The history of Cotton is the history of the industrial revolution which many do think about however in the book Cotton by Stephen Yafa, Penguin Books, 2005. there is a very good argument made. In the history of cotton, the civil war is fought which similar to all wars is never quite what on the surface it seems like for example the north and south issue. There was the majority theme of slavery overriding the war, however the economies of Boston and New York were on dependent on the cotton trade. The plant was grown in the south, the cotton bales were shipped to mills in the Boston area or the mills in England via New York ports, a disruption in the flow of cotton bales would cause unemployment. The war was fought, it went too long with many battles however in the broader picture the north with the greater concentration of railways and manufacturing plants to supply the army had an enormous advantage from the start. The south was essentially an agrarian society with limited infrastructure and fewer population to man the army. The civil war caused no cotton crop for a number of years and a recession in the economy. Those that stayed on the land were free to become farmers on relatively small farms which allows for a living but unless cotton prices are high does not generate surplus funds. All over the world, farmers borrow or take credit from the bank or the general store and when the crops come in during the fall, pay back the creditors. Some years are better than others where surpluses can actually be made.

The next phase of cotton was the invention of denim or blue jeans, now days most families have more than one pair of blue jeans in their homes at various price points. The acceptance of blue jeans from mining and ranching to hippies to urban designer jeans have many stories along the way. In terms of production of cotton, similar to all crops, there is a pest for each, and in the cotton plant, the pest is called the boll weevil. In an attempt to combat the pest the industry has tried many pesticides with various side affects for both the environment and humans. The other story with cotton is the migration of the production of the textile industry where it has moved from the Boston area to North and South Carolina to China to India and places in between. Cotton is an interesting story.

Linking to dividend paying stocks, cotton is a raw material or commodity which price goes up and down; the manufacturing plants tend to be very price conscious (or on the look out for the place where the price of  labour is kept to a minimum) the products come in a wide range of price points and that is where money is to be made. Invariably all governments want cotton producers to produce the crop and offer subsidies which keep the producers growing but that is not where your first choice of investment should be. Manufacturing needs to be value added or the ability to raise prices to continually to earn revenues to pay dividends. Retail is a tough business but some companies continue to do well including in the textile business. While the product of cotton and the history is very interesting, you must narrow your choices to find continuing profitable companies to invest in.

There are more questions than answers, till the next time – to raising questions