Mad About Strads Fiddling the Stradivarius Market

The cult surrounding the 300-year-old violins has sent prices through the roof, making the Italian masterpieces a coveted investment worth millions. Only a handful of dealers control the market -- and they’re willing to pull any number of strings to maximize profits.
Von Carsten Holm

Up in Katzelsdorf, a hamlet on the outskirts of Vienna, people seem to live one step closer to heaven. High on the hill above this picturesque village towers sits Eichbüchl Castle. This lofty stronghold, where Napoleon’s sister once held lavish parties, is now the residence of an extremely successful businessman from Bremen, Germany.

Dietmar Machold, 58, deals in antique violins. Ten years ago, he made millions virtually overnight when he sold three Stradivariuses and a Guarneri. The deal netted a tidy profit, so he decided to treat himself to something really special. Machold splurged and bought Eichbüchl, just as a successful stockbroker would indulge himself with a Ferrari or a rich doctor might purchase a Porsche.

Down in the village, in the local pub, folks don’t know much about Machold. Everyone realizes, of course, that he acquired one of the finest collections of violins in the world for the Austrian National Bank, and that the Austrian Ministry of Culture awarded him with an honorary doctorate for this achievement. Rumor has it that "Herr Professor" has managed to become "very, very rich," thanks to his business.

Yet none of the villagers can even begin to imagine how the lord of the castle up above pulls the strings in the mysterious world of the international violin trade. Machold and his companion, Austrian teacher Barbara Drews, 31, proudly welcome guests to their home behind the 700-year-old walls, battlements and turrets of Eichbüchl. The violin dealer has transferred the main branch of his family business, now in its fifth generation, from Bremen to Austria and made Machold Rare Violins a world leader in the highly competitive market for rare string-instruments.

These instruments rank among the great icons of Western culture, alongside the Gutenberg Bible and the Mona Lisa -- especially that most legendary violin of all, the Stradivarius.

The German runs his business from the castle and his office in Vienna. He sells 300-year-old Stradivariuses that fetch as much as $6 million (€4.2 million) each. Commissions of up to 30 percent are not uncommon. Consequently, quite a good deal of money can be made with these highly prized and priced instruments. In his heyday, Machold managed shops in Germany, the US, Switzerland and South Korea, and he knows his way around Seoul, Manhattan and downtown Chicago.

Boom in Stradivarius Market

Machold has a wealth of stories to tell. In 1985, he sold his first Stradivarius to North Korea, via East Berlin -- for only $285,000 at the time. A Mr. Kow came to Checkpoint Charlie at the Berlin Wall. They drove to the North Korean embassy. The Stradivarius remained there, for testing and as a sign of good faith. Mr. Kow then paid with 1,000-mark bills.

Machold’s cell phone is constantly ringing. Calls from abroad. From Chicago, where it's early in the morning. From Seoul, where it's late in the evening. On the line are potential Stradivarius buyers around the globe, and potential major deals. "Business with these instruments has started to boom to the point that, at times, it reaches incredible proportions," says Machold.

Antonio Stradivari fashioned more than a thousand instruments until his death in 1737, and his neighbor Giuseppe Guarneri del Gesù (1698-1744) produced hundreds of violins. About 600 violins, 60 cellos and 12 violas stamped with Stradivari’s initials inside still exist today, along with some 140 violins from the workshop of Guarneri del Gesù.

Within just a few decades, the value of these instruments has risen exponentially. In 1971, the "Lady Blunt" Stradivarius sold at Sotheby’s for $200,000, creating a minor sensation. In 1998, the "Kreutzer" Stradivarius went under the hammer at Christie’s for $1.5 million.

These days, even damaged violins made by the master himself command prices of a million euros, while his finest sounding instruments sell for many times that amount. In May 2006, Christie’s auctioned the "Hammer" Stradivarius for some $3.5 million; top instruments are now valued at over $6 million. What’s more, buyers increasingly see Stradivariuses as a lucrative investment.

The supply, moreover, is dwindling as more and more Stradivariuses and Guarneris are purchased for collections like the ones owned by the Austrian National Bank -- or bought by institutions like the German Foundation of Musical Life. This benefits talented young musicians, who are able to borrow these fine instruments free of charge.

Global Interest in Old Violins

At the same time, demand continues to rise because the sector has become a pioneer of globalization. Up until the early 19th century, only European dealers traded in old violins. Decades later, the US market joined the fray. In the 1970s, demand from Japan grew, followed by Korea. Now investors from China are showing a keen interest in this Baroque cultural treasure, which is still regularly played by musicians around the world.

"The Stradivariuses are the key rate for the market. If their price goes up, then the Guarneris and other historical violins follow suit," explains Machold. Every year, 10 to 20 Stradivariuses are offered for sale on the world market. Once a seller’s name is leaked, dealers descend on him like eagles diving for juicy prey.

People might ask why a Stradivarius that weighs roughly a pound should now be worth 500 times its weight in gold. But the world of violins dismisses such cynics as cultural ignoramuses. Experts insist that the sound produced by the wood of the Stradivariuses is the ideal violin tone. According to enthralled musicians, instruments produced by the godfather of violinmaking carry soft tones more powerfully into the far corners of concert halls.

How did Antonio Stradivari manage to set standards that have stood the test of time? What makes his stringed instruments far more admired than other outstanding centuries-old violins by such masters as Amati, Bergonzi, Ceruti, Guadagnini and Rogeri?

Roughly a century after the first violins were made in Italy, England and Poland, Stradivari opened his workshop in the town of Cremona in 1666. Music had established itself in court life, nobles treated themselves to orchestras, and violins were used as concert solo instruments for the first time.

Where Does the Remarkable Sound Come From?

According to legend, on nights with a clear full moon, the master journeyed from Cremona to the high Alps, where he selected impressive spruce trees and peeled off a section of bark. He then placed his ear against the trunk, knocked on the wood with a hammer and listened. If he was satisfied with the resonance, the tree was cut down. Stradivari is thought to have benefited from a series of hard winters from the mid-17th century to roughly 1715. The trees grew more slowly than usual, the wood was close-grained and denser, and some say that it transmits acoustic waves better than wood grown during warmer periods.

Researchers at Cambridge University, however, suspect that the secret of the remarkable acoustics from Cremona lies within the reddish layer of varnish on each Stradivarius. In 1988, a research team analyzed a chip of varnish from a cello made in 1711 and discovered a wafer-thin layer of primer below the layer of varnish, which chemically resembles Pozzuolana earth, a volcanic ash that is used to produce cement in northern Italy. Stradivari may have made a mixture of ash, egg whites and water and applied this to the wood to create the magical sound.

Perhaps Joseph Nagyvary, a biochemist at the University of Texas in Galveston, has come closer to the secret. His theory: Due to prevailing high humidity conditions in Cremona, Stradivari used a wide range of preservatives to keep the wood from rotting. Placing the wood under his electron microscope, Nagyvary discovered traces of an ordinary fungus that would have thrived in the rivers which were used to raft the wood from the Alps to Cremona. The water fungi flourished to such a degree that they altered the shape of the wood cells, giving the violins their rich, distinctive sound.

Nagyvary mimicked the manufacturing process using wood from Canada and Nepal. Experts who listened to his violins thought that they were Stradivariuses. This was hailed as a "pioneering" achievement according to the American Chemical Society, a leading scientific organization.

Nearly all Stradivariuses -- insiders call them Strads -- have their own pet names. They are often dubbed after their first known owners, "Ex-Derenberg" or "Davidoff." Each is different, each has its own personality. "They have," says Munich violin dealer Renata Koeckert, 59, "faces like people." And an entranced smile full of humility spreads across her face, not unlike the expression worn by the faithful as they receive the Holy Communion.

Each Violin Has its Own Story

In addition to their faces, Stradivariuses have biographies. The life and times of "Antonietta" were remarkably described in the novel by Pulitzer Prize winner John Hersey. It traces a journey over three centuries. Built in 1699 and named after a woman who was the object of the great master's infatuation, the violin makes its way to Paris where it meets Mozart in 1778 who is delighted and inspired by this delicate masterpiece and composes a sonata in its honor.

Or take the "King George" from 1710. George III, King of Great Britain and Hanover and Duke of Brunswick-Lüneburg, played the Stradivarius himself before it was given to a Scottish officer as a present. The officer then took it to the Battle of Waterloo where he was killed on July 18, 1815. The "King George" survived the tumult in a horse saddlebag and fell into German, then Japanese, and again German hands. Now this violin is played by the Zurich-based Amar Quartet, which performs exclusively with Stradivariuses.

"Oh, yes, it’s sheer madness with these violins," confirms Roger Hargrave, 59, a violin maker who lives in Lower Saxony and is one of the best in the trade. He clenches his powerful hands into fists and launches into a fortissimo sermon: "The violin is the queen. Take Hitchcock’s Psycho. The murder scene in the shower. The killer swings his arm back. Then he stabs. And this is accompanied by a couple of fine strokes on the strings. Out of this world. Suspenseful crime stories? Unthinkable without cellos. Eleanor Rigby by the Beatles or Ruby Tuesday by the Stones without strings? You can forget it. Life without strings would be unimaginable."

Then Hargrave pauses for a moment before he continues, almost piously. "The violins from Cremona stand above the others. The wood. The sound. And right at the top, far above the others, you have the Stradivariuses."

"Perfect Balance"

The best soloists play on them. "It took a Stradivarius to open my ears," says Anne-Sophie Mutter, 44. Most people are spellbound by them. The American Joshua Bell, 39, who is the proud owner of "Gibson" from 1713, says he fell in love with this violin after playing it for only a few seconds. He says it can "be light but also has depth, the perfect balance."

Dutch violinist Janine Jansen, 29, senses something about her "Barrere" Stradivarius that is "almost magical, that I haven’t found in a modern instrument." She plays exclusively with this small marvel because it "has such a flexible sound that it matches music from any era."

Leonidas Kavakos, 40, sings the praises of "the volume of the sound, the sweetness of the tone, the overtones and the timbre of these great, unrivaled violins." The artistic director of the Camerata Salzburg plays the "Earl of Falmouth" Strad from 1692. He recalls the "fantastic moment" decades ago when, as a young musician, he first held a Stradivarius in his hands.

Anne-Sophie Mutter alternately places two very different Stradivariuses under her chin. Her "Emiliani" from 1703, says Mutter, sounds "superb" but it lacks "a dimension: It has no edginess. I miss the unbridled power. I need this roughness for the eruptive moments of the Beethoven sonatas. You need it for Brahms, Sibelius and contemporary works." To meet these challenges, she plays her "Lord Dunn-Raven" Stradivarius from 1710.

Are Strads Really That Good?

Nonetheless, there are soloists who are chipping away at the Strad myth. Christian Tetzlaff has played two Stradivariuses but only performs with a violin from the Bonn workshop of Stefan-Peter Greiner. "It sounds better than the two Stradivariuses that were loaned to me," says Tetzlaff. He thinks there are "perhaps 15 Stradivariuses" that outshine the others, that have a "particularly brilliant, particularly sweet and particularly dark" sound. Many others have an aura and, above all, a price that, "compared to their sound, is far too high," he says.

It’s late at night and the smell of varnish and glue permeates the Vienna workshop of German violin maker Marcel Richters, 49. He has just performed a "pit stop," reconditioning the "Rawark" Stradivarius. It’s worth roughly €3 million. He placed grains of rice in the body of the violin and shook it back and forth, gently, like a prospector panning for gold. It loosens the dust.

A Flood of Fakes

When Strads fall ill, for example, to woodworm, restoration can cost up to €200,000. Richters knows the best precaution against the pests: "You have to play the Strads. Play and play and play. The bugs can't stand the vibrations."

He recalls how his hands shook the first time he opened a Stradivarius, long ago. He shines the light of his work lamp into the interior of the violin and points with a knowing smile at the dimly-lit interior of the instrument. Suddenly the fabled label appears, a piece of paper glued to the corpus as proof of authenticity: "Antonius Stradivarius Cremonensis Faciebat Anno 1724" stands there, next to the seal with the initials and a cross. That paper label has been glued there for 283 years.

Richters says he was thrilled when he once chanced upon telltale traces left by the master: "Compass marks that Stradivari used to position the two f-holes."

Beware of Fake Stradivariuses

Very few instruments that have a label with the name Stradivari are genuine. Time and again, heirs of music lovers have been bitterly disappointed when they thought they found a Stradivarius tucked away in an old attic.

For instance, there was a young man named Markus who examined his grandfather’s violin and discovered a label inside with the inscription "Antonius Stradivari" and "1707." He immediately sounded the alarm on the string instruments forum at but an expert soon set him straight: The master of all masters never wrote "Stradivari" inside his instruments but only "Stradivarius" -- because it was chic to use Latin in his day.

A certain Nadine was also disappointed. "Antonius Stradivarius Cremonensis Faciebat Anno 1776" was inscribed on the label of the violin that she discovered in the family’s possession. The name, at least, was correctly written, as well as the Latin "Faciebat" (made). But when it came to the date, the forger had failed to do his homework. In 1776, Stradivari had been dead for 39 years.

There are literally thousands of Stradivariuses with forged labels. In 1937, to mark the 200th anniversary of the death of the great master, a jury in Cremona examined some 2,000 supposedly genuine old violins, but found that only 40 were historical instruments.

And a fair share of fiddling occurs on the market for old violins. Many dealers resort to business practices that are far less distinguished than the sublime masterpieces from Cremona that they buy and sell; slander is a common tool of the trade. The method known as "killing" involves running down the competition or even labeling their Strad a forgery.

Some violin deals might even be a case for public prosecutors -- if they were ever to get wind of them. From time to time, shady couriers turn up at the offices of dealers with bags of cash, ready to do business. This makes it virtually impossible for tax authorities and law enforcement officials to trace the violins and the money.

Handful of Dealers Control Market

Worldwide, only three dealers pull the strings in the business: Bein & Fushi in Chicago, Beare’s in London, and Machold. A few smaller rivals yap at their heels and occasionally grab a piece of this business worth millions.

Next stop: Geoffrey Fushi, 63, one of the well-known old hands of the violin business. His partner, Robert Bein, an undisputed expert, died in February. The firm has its offices in the Fine Arts Building in Chicago, a prime location on Lake Michigan with a view of Grant Park.

Fushi is a short, stocky man of considerable proportions, with a penchant for wearing the finest suits and ties. He is one of the few people whose footwear alone suffices to demonstrate how independent they are of other people's opinions. Fushi wears red cowboy boots with his suit. The leather has been adorned with the initials of three great men: Stradivari, Guarneri del Gesù -- and his own, of course.

The man who has sold "about 80" Stradivariuses and some 30 Guarneris shows us his vault, which houses violins with a total value of approximately $50 million. Then he sketches the Stradivarius world: between 200 and 300 of the masterpieces are in Europe, about 250 are in the US, roughly 50 in Japan. Taiwan is becoming a "big buyer," says Fushi.

Strads, so it seems, are a lucrative investment. Since 1960, the Dow Jones Index and the price of gold have risen by a factor of 20. According to Fushi’s Stradivari Society, the price of a Stradivarius has soared by a factor of 200, and it rises, says Fushi, by 7 to 10 percent annually.

Shady Deals

Without knowing what he was getting into, two years ago the Scientologist found himself involved in a shady deal, the kind of transaction that is typical of the trade. What emerged was a picture-perfect example of the business practices of a worldwide sector that prides itself as purveyors of one of the finest cultural treasures -- yet tricks and hoodwinks people as if this were a shell game.

It was a classic "middleman deal", as the dealers call it -- a sale involving a number of players. The merchandise is passed from hand to hand. Everyone earns hundreds of thousands, and the price of the violins keeps rising.

Munich-based dealer Koeckert, who enjoys a highly respectable reputation, was nearly ruined by this deal. A violinist from the Chicago Symphony Orchestra wanted to sell his Guarneri del Gesù, which was valued at over $2 million. Bein & Fushi agreed to sell it on commission. Koeckert indicated that she was interested.

The violin was sent to Munich, in good faith. Koeckert saw an opportunity to play in the big league. She had serious potential buyers. The only problem was that these clients all eventually lost interest -- except for Machold. Then the usual game of smoke and mirrors began. Fushi didn’t know that the Guarneri had gone to Machold and he, in turn, had no idea that it had come from Bein & Fushi. Otherwise, Fushi and Machold could have made the deal directly and saved Koeckert’s commission. The Munich businesswoman proudly ran the show between Chicago and Vienna.

'No Worse than the Carpet Trade'

But then she ran into a major snag: Although Machold had sold the 300-year-old violin to a Frenchman, he could only pay a small portion of the $2.6 million in proceeds to Koeckert. He was strapped for cash -- a quandary that had international ramifications. Koeckert couldn’t pay Bein & Fushi, and even the owner was left empty-handed. The calamity took its natural course: Bein & Fushi sued Koeckert, who then hired lawyers to pressure Machold.

It was a regular cliffhanger. Months later, Machold paid up and, via Bein & Fushi, the millions finally reached the original owner in Chicago. "I couldn't have left Bein & Fushi waiting much longer," says Koeckert, "but I didn’t have the money. I would have been broke. Permanently." Insiders estimate the commission for the Munich dealer and Bein & Fushi at $100,000 a piece. "Since then I’ve decided not to do business anymore with Machold," says Fushi. "I won’t take a risk like that with Machold again," says Koeckert.

Highs and Lows

"It was horrible for me, too,” says Machold. He swallows hard. "I had a lot of sleepless nights, and I felt terribly ashamed, especially with regard to Ms. Koeckert. I know that she almost went bankrupt because of me." Machold says he had "a cashflow problem" -- valuable violins, a castle, but nothing in the bank.

"Up until 2004, I was a millionaire,” says Machold. Then the cashflow problem reared its ugly head. He bought a Stradivarius in Rome, which was passed on through middleman deals and other dealer tricks via Brussels, London and Los Angeles to a buyer in Salt Lake City in the US. He says that this was the first time in the business that he wasn’t paid what he was owed. As a result, a chunk of cash, $3.6 million, was missing from the war chest.

It wasn’t until this spring that Machold got back on his feet. The sale of four Stradivariuses and a number of less valuable instruments brought in over €13 million. Two big deals are in the offing, each with a volume of $40 million. Now he just has to weather a rather bizarre court case: An Austrian actress is suing Machold for $21.3 million for allegedly stealing four old violins that belonged to her.

Machold’s reputation has suffered from the middleman deal with Koeckert. But this is not the first time that he has received bad press. Time and again, he has been criticized by colleagues because, in their opinion, he places inflated values on instruments. In 1998, US multi-millionaire Herbert Axelrod, 80, must have been overjoyed with Machold’s appraisal when he decided to donate two violins, a viola and a cello made by Stradivarius, to the Smithsonian Institution, a renowned research and education institute which also runs world-class museums.

Inflated Valuations?

The gift also benefited the donor. Since the value of the instruments was tax deductible, getting the highest possible estimate was worth plenty of cash. Axelrod was Machold’s "most important customer" at the time -- the German sold $20 million worth of instruments to the American between 1997 and 2003, and made millions in the process.

Machold estimated that the extremely rare quartet with inlaid work was worth a total of $50 million. This infuriated his colleagues around the world, and another expert said that he thought the collection was worth only $12 million. Machold is setting "astronomical prices," said Robert Bein, co-owner of Bein & Fushi in Chicago. Simon Morris, co-owner of Beare’s in London, is still outraged. He says Machold’s appraisal was "extremely high" and that this creates mistrust and is detrimental to "the entire business."

"I took the biggest beating of my life," says Machold. But the quartet is "unique", he insists. He adds that a similar assessment was made by the famous Art Appraisal Service of the US Internal Revenue Service.

The practice of making appraisals, as witnessed by the Smithsonian case, represents one of the main potential trouble spots in the sector. "It’s all marred by the fact that there are no independent appraisers," says David Schoenbaum, 71. The respected US historian from Iowa City, who is writing a 600-page compendium on the social history of the violin, does not have a high opinion of the violin trade. "The dealers are actually continuously at war with each other. They forge alliances again and again, short-term cartels to generate money."

Master violin maker Hargrave is applying varnish to a cello in his workshop in Lower Saxony. Long ago, he decided to focus on the artistic side of the industry, and leave the trading to others. Despite his extensive knowledge of the practices of the business, he focuses exclusively on making and repairing string instruments.

The violin trade, says Hargrave, has over the years "become an absolute jungle," he says. "It stinks from top to bottom." The only consolation, he adds, is that it's "no dirtier than the trade in carpets or antiques."

Translated from the German by Paul Cohen

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