Auction

An auction is a method of buying and selling goods and services through a system of bidding. Traditional auctions are on-site events overseen by officials called auctioneers in which prospective buyers compete using increasing bids for items. The highest bid offered becomes the winning bid—the price at which the item sells. The earliest auctions took place in ancient times. After dwindling interest in auctions for many centuries, the practice revived in the 1600s and grew in popularity into the modern era. New innovations in auction techniques along with technologies that greatly expand the types, accessibility, and effectiveness of auctions have made auctions a very popular means of commerce around the world.

Brief History

The first documented auctions took place in ancient times. In parts of Greece around 500 BCE, families used auction-style gatherings to offer young daughters to the wealthiest potential grooms. Within a few hundred years, auctions had become a popular form of commerce in the Roman Empire. There, licensed auction officials began a bidding period by driving a spear into the ground. Until the spear was lifted, attendees could place bids on a wide range of offerings. The bids rose until a final sale price was reached. Accordingly, the word auction is derived from the Latin auctus (meaning "increase" or "enlarge").

Roman auctions were known to peasants and kings alike. Bidders could vie for offerings including private goods and real estate, the possessions of debtors, treasures of foreign lands plundered by soldiers, and even enslaved people. Roman emperor Marcus Aurelius was known to have sold furniture at auction to settle some financial troubles. Perhaps the most important auction of all time occurred in Rome in 193 CE, following the death of Emperor Pertinax, when a group of elite Roman soldiers auctioned the leadership of the Roman Empire to the highest bidder.

Following the collapse of the Roman Empire, auctions became less popular until interest revived around the 1600s. At that time, the practice emerged in parts of Europe and in the European colonies of North America. Early American pioneers sold household and luxury goods, property, crops, and animals at auction-style sales. In many areas, slave auctions became a fundamental part of the American slave trade. Many auctions in the colonies took place at taverns, often using a lit candle to time the duration of the bidding period. When the candle went out, regardless of the reason, the bidding was closed.

The earliest known auction house, Stockholms Auktionsverk, opened in Sweden in 1674. Two other notable auction houses opened in the mid-eighteenth century. Sotheby's auction (1744) and Christie's auction (1766) both opened in London and later opened branches in New York. In modern times, these auctions continue to make millions of dollars in sales annually. Despite the popularity of auctions in the United States, schools for training auctioneers only became common in the early 1900s. The first generations of auctioneers trained in the United States were soon tasked with selling thousands of estates that belonged to people hurt by the Great Depression of 1929 to 1939.

Overview

Despite their ancient origins, auctions have retained great popularity into modern times. In many ways, auctions have become even more common and popular over time. Millions of buyers and sellers use auctions to liquidate old possessions and acquire new ones. Billions of dollars' worth of goods and services pass through auctions every year, and the auctions themselves are more diverse, wide-reaching, and effective than ever.

Auctions hold much appeal to modern people. One benefit of auctions for sellers is their speed in comparison to other forms of commerce. An auction can liquidate an entire estate in just hours, converting potentially thousands of items into cash payments. Traditional forms of selling such large amounts of goods might take weeks, months, or longer. Buyers benefit, too. Some buyers are fascinated by the wide array of items that may be available at auction, often for low prices. Other buyers are attracted to the social scene of gathering with others, inspecting a variety of items, and comparing notes. These activities may help build friendships, business networks, and knowledge about the value and availability of various products.

Other people are attracted to the brisk and energetic way live auctions are conducted. Traditionally, auctions have contained a certain level of showmanship that many visitors find entertaining. Auctioneers use a system of fast chanting, often interspersed with humorous asides or boasts about the quality of the goods, when they are calling bids. This method of conducting an auction can build excitement in a crowd, stimulate sellers, and increase competition, thereby generating more money for sellers.

Auctions traditionally took place live and on-site, with interested parties gathered around the auctioneer. Such auctions still take place, but in modern times, auctions have developed into many other formats. Some auctions vary the bidding procedures or add or remove stipulations. For example, at a silent auction, bidders write their bids on paper rather than giving them verbally to an auctioneer. At a designated time, the silent auction ends, and the highest written bid is declared the winner. The invention and popularization of the telephone has allowed absentee bidders to submit bids during traditional live auctions.

A new era in auctions began with the creation of the Internet. In the late twentieth century, online auction platforms opened, allowing members to buy and sell goods using a computerized system that required no mediation by human auctioneers. Online auctions can take place day and night in any location with Internet access. Potentially millions of bidders from around the world may compete for a single good or service. Internet auction sites such as eBay and Catawiki generate billions of dollars in bids.

Despite the wide variety of auctions, most follow the same basic procedures and use similar terminology. An item entrusted to an auction is known as a consignment, and generally the auction will keep a percentage of the final sale price as a consignment fee. Some items are sold with reserve bids, which are minimum amounts of money a consignee will accept for the item. Other items simply begin at the first, or opening, bid, and sell to the highest bidder. Many auction houses charge a buyer's premium, or a fee paid by the winning bidder based on a percentage of the winning bid amount.

Bibliography

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