What is the effect of a financial crisis on the high-end violin market?
Although the 2008 financial crisis did not have a deleterious effect upon the violin market, it cannot be said that violin prices have never gone down. Just prior to the 1929 crash, Stradivari violins such as the “Jansa” sold for $23,000, the “Artot” for $27,000, and the “Titian” for $30,000. In the midst of the Great Depression, prices fell to about one-tenth their pre-Depression levels; for example, the “Portuguese” Strad sold for £2,300 in 1933. However, by the late 1940s violin prices had recovered, as evidenced by the sale of the “Lamoureux” Strad for £21,000 in 1948. The same cannot be said for savings lost in the Bank Holiday or money invested in the stocks and bonds of companies that went out of business during the Depression. During the recent stock market recovery, violin prices continued to rise - the "Vieuxtemps" Guarneri, for example, reportedly reached a record $18,000,000 in a private sale. In general, fine violin prices have continued to rise during the present market stall.
Because of rising prices, fine violins, violas, and cellos are now virtually out of reach of most students and a growing number of professional violinists. Even many prominent soloists are playing on borrowed instruments. If leading musicians cannot afford to own fine violins, then who is buying them? The answer is a diverse group of collectors, investors, foundations, banks, and governmental agencies.
In recent years, foundations in Taiwan (such as the Chi-Mei Culture Foundation), Japan (Nippon Music Foundation, Hayashibara Foundation), and Korea (Samsung Foundation of Culture) have purchased dozens of fine violins that are principally lent to native-born musicians. The Austrian National Bank recently purchased twenty-nine violins, which it mostly lends to musicians of Austrian citizenship, and the Canadian Council maintains a collection of fine violins that they lend to Canadians. Other banks that have recently purchased violins include the Landeskreditbank Baden-Württemberg and the Finnish OKO Bank. In 2005, the legislature of the state of New Mexico passed a bill (SB 141) authorizing the appropriation of $40M from the Severance Tax Permanent Fund for investment in rare violins. In 2007, the private investment management firm Medley Capital purchased a collection of thirty fine violins, which it is lending to the New Jersey Symphony Orchestra. The Medley Capital/NJSO transaction, certainly the largest of its kind, was brokered by Violin Advisor, LLC.
Many violinists are seeking private investors to purchase instruments for their use. Secure in the knowledge that their violins are appreciating at a comfortable rate, lenders enjoy the benefits and privileges of arts patronage (such as public acknowledgment in concert programs and recordings) and have the satisfaction of hearing their instruments played and enjoyed in the great concert halls of the world.
The New Market For Fine Violins
Read "Financial Instruments: Rare violins" in The New Yorker
Read "Expensive violins: A high-strung market" in The Economist.