David, for anybody living in a low humidity climate, and in some air conditioned atmospheres, wood care is a matter of primary concern.
Not only will shellac crack and peel, but the wood itself will crack. I have sent perfect hilts to places like Ontario (air con), and Utah (dry) and have received reports of severe cracking.
The same thing will happen with ivory, and for that reason most ivory collectors I know keep a tumbler of water in with their ivories. I don't know if this does much good, it seems to be a general practice.
In Jawa we accept that certain woods need to be treated very carefully. Probably the most prestigious Javanese hilt wood is tayuman, but an old tradition says that hilts of this wood should never be worn during daylight hours, and that sunlight must never touch them. This is because this wood is very subject to cracking.
I really don't know how to prevent this cracking problem.
I do know that custom knife makers usually will not gaurantee handles from natural materials --- they can't afford to, because of this cracking problem.
I feel that regular use of a good furniture oil, something like the old-time Sheraton, might help prevent cracking, but I really don't know.
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