What is worth more: The signature of Theodor Herzl, the visionary of the State of Israel, or the signature of William McKinley, the 25th president of the United States? A first edition of all the writings of Hebrew poet Haim Nahman Bialik or of "The Adventures of Tom Sawyer" by Mark Twain? You certainly won't be surprised that the American items are worth at least 20 times as much as the Israeli ones. One reason is that up until four years ago there was no public auction house in the world that specialized in the field that collectors call "Israeliana."

Meron Aran and Avishay Galer are trying to fill this vacuum. In 2008 they established the Kedem auction house, which specializes in items of Israeli culture and early Zionism, and in Judaica. In order to illustrate how neglected the field was, Eren says that the archive of poet Yehuda Amichai was purchased by Yale University, and that the biggest collection of Israeliana in the world is at Harvard University. "The Americans and Europeans have a far more developed preservation culture than in Israel," he says.

Eren, 49, who was once a farmer, ended up in the field of public auctions when he lived in Italy, where he was a wholesaler for gifts related to paper, and spent a considerable part of his time in flea markets. Occasionally during his wanderings he found old books in Hebrew, and over time he discovered that you can make a living from selling them. When he returned to Israel and met Galer, he entered the field professionally.

Galer, 38, is a rabbi. His main occupation is teaching at a yeshiva in one of the communities in the Jerusalem area. Galer specializes in sacred texts, rabbinical letters and rabbinical manuscripts. He entered the field because of books his father sent to him from Germany, where he lived for many years and occasionally received estates of people who died. His father was not very interested in the old books, and sent them to Galer who learned to read them, researched them and became an expert.

So how do a farmer and a rabbi meet and decide to establish a public auction house? At a public auction, of course. Those who are addicted to collecting come to public auctions not only in order to buy and sell, but also in order to mingle, and that's how their relationship began. Both shared the feeling that Israel lacks a public auction house like those in Europe. In Israel, they say, public auction houses focus on niches such as art and stamp collecting, and the large auction houses, Sotheby's and Christie's, no longer have sales here, although they do have offices.

A matter of trust

The beginning was not easy. Public auctions are based on trust and on connections with customers. Galer and Eren began with potential buyers and sellers whom they knew form the past, each in his own field. From them they collected additional names and sent catalogues to potential customers – at first unsuccessfully, but gradually institutions such as the U.S. Library of Congress, Yale University and the British Library became regular customers.

The two of them do everything – they collect addresses and items for sale and search for workers – and each of them focuses on items in his field of expertise. Neither of them likes administration, and they started without business advice and without market surveys, based on gut feelings. "There's no point in getting business advice in this field, because the consultants don't understand it," says Eren. The initial joint investment was about $100,000. For Eren these were "Mother's savings," and at the first auction Galer sold all the items he had planned to keep for his children's weddings.

Their gut feeling proved itself, and their auction house became a leader in its field. Kedem's main income comes from the commissions it collects from the buyer and the seller. The seller pays a commission of $10 per item and another 17 percent, on average, if the item is sold. The buyer pays a commission of 20 percent for the purchase.

To date Eren and Galer have held 25 public auctions. At the first one, four years ago, items were sold for $60,000, while at the most recent one, a month ago, sales reached $750,000. The average for a public auction is about $280,000, and there is a trend toward an increase in sales. Another source of income is private mediation, outside the public auction, between a buyer and a seller. In 2011 the annual turnover of the auction house was $2 million.

Recently they sold an item for half a million dollars – a volume of the writings of the Vilna Gaon, a leading 18th-century scholar, on the Talmud. The buyers and sellers are strict about maintaining their privacy, and Eren and Galar protect it zealously.

The sellers need a great deal of trust in order to give you items when in effect they have no idea what the items are worth

Eren: "That's exactly the advantage of a public auction house over a secondhand shop that only empties out libraries – we're interested in having every item sold for as much as possible. Another advantage is that even if I'm mistaken about the price, the market, by means of the public auction mechanism, will determine the price.

"There are customers who rely on us so completely that they give us permission to buy, naming a maximum price, without being present at the auction. They know that we won't run up the price only in order to get an inflated commission. Others consult with us about what to buy as an investment.”

Galer: "Our good name is one of our important assets."

The sellers at public auctions are heirs to private collections, public institutions that sell estates that they received and people who earn a livelihood from selling – owners of galleries and secondhand stores, Judaica dealers, owners flea markets stalls and sellers of "alte zachen" (old stuff). The buyers are private and institutional collectors. Most are not from Israel, and this is blatant among institutional buyers, more than 90 percent of whom come from abroad.

Other customers are private individuals who purchase items for investment purposes, based on an understanding of the market, and mainly from experience at predicting cultural trends. For the Haredim (ultra-Orthodox), Judaica is the only possible type of collecting – they can't buy a Picasso and hang it on the wall.

In the past year Galer and Eren decided to use their office, manpower and mainly their list of 1,500 addresses of collectors and dealers form all over the world, in order to enter the art field. For that purpose they hire outside experts who help them with the work. Another field that they have entered lately is Judaica items, such as Hanukkah menorahs and rimonim (Torah scroll finials), in addition to the texts that they have dealt with from the beginning.

Their professional development in the business was also accompanied by organizational progress. In the past year the two transferred the auction house from the industrial area in Givat Shaul to the center of Jerusalem, where they leased an area of 250 square meters, in which they invested almost NIS 400,000 in renovations. Aside from the offices the place has a salesroom, a storage area for about 300 items and a room with safes. The staff includes three young employees who work without defined hours, in an informal atmosphere and with absolute trust – "like work in a start-up – with the adrenaline of constant activity, only without the high-tech salaries and the fitness room," says Eren.

How do customers get to you?

Eren: "Our marketing is divided into two parts – secular and Haredi. In the secular community we advertise on Google, and every public auction of ours also appears on specialized websites that promote public auctions. In addition, when you search for terms in the field of history on Google, we come up first."

Galar: "For the Haredi community we prepared catalogues for selling in synagogues, whose price is deliberately very high so that they'll peruse them rather than buy them. But alongside them we sell discs of the catalogues for pennies, and people buy them or copy our phone number from them. Sometimes we also have targeted advertising in the Haredi press abroad. If there's a sale of items from one of the Hasidic courts, we look for the weekly connected to that Hasidic movement and advertise in it.

"In addition, many Haredi homes have a disc called 'Otzar Hahochma' – a kind of Google for Haredim – which contains a digital library of 50,000 sacred texts, and if someone wants to do research in a particular field related to Judaism, he needs the disc. We also contributed to writing entries in this library and people who were interested in these entries come to us as a result of the advertising."

Since they began emphasizing the field of Israeliana, say Galer and Eren, the prices have increased. For example, 1940s Haggadahs from the kibbutzim, which in the past cost $20-$50, are now being sold at public auctions for $700-$2,000.

The dream of the two men is to get to capital venture funds that invest in art and to convince them to invest in collectors' items. "Sometimes we see items whose value we know will increase significantly within two to three years, but we don't have the necessary sum to buy them," says Eren. "A capital venture fund could buy expensive collectors' items as an investment, and we can almost guarantee that they'll get a handsome return."

Attorney Iris Truman, a specialist in commercial law and capital venture companies and a mentor in Keren Shemesh (a foundation for young entrepreneurs), says that there is a steadily growing trend of investments in works of art in addition to the existing investment channels. She says that there are several Israeli funds – Art Partners and APT - which have been active in the field in recent years, where one can invest in art indirectly. "Many studies that have been done in the field of investments indicate that the ratio of risk versus return in investments in art is similar to investment in traditional channels, " she says. "As in any initiative, the two have to show the capital venture funds that their investment in works of art will yield a handsome return, and have to demonstrate not only good will, but operational abilities as well."