In 1943, already declared “stateless” by the Nazi Regime, most Jewish European emigrants were forced into a small, designated area in Hongkou – the so-called Shanghai Ghetto – by the occupying Japanese authorities. Already facing harsh economic conditions, for many this meant the loss of previous income opportunities, as well as of their professional and social networks, as in the case of the commercial graphic artist John Isaac. Housing conditions were cramped, many had no choice but to stay in shelters (Heime), and availability of food and health care deteriorated dramatically. In 1943, seven European artists whose artworks had previously been shown by the German émigré architect Richard Paulick at his company showrooms, founded ARTA in order to promote their work and enhance cultural life in the so-called Shanghai Ghetto. The Alfred Dreifuß Archive at the Akademie der Schönen Künste in Berlin holds a founding note for advertising purposes. The association presented itself as follows:
„Die im Distrikt lebenden juedischen Kunstmaler haben sich zu eienr Vereinigung zusammengeschlossen. Deren Zweck ist die Pflege und Foerderung der bildenden Kuenste durch Kunstausstellungen, Vortraege, Unterricht und geselliges Beisammensein mit Kunstinteressierten. Um unseren Mitgliedern fuer einen geringen Monatsbeitrag ein Aequivalent zu bieten beschlossen wir Kunstmaler folgendes: Jedes Mitglied hat jaehrlich Anspruch auf eine kostenlose graphische Arbeit. Ausserdem werden anlaesslich unserer Kunstausstellungen ein bis drei Oelbilder kostenlos innerhalb unseres Mitgliederkreises verlost. Ausserdem wird bei besonderen Anlaessen ein Gutschein fuer ein Portrait unter den Mitgliedern verlost werden. Die Wahl des Kuenstlers steht dem Gewinner frei. Bei Kaeufen auf unseren Ausstellungen erhalten Mitglieder unserer Vereinigung 20% Rabatt. Der monatliche Beitrag betraegt $30.--, eine einmalige Einschreibegebuehr den gleichen Betrag. Wir erlauben und darauf hinzuweisen, dass diese Vereinigung hier voellig neuartig ist, dem kulturellen Beduerfnis weiter Kreise entspricht und im Kulturleben unserer Gemeinschaft eine Luecke ausfuellt. Indem wir auch Ihr Interesse am juedischen Kunstleben voraussetzten, gestatten wir uns hoeflichst Sie zum Beitritt in unsere Vereinigung einzuladen. Fuer besondere Auskuenfte steht Ihnen gerne einer der unterzeichneten Kuenstler zur Verfuegung.“

(English translation:
"The Jewish painters living in the district have formed an association. Its purpose is the cultivation and promotion of the fine arts through art exhibitions, lectures, classes and social gatherings with art enthusiasts. In order to offer our members an equivalent for a small monthly fee, we art painters decided on the following: Each member is entitled to one free graphic work per year. In addition, on the occasion of our art exhibitions, one to three oil paintings are raffled free of charge within our circle of members. In addition, on special occasions, a voucher for a portrait will be raffled among the members. The choice of the artist is up to the winner. Members of our association receive a 20% discount on purchases at our exhibitions. Monthly dues are $30.00, and a one-time registration fee is the same amount. We would like to point out that this association is completely new, meets the cultural needs of wide circles and fills a gap in the cultural life of our community.”)

From Hans Jacoby’s diaries we learn that the application for approval of the art association was made at the police headquarters on 13 July 1943, while the first announcements in the local press, such as the Jüdische Nachrichtenblatt (article by Alfred Dreifuß, December 24, 1943) seem to have appeared only in December of the same year. We also learn that one the artists' favourite meeting places was the Cafe Barcelona on Chusan Road. The first ARTA exhibition took place in March 1944, at the Shanghai Jewish Youth Association or Kadoori School at East Yuhuang Road, and was opened by Kubota Tsutomu, head of the Bureau of Stateless Refugees Affairs for the Japanese occupation forces in Shanghai, and Ghoya Kanoh, an executive employee, who made celebratory speeches. Exhibiting artists got a special stamp in their passport that allowed them to cross over the border of the designated area. However, regulations governing permission to stay in any part of the city were subject to monthly changes by the Japanese authorities.
The second exhibition, in May 1944, was held on the second floor of Whiteaway, Laidlaw & Co, a departmental store at 98 Nanking Road. The store building had been built in 1904 and renovated by the Hungarian émigré architect C. H. Gonda in 1930. The formerly British business, that had originated in Calcutta, was taken over by the Japanese in 1941.
The exhibition was sponsored by the Japanese and probably helped them spread positive publicity regarding their ghetto politics in the already censored press. The participating artists set up a quick sketch service and visitors could have their portraits done free of charge. A similar kind of service was also provided as part of the evening entertainment programme at the Tabarin, a popular emigré ran restaurant and bar on Broadway East, by the artist Fred Fredden Goldberg and shows the ingenuity of the artists in their quest to earn some money.