We have recently survived the holidays and with the holidays people tend to use and smell more flavors that normal. We allow ourselves to try different foods, add flavor to the food and part of the holidays is enjoying the food. After the holidays, we tend to settle back into what our normal routine of foods are. If you think about Christmas and in particular the wise men bringing gifts, what type of gifts did they bring? Some of what they brought were flavors from other parts of the world.
In the middle ages, before Europeans discovered America, the known world for the average person in Europe was the Mediterranean Sea countries, different languages were spoken and depending on where you were born, you thought your language was the best. Depending on where you were born and how much money you and your family had accumulated, most of what you ate was local. There were practical aspects to the eating, if something is local, it tends to be less expensive. But if you were a little wealthier, it was possible to buy spices to make the meal more flavorful. But where did the spices come from?
If you lived in Italy, you likely would be a Catholic because at that time all of Europe was Catholic, it was much later before Christians broke into many direction of faith to what exists today. You would know that the wise men brought spices to Jesus but where did the wise men come from? Your map would not show you and because they came from outside the known world. The merchants who bought and sold the spices told stories which you tended to believe. Once you believed the stories, the reality really did not make a difference.
The reality was spices such as cinnamon came from a tree south of India or the island of Ceylon or what we now know as the island of Sri Lanka. The cinnamon tree also grows south of China. The process is the bark is removed, the inner bark is dried and cinnamon is the result. In the middle ages, traders sent the cinnamon to India then to the middle east up the Red sea and Nile River to Cario and then by ship to Venice where it was distributed across Europe. The merchants wanted to ensure the price remained high so they would tell stories how the plant was grown in Africa to ensure their supply and price was protected and lead people astray.
It was not until the Portuguese sent ships around Africa to India and then to the South China Sea that trade routes would be changed. The Portuguese were bringing back large quantities of spices and making lots of money. Making lots of money led to the other European countries including Netherlands and England sending their ships to the spice lands to make money. The desire to make money changed the politics in the South China Sea countries. The journey from England to the spice islands and back took 2 years which lead to Columbus sailing to the Americas looking for a short cut. Spain found gold and silver from Mexico and Peru and for a time that was more important than the spices.
Linking to dividend paying stocks, all companies have some sort of myth attached to them, why the founders decided to do what they did? why them as opposed to the competition? All companies love monopolies because they can raise prices and sell their products, but the myth is the competition from somewhere. Companies tell politicians they must protect them with regulations and it can make a great deal of sense to do so. Companies can grow and prosper and the myths will grow with them. When you buy a company which is profitable and can pay dividends, it tends to be in business for a number of years and the founding myths have grown up. Often the myths have some sort of truth attached to them, but as an investor you are concerned about the reality of the profit to pay the dividend.
There are more questions than answers, till the next time – to raising questions.