After his marriage to Clara Dresel (1878–1947), Julius Freund became co-proprietor in 1902 of his father-in-law's ladies' wear company Wilhelm Dresel at Niederwallstraße 13 in Berlin. The couple lived in Berlin-Schöneberg with their children Hans Max (born 1905) and Gisela (born 1908, who became famous as a photographer by the name Gisèle Freund). Freund invested in art and, with the assistance of Guido Josef Kern, director of the National Gallery in Berlin, put together a highly admired collection over the years, particularly of works from the German Romantic period. Apart from over twenty oil paintings by Carl Blechen and three pictures by Caspar David Friedrich, he owned around 500 other works, including paintings by Daniel Chodowiecki, Hans von Marées, Adolph von Menzel, Wilhelm Trübner and Heinrich Rudolf Zille. He was personally acquainted with many artists such as Käthe Kollwitz and Hans Thoma. Max Liebermann and Max Slevogt painted his portrait. His company ran into financial difficulties as a result of the economic crisis, and in 1930 he sold Friedrich's Chalk Cliffs on Rügen to the Swiss collector Oscar Reinhart in Winterthur. When he offered his collection on loan to Kunst Museum Winterthur in October 1931, the museum accepted only three paintings and a watercolour by Carl Blechen. After the Nazis came to power in Germany, the museum accepted 360 artworks on permanent loan through the mediation of the Berlin art dealer Fritz Nathan. Further works followed in subsequent years. At around the same time, the collector renounced his power of control over the works. On 17 December 1933, he gave the art collection to his daughter Gisela, who at this time was already living in Paris, for her twenty-fifth birthday. It should be noted that since 1927 at least parts of the collection had apparently been owned by her mother Clara, who had been given the works as settlement of her inheritance claims to her father's company. There is no record in the surviving sources, however, of her questioning Gisela's title.

The situation of the family, which was Jewish, continued to deteriorate. Both children, who belonged to opposition left-wing circles, fled early from Germany. Gisela Freund went to Paris in May 1933 and acquired French nationality three years later through her marriage to Pierre Blum. Hans Freund emigrated to Britain and attempted from there to arrange for his parents to follow him. From 1936, the parents shipped furniture and other household items to him in Elsworth. After Clara's release from the women's prison, where she had been interned for at least one month for customs infringements, Julius and Clara Freund applied for emigration and received authorization in February 1939, enabling them to leave in time and settle in London. The war caught up with all members of the family in 1940. Gisela left for the south of France in early June following the first air raids on Paris; and her father suffered a stroke in September 1940 during an air raid in London, from which he never recovered. The family was evacuated to Wigton, Cumberland, in the north of England, where Julius Freund died on 12 March 1941 in Highfield House, the workhouse hospital there. Shortly afterward, in early summer 1941, Gisela Freund sailed from Marseilles to Buenos Aires. After Julius Freund's death, Clara commissioned Fritz Nathan to negotiate the sale of the art collection through the Luzern art dealer Theodor Fischer. All of the objects in the collection except those that had been purchased by Kunst Museum Winterthur and the items retained for the Freund family, arrived in Luzern in December 1941. On 21 March 1942, "collection of Julius Freund owned by Dr. G. Freund, Buenos Aires" came up for auction. In view of the specialization in nineteenth- and twentieth-century German prints, it attracted German museums and the "Sonderauftrag Linz", Hitler's planned museum in Linz, and also some Swiss institutions and collectors. Hitler's special representative Hans Posse purchased thirty-one paintings and drawings from the nineteenth century for just under 62,000 Reichsmarks. In May 1942 Fischer transferred the total proceeds of 198,860.50 Swiss francs to Gisela Freund, Bank of London South America Ltd Buenos Aires, via Schweizer Kreditanstalt in Luzern. It was not until early 1943 that Fischer himself received the money from the NSDAP Chancellery in Germany headed by Martin Bormann. Galerie Fischer, which was to handle over 90 per cent of the Swiss acquisitions by the "Sonderauftrag", continued to deal with the "Führer Museum" until 1944.

After the Bundesamt zur Regelung offener Vermögensfragen (Federal Office for Unsettled Asset Claims) determined in 2004 that the artworks from the former Freund collection acquired by Posse and now owned by the German state were not subject to restitution, in 2005 the German Federal Government Beratende Kommission für die Rückgabe NS-verfolgungsbedingt entzogener Kulturgüter, insbesondere aus jüdischem Besitz (advisory commission for the restitution of cultural items expropriated by the National Socialists, especially from Jewish ownership) recommended the restitution to the legal successors of Julius and Clara Freund of a watercolour by Anselm Feuerbach from the Historisches Museum der Pfalz (Historical Museum of the Palatinate) in Speyer, three works by Carl Blechen from the Wallraf-Richartz Museum in Cologne, the Westfälisches Landesmuseum (Westphalian State Museum) in Münster and the Kurpfälzisches Museum in Heidelberg, all permanent loans of the state. Following an agreement with the heirs in 2010, the Kupferstich-Kabinett in Dresden restituted several dozen drawings, watercolours, woodcuts, etchings and lithographs held by it since 1944, also as a result of acquisitions for the "Sonderauftrag Linz", and repurchased them immediately. This was the first instance of the restitution of an art collection defined as "Fluchtgut". By contrast, in 2016 the Art Restitution Advisory Board did not recommend the restitution of two drawings by Carl Blechen and one by Carl Georg Anton Graeb, which had also been acquired by Posse and were in the Albertina at the end of the war, because they had been sold by Gisela Freund outside of Nazi territory and were not therefore covered by Section 1 of the Austrian Nichtigkeitsgesetz (Nullity Act).