Read all about it: Beaverbrook's gallery forced to sell works of art just to survive

The Beaverbrook family is fond of relating the story of how its founder, the Scottish-Canadian newspaper baron Max Beaverbrook, was once asked if his name was an abbreviation for Maximilian.

The Beaverbrook family is fond of relating the story of how its founder, the Scottish-Canadian newspaper baron Max Beaverbrook, was once asked if his name was an abbreviation for Maximilian.

"No," he replied. "It's Maximultimillion."

People in the town of Fredericton, in Beaverbrook's native south-east Canada have been basking in his beneficence for more than half a century. The gallery that Beaverbrook opened and stocked there contains one of the great collections of British art of the 20th century.

But the Beaverbrook fortune is not what it was ­ and Fredericton is feeling the pinch.

Yesterday, Maxwell Aitken, the third Baron Beaverbrook and grandson of the celebrated Daily Express owner, admitted the Beaverbrook Foundation - the family-led organisation that controls the dynasty's legacy ­is demanding the return of some of Fredericton's finest paintings. Selling works is the only way the foundation can tackle the gallery's financial crisis- which has been brought on by mounting endowment and insurance costs.

In return for handing over pictures for sale, the gallery's governors had been offered a $5m (£2.5m) contribution towards the $11m appeal fund it has set up. But, last week, 15 of the 18 governors resigned in protest, claiming the venue's 200 paintings, which include works by Gainsborough, Dali and the Canadian landscape painter Cornelius Krieghoff, were gifts from the first Lord Beaverbrook and were not the foundation's to sell.

The museum's former curator Stuart Smith launched an attack on the foundation, accusing it of reaping the financial benefits of Lord Beaverbrook's shrewd investment. "If you bought something for $50,000 and it was worth $3.5m, you might want it back too," he said.

While the current Lord Beaverbrook was anxious to point out that he cannot benefit directly from the sale of paintings which belong to the trust, he knows from bitter experience how it feels when the money runs out. He was made bankrupt in 1992 and stripped of a seat in the House of Lords after admitting debts of £5m.

Yesterday, his grandson expressed no regret at the prospect of adding to the half dozen or so works from his forefathers' collection which have been sold over the years.

"The collection has evolved over the years. We've sold some and bought some as well," said Lord Beaverbrook, who also indicated that he considers selling expensive works to be the best strategy. "You can sell one valuable painting or 20 cheap ones [but] if you've got an art gallery you probably need to retain quantity because you need to cover the walls," he said.

Though he would not confirm which pieces he was considering for sale, Turner's Fountain of Indolence, valued at an estimated $3.5m, is said to be among two of the many on indefinite loan from the British Beaverbrook Foundation which are being lined up for auction.

In a statement yesterday, the gallery's director and CEO, Bernard Riordon, appeared to accuse the Beaverbrook foundations in Britain and Canada of browbeating governors into signing over ownership of works of art. Mr Riordon said the outgoing governors had decided they could not stay after being asked by the foundation to agree some of their gallery's works "are and always have been owned by the foundations", he said.

The governors wanted to seek legal advice to resolve the issue of ownership but the foundation "expressed an unwillingness to give the board of governors time to discharge these responsibilities".

The foundation's case is believed to have been strengthened by the conclusion of Sotheby's, after an inspection of the gallery, that some of the paintings are now too valuable to stay there. Sotheby's did not comment yesterday.

It is a far cry from the first Lord Beaverbrook's day, when there would have been more than enough money around to hold on to the paintings.

Beaverbrook's paintings are the product of a phenomenally successful career in business and politics. The family fortune was accumulated at the beginning of the last century on the world stock exchanges, with further riches gained from Canadian cement mills.

The first Lord Beaverbrook entered politics after moving to Britain in 1910 and, within a year, was the Conservative member for Ashton-under-Lyne. One of only three men to serve in the cabinet in both wars, he became private secretary to the Colonial Secretary during the First World War and acquired a controlling interest in the Daily Express.

In 1919, the paper sold 400,000 copies a day. By 1938, the figure was 2,329,000, when the paper was espousing the cause of appeasement and, by 1960, an astonishing figure of 4,300,000, making it the largest selling British newspaper in history.

The Fredericton gallery was opened on 16 September 1959 to receive works purchased by one of the art scene's less decisive buyers. "Whaddya think?‚" was Beaverbrook's famous catchphrase when purchasing.

Art was Beaverbrook's passion. His biographer, A J Byer, tells how, when his art adviser resigned rather suddenly, he hired the Express's crime reporter to discover whether the man had been taking bribes from dealers.

Beaverbrook's charity has not helped future generations of his family. On the death of his father, Sir Max Aitken, the current Lord Beaverbrook inherited just £250,000.

For a time, he appeared to have become the classic 1980s entrepreneur, delivering £38m to the Tory party before his businesses collapsed.

Lord Beaverbrook would not tell The Independent yesterday how he now earns a living, though much of the Beaverbrook Foundation's money is going on the renovation of Cherkley Court, his grandfather's country house and gardens near Leatherhead, Surrey.

One of the Fredericton gallery's three remaining governors, Vincent Prager, who is also a Canadian Beaverbrook Foundation trustee, said that Fredericton had never owned the paintings, which had been listed as assets in the foundations' internal audit reports. "It was felt by the UK foundation, as I understand it, that [the paintings] should be taken back and have a different future, in exchange for a very large sum of money," he said.