Art appreciation runs so deep in Basel that the citizenry voted in 1967 to spend several million francs of public funds on a pair of Picassos. Delighted by this distinctively Swiss display of democratic patronage, the artist threw in four more, gratis. As a pharmaceuticals hub — it's the world's second most-lucrative industry after arms — Basel (pop. 165,000) doesn't need any freebies, but its denizens still love their art. The city has more fine museums per sq km — 30 in an area of 37 sq km — than any other in the world. That's one for every 5,500 residents, and they draw more than a million visitors a year.

For artists, dealers, collectors and curators, the city's best-known attraction is Art Basel, an annual fair of 20th and 21st century art held every summer at the Convention Center on the Messeplatz. "It is unquestionably the most important contemporary arts fair in the world," says Stefan Ratibor, a director of the Gagosian Gallery's London branch. "You show there and everyone who matters in the contemporary art world sees it." Just about every artist worth their salt has shown there: Jeff Koons, Cy Twombly, Gerhard Richter, Bridget Riley, Damien Hirst. Last year, the fair featured 5,000 pieces by over 1,500 artists, and drew 50,000 visitors in five days.

But the fair is only one aspect of the city's tradition of artistic patronage, which is among the richest in Europe. "It's been very good to me," says Julian Schnabel. "For me, Basel is a very, very special place, but not necessarily just because of the art fair." As a young artist still breaking through, Schnabel had one of his first museum exhibitions in Basel, and has since had two more. "It's very unusual to have three museum exhibitions in one small town, and there are some really good collectors," he says, such as Maja Hoffmann of the Hoffman-La Roche pharmaceutical family. "She's got a great picture of mine." Hoffmann is one of many wealthy, civic-minded private collectors, like art dealer Ernst Beyeler, who amassed a trove of treasures by Picasso, Cézanne, Degas, Giacometti and Warhol, then commissioned Italian architect Renzo Piano to build a museum for them — and donated all of it to the city. The local government (motto: Culture Unlimited) encourages such largesse by making all gifts of art to the city or cash donations to its arts institutions tax deductible. Picasso would have approved of that, too.