The History of Auctions
Some scholars argue that the very first auction occurred when Joseph of the Many-Colored Coat was sold into slavery by his brothers; however the first commonly-recognized auctions occurred in Babylon in about 500 B.C. In those times, auctions were held annually, and women were sold on condition that they be married. Beautiful maidens engendered lively bidding, but women seen as less attractive had to pay a dowry to be accepted in certain cases resulting in a negative price.
Ancient Romans also auctioned goods. These auctions were held in the "Atrium Auctionarium," and the trading was carried out by four functionaries: the Dominus, on whose behalf the property was sold; the Argentarius, who organized, regulated, and possibly financed the sale; the Praeco, who advertised and promoted the auction as well as conducted the bidding; and the Emptor, the highest bidder (recalling Caveat Emptor, “let the buyer beware”). It is not known whether the auctions were ascending or descending, but ascending is presumed given that the term Auctus means “increase.” Bidders normally did not call out openly, but rather winked or waved to indicate a bid.
After a military victory, a Roman soldier would plant his spear in the ground to mark the location of his spoils. Later he would put these goods up for sale at auctions. Subhastation, a now rarely-used term meaning “sale by auction,” comes from the Latin, subhastare – “to sell by public auction” - which in turn comes from sub (under) and hasta (spear) or, “under the spear.” Roman business agents were said to have accompanied warriors into battle to facilitate the expected sales. The Romans also used the auction to liquidate property. Marcus Aurelius himself is said to have auctioned off prized heirlooms and furniture (that auction lasted over two months).
One of the most astonishing auctions in history occurred in the year 193 A.D. when no less than the entire Roman Empire was tossed on the block by the Praetorian Guard, who killed Pertinax, the emperor, and then announced that the highest bidder could claim the Empire. Didius Julianus outbid all comers and became the emperor for the price of 6,250 drachmas per guard. Unfortunately, he was beheaded a mere two months later when Septimus Severus conquered Rome. Julianus may have been the first victim of winner's curse. Later, the Empire was restored to the people.
Less is understood about auctions in other civilizations. It is known that the auction was one of the four money-raising institutions (the others being pawnshops, mutual financing associations, and lotteries) used by Buddhist temples and monasteries, and as early as the seventh century, the possessions of deceased monks were sold on the block.
The earliest reference to the auction as practiced in Great Britain relates to an entry in the 1595 Oxford English Dictionary, but nothing more is known until the final years of the seventeenth century. At that time, auctions were held in taverns and coffeehouses to sell art. It is likely that such auctions were held daily and that catalogs, announcing the availability of certain merchandise, were printed. The firm of Sotheby's was established in 1744, and Christie's was founded in 1766. One seventeenth century catalog describes a process called "mining," which was similar to the concept of the Dutch auction; the auctioneer started the bidding high and worked down. A lot was claimed when someone yelled, "mine." Here, there was an interesting twist – after the bid descended to the point where a bidder claimed an item, the bidding actually resumed, but this time in an ascending format, hence bids would go down and then back up again.
The auction migrated to America where it was used to liquidate goods and to sell unsold goods at the end of a season. Domestic animals have been sold this way as have tobacco, natural resources, horses, debt, credit, and of course slaves.