When you think of the industrial revolution, what industry do you think of? My answer would have been the invention of the steam engine and the railroad industry. Recently read a book called Empire of Cotton – A Global History written by Sven Beckert, published Alfred A. Knopf, NY, 2015. The book examines cotton through global transformation – the movement of capital, people, goods, and raw materials.

When you look at the cotton plant, it seems an unlikely candidate for one of the wonders of the world. Humble and unremarkable, it grows in many shapes and sizes. The dominated type of cotton is G. hirstum – also known as American upland. It rises to a height of 2 to 3 feet, and then divaricates into boughs, which bristle with hairs. The upper leaves are entire and heart-shaped; the petioles are velvety. The flowers near the extremities of the boughs are large, and somewhat dingy in color. The capsules are ovate, four-celled, nearly as large as an apple, and yield a very fine silken cotton wool, much esteemed in commerce.

The history of cotton is while it was found in various countries around the world, it was small scale and focused on households. While some sold the cotton outside the area, most used for the household or to pay taxes or tribute. There would be change in the 19th century. Cotton came to Europe via the spread of Islam. Cotton was grown in cities in Spain and exported to the rest of Europe. When Christians reconquered Spain, the expertise of the growers left and cotton was introduced to northern Italy.

Cotton manufacturing blossomed in northern Italy for 2 reasons first, these cities looked back on a long history of still vibrant wool production, which left them with skilled workers, capital-rich merchants and expertise in long-distance trade. Once entrepreneurs decided to engage in cotton manufacturing, they could draw on those resources. They advanced raw cotton to women in the area to have it spun. Then urban artisans, organized in guilds, weaved the yarn. They branded and standardized their goods and exported the goods across the Mediterranean.

Second, northern Italy had easy access to raw cotton – what is now known as Turkey and Syria at the time the Ottoman Empire. As improvements in shipping allowed for cheaper transportation of bulk commodities, Venice became Europe’s first cotton entrepot, the Liverpool of the 12th century.

To improve every industry needs new technology. For cotton, it was the introduction of the spinning wheel. Before that people used hand spindles. It was a slow process: a skilled spinner produced using the hand spindle took 11 hours to spin enough yarn for one blouse. The spinning wheel triple productivity, which is why in medieval Europe the spinning wheel was called the cotton wheel.

The downfall of the industry was the rise of a strong Ottoman Empire which controlled the raw material and did not send it to Italy and Germany. People wore linens and woolens.

For the next couple of hundred years, little changed in the world of cotton, but then Christopher Columbus discovered the Americas.

Linking to dividend paying stocks, we all think we are looking at something new and shiny but in reality, there have to be a number of elements which go together to change a industry and the profitability of it. Once that happens, more innovation and change happens and then profits can be made for a long time.

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