Karl Höfner GmbH & Co. KG
is a German manufacturer of musical instruments, with one division that manufactures guitars and basses, and another that manufactures string instruments.
The company was made famous by The Beatles' bassist Paul McCartney's use of their left-handed 1962 500/1 model. Today it is known as the "Beatle Bass" or "Cavern Bass" (after the Liverpool club where the Beatles played in their early days), as well as John Squire's iconic use of a custom Jackson Pollock paintjob semi-acoustic guitar while in The Stone Roses.
The Höfner company was founded by luthier Karl Höfner in the city of Schönbach in Germany in 1887, and soon became the largest manufacturer of string instruments in the country. His sons Josef and Walter joined the company around 1920, and began spreading the brand's reputation worldwide. The company suffered some upheavals during and after World War II, but survived and continued to thrive. The company built new factories in Bubenreuth in 1950.
In 1994, Höfner became part of the Boosey & Hawkes Group, and was able to expand and upgrade its facilities with the influx of cash. In 1997, the company moved from Bubenreuth to Hagenau.
After a near-bankruptcy in 2003 Boosey & Hawkes sold its musical instrument division (including the Höfner and Buffet Crampon companies) to The Music Group, a company formed by rescue buyout specialists Rutland Fund Management, for £33.2 million.
Höfner remained a part of this conglomerate until January 2005, when The Music Group sold the company to Klaus Schöller, who has been the General Manager of Höfner for many years.
In mid-2005, The Music Group (having lost many of its component manufacturers) stopped distributing Höfner in the USA, and the distribution was picked up by Chicago firm Classic Musical Instruments (CMI).
The 500/1, an electrically amplified semi-acoustic bass, was invented by Walter Höfner in 1955; the 500/1's were very light and easy to play, but had a very rich and warm tone. The body was fashioned in the shape of a double bass (although the 500/1 is generally known as "the violin bass."). The 500/1 is superficially similar to the Gibson EB-1, a solid bodied bass with painted F-holes first manufactured in 1953.
In 1961, the Beatles' original bass player, Stuart Sutcliffe who had used a Höfner 500/5 bass (similar to the later 'President'), left the band to resume his art studies. The Beatles were without a bass player, and none of them wanted to start playing one, but the job fell on Paul McCartney (who had been playing rhythm guitar and piano) over George Harrison (their settled lead guitarist) and John Lennon (who had just bought a new Rickenbacker 325 guitar and refused to switch). In the British vernacular of the time, McCartney referred to it as being "lumbered" ("stuck") with the job. Stuart Sutcliffe initially lent his Höfner 500/5 bass to Paul McCartney. McCartney had seen another guitarist in Hamburg using a violin shaped bass, and when he saw one in the window of a Hamburg music store, he investigated it. Because of the instrument's symmetricality, McCartney could play left-handed without the bass "looking daft" as he put it.  It was also inexpensive (about £30, or $125 at that time), lightweight, and easy to play melodic bass lines on, yet had a deep, warm tone. McCartney bought the bass outright, and used it through the early Beatles years. In 1963, McCartney received a second 500/1, which can be told apart from his first by the different pick-up positions, directly from Selmer, Höfner's UK distributor. McCartney relegated his original 500/1 to backup duties. His original 500/1 did see one more "public" performance in the video for "Revolution," the bass having been repaired after years of touring and abuse.
Though McCartney retired his second Höfner in favour of a Rickenbacker Model 4001S around 1965 (employing it one last time minus pickguard in 1969, for the famous Apple headquarters rooftop session and the Get Back
sessions), the little bass remained famous. 
It is ironic that McCartney bought his because it was the cheapest decent-sounding, symmetrically-shaped bass he could find, whereas today, they usually sell for between $1600 and $2000 (it must be noted, however, that the instrument's modern incarnation is much improved over the early 1960's versions).
Höfner reissued the 500/1 model, briefly experimenting with other designs, every year or so. Today, they are very successful with their '62 500/1 reissue.
In 1989, Elvis Costello convinced McCartney to unearth the 1963 Höfner for their collaboration "My Brave Face". Since that time, McCartney has leveraged the iconic image of the instrument, using it in concert as well as videos, promotional photos, and album covers. "It's like Chaplin's cane," McCartney has said. "People just expect to see it." Somewhere along the line, McCartney also removed the pickguards from his Höfners and has used the instruments without pickguards since that time. He also had the 1963 500/1 reconditioned by Mandolin Brothers, a guitar shop in Staten Island, New York, which brought the bass back into reliable tune. Until the mid-1990s, McCartney's second 500/1 had a 1966 Beatles set list taped to its body (it has since been removed with subsequent restoration). 
The recognisability of the 500/1 bass, along with the high price of the official reissues, has led to other brands - notably Greco, Epiphone, Tokai, Jay Turser, Duesenberg, Eko and Rogue to market their own versions of the "Beatle Bass".  Just as Fender reacted by creating the Squier line of guitars when they realized that their legendary designs were being copied, Höfner also created a cheaper Chinese-made 500/1 called the Icon B Bass.  This version has many corners cut from the original one including the use of Spruce and Maple laminates instead of premium German Spruce and Maple, cheaper China-made hardware and the use of black Jazz Bass-styled knobs instead of the distinctive "teacup" knobs. Also it could not be slung in the way the original bass could around the body below the fingerboard.
In an interview with a German guitar magazine a spokesman of Höfner said, that there sadly has never been any direct contact between the company and McCartney, although in 2006 Höfner presented him with Number one of a limited edition 'Cavern' bass.
- Höfner GmbH page at The Music Group (web archive)
- Paul McCartney World Tour magazine, EMAP Metro, MPL Communications 1989