectible markets, tastes change over time, some works retain their desirability while the demand for others peaks and then recedes. A great many particularly important books have shown a dependably steady increase in retail value over time, but, as with any market, previous “performance” is no guarantee of future results. We recommend that book collecting should be pursued for the enjoyment of finding and owning collectible copies of books that an individual finds personally important. This should be done prudently of course, but not strictly for the sake of investment.

2) What does the value of a book depend on? And what leads to an appreciation in value?
Many factors dictate the value of a book, but the four basic variables are edition, condition, scarcity, and desirability. For most titles, the first printing of the first edition of the book is generally the most desirable, often by so wide a margin that nothing but the first printing has any value as a collectible. This is partly because most books have a smaller first printing than their subsequent printings, partly because in many cases the first printing is closest to the author’s desired text (republished editions are more likely to be edited by someone else), and partly because historically this is what the book collecting market wants.

In addition, most collectors desire copies of books that are as close to the original condition of the book when it was first offered for sale. They often pay considerable premiums for copies that are considered in “fine” condition, particularly if such copies are difficult to obtain, and if the condition of the book has not been restored or repaired. Some books, such as the latest releases by bestselling authors like J.K. Rowling, have very large first edition printings and such books will never be sufficiently scarce to be collectible, even in fine condition (excluding books signed by the author or otherwise special copies). But other books, such as J.K. Rowling’s first Harry Potter book, had very small first edition printings and copies are quite difficult to find. Scarcity is not only determined by the size of the first printing, but also by how many copies survive. For example, the first edition of Herman Melville’s Moby-Dick did not sell very well and it languished in literary obscurity for several generations before it was widely accepted as a classic in the early 20th Century. To add injury to insult, 272 copies of the first edition were destroyed in a warehouse fire. So, relatively few of the originally printed copies survive, and the book is scarce.

All the preceding variables (edition, condition, and scarcity) can be in alignment, but if the book is not one that many people care about, or at least two people are willing to compete for, the book will have little value. Conversely, there might be many copies of a first edition, but if a great number of people of means are willing to compete for them, then that book can have substantial market value. Some books, such as Margaret Mitchell’s Gone with the Wind, had very large first printings but copies of the first edition are nevertheless expensive because there is still a greater demand for nice copies of the first edition than there is a supply.

BTC's Catalog 161: Association Copies

In addition to the four basic variables already mentioned, there is a fifth variable, association, which distinguishes the most exceptional copies. An association copy is one that was presented to or owned by someone whose life or work has bearing on the author and the author’s work. A copy presented by the author to his parents, spouse, or mentor would be such a copy. These copies often appreciate at a much higher rate than other signed copies.

Many books see a slow but steady rate of appreciation in value – these tend to be works which are to some extent canonical in either academia or popular culture. The American novelist William Faulkner, for example, is now routinely taught in American high school and college courses, and probably always will be. Thus a large number of literate people, some small percentage of whom may become book collectors, are exposed to his work in their schooling. To give another example, the children’s book The Wizard of Oz was the beginning of a popular book series and then made into a film which is viewed every year by millions of children on television. The characters of the book have entered popular culture and so, even if the book series is not as widely read as it once was, the book itself will always be very collectible.

From time to time a few books and authors have a quick and significant rise in desirability, which creates a commensurate rise in value. The American writer Cormac McCarthy, for example, has been publishing novels since the mid-1960s. But he was not well known until the 1990s, when his books started to hit the best-seller lists, were adapted into films, and won major awards. Any one of these three changes (best-sellers, film adaptations, major awards) is likely to increase interest in an author’s works, raise the desirability of collectible copies, and so raise the values. In the case of McCarthy, before 1990 most of his first editions could be purchased quite easily for under $100, whereas after 1990 they cost several hundred and now many are several thousand dollars.

3) How does one go about choosing a book which can give higher returns?
The nicest, most desirable, and most historically important copies of key works, although they tend to cost the most at any given time, often have very dramatic returns. Collectors who cannot afford the best and most expensive books can still get very good returns on their purchases if they pursue subject areas or types of books that are, at the time the collector is operating, generally under-appreciated. Of course, “hindsight is 20/20.” It is much easier to identify previously undervalued books than it is to accurately predict what books are currently undervalued on the market. This is part of what makes book collecting fun. It is also a good reason collectors should acquire books that have a personal meaning to them. Collecting every obscure book would be a waste of time and money. But collecting first editions of obscure books that you personally enjoy, and that you believe are underappreciated, has often lead to both emotional and financial satisfaction in the long term.

4) Could you give some examples of how much rare books appreciate in value?
This is where we started. If you really want an honest answer to the question of how much rare books appreciate in value over time, the quick but honest answer is, “It all depends.”

Let’s start with the question, “How much is a book worth?” One answer might be the last price at which that exact object was purchased. If you paid $100 for a book, then, in at least one sense, that makes it a $100 book. But suppose price guides tell you that it’s a $200 book. If that’s what the price guide says, then it must be so — right? You did well. You bought it for $100 but an expert is telling you it’s worth $200. What would the book sell for at auction? You look it up and you find that in the last year two copies of the first edition sold, one for $50 and one for $400. Well, now what’s the verdict? Did you overpay or underpay? Suppose your toddler gets the book in hand and decides to adorn it with crayon drawings of curiously impossible animals? Now you want to replace the book, but the only other copy you can find is $517.43 on Amazon. You just bought it last year for $100. Did it increase five-fold in a year?

The quick answer to all these questions that stem from the very simple question, “How much is a book worth?” is context. If you don’t put the values in the proper context, you may be comparing apples to oranges. Or perhaps good apples to bad apples would be a more apt analogy.

Two different copies of the same first edition are two different objects. Within a large stack of the latest James Patterson thriller this might not matter very much. But if you are talking about collectible books, especially scarce ones, a copy with one chip might be roughly equivalent to another copy with two short tears. Or it might not.  So, in my opinion a good way to examine how much rare books appreciate in value over time is to look at the prices paid, in public, for the exact same copy of a collectible book. In 2004 the collection of the West Coast book dealer and collector Maurice Neville was auctioned at Sotheby’s. This auction provided one of the best barometers possible for assessing the appreciation of the types of books in the collection. Maury’s collection was particularly strong in association copies and inscribed books. The previous ownership and sales histories of these copies, with their unique inscriptions to particular individuals, were very easy to trace. And Maury had purchased some of these copies in circumstances very similar to which they were sold from his own collection in 2004, namely at high profile auctions of previous, famous collections such as the Goodwin sale in 1977 and 1978. The fact that the auction was high profile is very important – it ensured that there would be several wealthy parties competing in earnest for the same book (something that does not always happen at auction). I chose a few specific examples, shown above and repeated here:

Author	Title	Old Price	2004 Price
Ernest Hemingway	Three Stories and Ten Poems	$6000 in 1977	$150,000
Jack Kerouac	The Town and the City	$2500 in 1978	$40,000
Mark Twain	Life on the Mississippi	$4800 in 1988	$19,000
Oscar Wilde	Lady Windemere’s Fan	$1700 in 1982	$32,500

“But what about inflation?” you ask. You could buy more with $6000 in 1977 than you could in 2004 anyway. The price of everything goes up, but that doesn’t make everything a good investment. Maybe if we adjust for inflation these increases won’t seem very good at all. Thanks to the Internet and easily found calculators of inflation based on the Consumer Price Index, it’s easy to check. So below are the books again, but with the details of the inscription, where they sold, and how it compared against the rate of inflation:

• Ernest Hemingway’s Three Stories and Ten Poems (inscribed to Sylvia Beach) brought $6000 in 1977 (Sotheby’s) and $150,000 in 2004 (Sotheby’s) (more than 8 times the rate of Consumer Price Index inflation for that time period)
• Jack Kerouac’s The Town and the City (inscribed at length by Kerouac and Allen Ginsberg) brought $2500 in 1978 (Sotheby’s) and $40,000 in 2004 (Sotheby’s) (more than 5.5 times the rate of inflation)
• Mark Twain’s Life on the Mississippi (inscribed to Ulysses S. Grant, Jr.) brought $4800 in 1988 (Christie’s) and $19,000 in 2004 (Sotheby’s) (2.5 times the rate of inflation)
• Oscar Wilde’s Lady Windermere’s Fan (inscribed to Arthur Clifton) brought $1700 in 1982 (Christie’s) and $32,500 in 2004 (Sotheby’s) (almost 10 times the rate of inflation)

So these books themselves obviously turned out to be a good investment. No surprise to anyone in the book world. Maury knew what he was doing, both in 1977 and in 2004. Would average or below average copies of the same first editions have appreciated as much? Doubtful. But unless you can find the exact money spent on the same copy at two different points in time, all even an expert can do is guess. Again, knowing how to put the information in context is key. Why did a Shakespeare First Folio sell at auction for $6.1 million in 2001, but another copy sold for $2 million in 2010? Did the book go down in value? No – it wasn’t the same book. Just the same edition of the same title (a very good one).

Buy what you like, and buy the nicest copies you can find of what you like. You might see returns of 10 times the rate of inflation. Or you might not. But at least you’ll have books you enjoy owning.