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THE RECENT UPROAR OVER National Endowment for the Arts funding of what the religious Right termed obscene and sacrilegious art concluded in victory for the battered NEA, though sniping from conservatives continues. But for all the attention that fracas received, it was a minor, inconsequential skirmish compared to the all-out war that raged over art in this country for the better part of the first half of this century.

At issue was not merely sex and sacrilege but the entire movement that came to be called ”modern art”-Cezanne, Matisse, Picasso and a multitude of others whose works now sell for many millions apiece. The bitter struggle lasted from 1910 until World War II and was waged not only in arts magazines and salons but in daily newspapers, church pulpits and the streets.

The battleground was not New York-which, though startled by Modernism, rolled over and embraced it-but Chicago, then a major arts center with not entirely ridiculous boosterish pretensions to one day becoming the arts capital of the world.

On one side were the city`s elite-conservatives who controlled Chicago`s major cultural institutions, believed in art as a moral force to elevate and civilize the masses and who vowed to keep this dangerous modern art out of the American Heartland. Among those leading this reactionary force were a formidable socialite and arts patron named Josephine Hancock Logan, founder of the ”Sanity in Art” movement; Eleanor Jewett, longtime Chicago Tribune art critic and (not so coincidentally) cousin of the paper`s legendary editor and publisher, Col. Robert R. McCormick; and, for a time, the administrators and staff of the Art Institute of Chicago, then as now one of the leading art institutions in America.

Challenging them were the better part of the city`s artists, writers and progressive thinkers; the more-avant garde art galleries; the Chicago Arts Club; and the extraordinary Clarence J. Bulliet, art critic of the Chicago Evening Post and later Chicago Daily News, an Indiana University-educated Hoosier and a former police reporter who came to be internationally regarded as one of the great intellects of the art world.

A true Bohemian who valued individualism above all else and a romantic slob who, though obese and nearly toothless, was considered one of Chicago`s great Romeos, Bulliet was a man loved or hated but never ignored. He argued that it was important to know that the women who posed for so many of the world`s great masterpieces were whores and artists` mistresses. He condemned as Nazis the reactionaries who tried to suppress modern art. And he considered his experience as a police reporter the most important part of his education as an art critic.

”The watching of humanity in the raw,” he said, ”such as you see them in . . . their first outbursts of savage rage or cynical humor-gives you the groundwork forever for the detecting of the true from the false in the emotionalism found in the canvases of the painters.”

For all its importance and fury, this rich and colorful chapter in the history of American art was for years all but forgotten-mostly because art history and commentary in this country has largely been written by critics and writers in New York.

But in the mid-1980s an Illinois-born arts scholar named Sue Anne Prince, then Midwest director of the Archives of American Art, undertook an archeological dig into this area of scholarship. A Dixon, Ill., native educated at the University of Illinois as well as the Sorbonne in Paris, she thought the battle over modern art in Chicago had been wrongfully overlooked by historians.

”As opposed to New York, which was written about at length, Chicago, the second largest city in the country, had been neglected,” Prince says. ”I wanted to set about collecting things before any more people died and any more materials were discarded, to raise an awareness in the community of the importance of that heritage.”

IN 1988, WITH THE COOPERATION of the Art Institute, Prince organized a symposium on the subject in Chicago that attracted art scholars from all over the world. Now a William Penn fellow at the University of Pennsylvania and consultant to the National Portrait Gallery in Washington, she has used many of the papers presented at that symposium as the basis for a richly illustrated, recently published book, ”The Old Guard and the Avant-Garde:

Modernism in Chicago, 1910-1940” (University of Chicago Press, $35), which is a must for anyone who ever wondered why Chicago, with all of its resources, never became anything more than a big city with another big art museum.

To put it mildly, when modern art exploded onto the world scene just after the turn of the century, Chicago was not ready for it. Though a brash upstart by the standards of such snooty rivals as Boston and Philadelphia, the city had become one of the most important, wealthy and successful metropolises in the nation, and it wished to embellish its status with the refinement and gentility of its Eastern cousins.

The ideal set forth by its social elite was that of the Beaux Arts marble-and-lagoon fantasy created on its lakefront for the 1893 World Columbian Exposition. Though a few progressive local collectors such as Bertha and Potter Palmer had become taken with French Impressionism and other new trends, Chicago-yearning to be seen as genteel-stuck to the classical.

”The business and social view of art (in Chicago) was civic,” Prince says. ”It was supposed to elevate people, elevate the masses who worked for the rich.”

In the 1890s New York was already looking with some excitement at the works of ”The Eight,” or ”Ash Can School,” painters such as John Sloan and Robert Henri who had turned to grittily realistic renderings of urban scenes. Chicago favored paintings of gardens and ladies in long summer dresses. Even years later, as Bulliet caustically noted, Chicago artists were still making Michigan Avenue look ”like the Champs Elysees.”

There were no gritty cityscapes exhibited among the 10,000 works in the Columbian Exposition`s fabled Art Palace. There were very few works by any new Chicago artist.

”The standard of taste was 19th Century academic art,” Prince says.

A decade into the new century, modern art began to creep into the galleries and studios of ”the hog butcher to the world,” but the city`s cultural guardians dismissed this trend as a sort of loathsome fad. Open warfare did not break out until 1913.

The first skirmish of the struggle was over Paul Chabas` 1912 nude painting ”September Morn,” a work so demure by present-day standards as to excite considerably less interest than a Madonna album cover. The work won the Medal of Honor at the 1912 Paris Salon (the annual exhibition of the French arts establishment), but when a reproduction of it was placed in a Chicago department-store window the following year, there was a riot of protest. Condemned by ministers and grandes dames alike, it was removed by police as

”obscene,” prompting James William Pattison, editor of the Fine Arts Journal, to describe the seizure as having ”disgraced Chicago in the eyes of the world.”

CHICAGO`s ESTABLISHment didn`t care. It was much more concerned about the world`s ”scandalous” intrusion upon the city in the form of the then-infamous 1913 Armory show, the first really big battle of the Chicago art war, and one won by the conservatives.

Organized by progressives on the order of photographer/entrepreneur Alfred Stieglitz, later the husband of Georgia O`Keeffe, the show, formally titled ”The International Exhibition of Modern Art,” first opened in New York in a Manhattan armory. Featuring Picasso, Matisse and many other revolutionary new painters, it included not only provocative nudes and ”ash can” reality but cubism and other forms of abstractionism.

The New York press gave it more attention than a sex murder. Manhattan art circles went into a tizzy, but a productive one. In the end, the show served as a catalyst to prod the city`s artists into new directions and more ambitious ideas.

The Armory show`s other stop was Chicago. The Art Institute was host to it for 24 days, during which 188,000 visitors trooped through. Only a handful bought any paintings. Many screamed.

”Why, the saloons could not hang these pictures!” thundered Arthur B. Farwell of the Chicago Law and Order League. Art Institute students held a mock trial and then hanged Henri Matisse in effigy, deriding the French genius as ”Henry Hair-Mattress.”

”It`s a rube town,” New York collector Walt Kuhn wrote back from Chicago. As art exhibitor Milton Brown noted a half-century later, Chicago

”was not only more provincial (than New York) but it suffered from a badly concealed sense of inferiority.”

As University of Chicago historian Neil Harris noted in his contribution to the symposium and to Prince`s book, people could be reminded of a remark made in 1897 by a civic booster named Price Collier, ”Pork, not Plato, has made Chicago.”

The Art Institute itself, according to Harris, was almost as narrow while attempting to appear liberal. Following the show, it noted smugly that it

”has been willing to give hearing to strange and even heretical doctrines, relying upon the inherent ability of the truth ultimately to prevail.”

THE TRAGEDY OF THIS PHILIStinism and classical elitism was not simply that Chicago, indisputably the capital of its vast region, prevented so many new ideas from reaching so many minds but that this kind of anti-

intellectualism helped abort a very real if rather raw renaissance in the city that might have made it a cultural center competitive with New York.

As Harris recounted, no less a literary figure than H.L. Mencken had in 1920 proclaimed Chicago America`s literary capital.

”Life buzzes and corruscates on Manhattan Island, but the play of ideas is not there,” Mencken wrote. It was a ”shoddily cosmopolitan, second-rate European town, dominated by a spirit of `safe mediocrity.` America`s masters came not from New York, nor from Boston, `dead intellectually as Alexandria,` or Philadelphia, `an intellectual slum,` but from the `unspeakable` Chicago, the most `thoroughly American of American cities.` ”