I guess it's in a large measure a "supply and demand" issue. Silver bowls, carved wood, carpets etc. enjoy wide demand because of their universal decorative potential and wide appeal to a large clientele. Swords, on the other hand, have very narrow client base and, most importantly, have major emphasis on the blade. Art lovers would be happy to purchase intricately-designed scabbards and handles without blades in them. Thus, the decorative component is preserved, but there is no place for the swordsmith in this food chain.
Let's admit it: the utilitarian purpose of the sword is lost forever and the tradition of real swordmaking vanishes as we speak. Governtmental and NG organisations can pour (or trickle) money into this industry until they are blue in the face, but if nobody buys the stuff even the trickle will dry up.
By the same token, the art of making horse whips, washing boards and chastity belts is also unlikely to flourish.
As Bill Clinton used to say, "It's the economy, stupid!"
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