Was the VOC company really worth trillions?

Nooooo

I'm sure everyone has seen comparisons of the VOC company, which operated in the 17th and 18th century, to modern day companies like Apple. This is the first image that pops up on Google when I search it:

This image is blatantly false, and I even saw Citrini put it in one of his articles. So I thought I would be a good citizen and debunk it here. It is not just a little bit wrong, but it is terribly completely and utterly wrong (the worst kind of wrong). We can first do a common sense check by having a look at GDP figures at the time (in today's money):

Source

Now double these figures (since above is in 1990 dollars), multiply by 80 million (Euro population in 1700) and you get a figure of somewhere in the several $100 billion of total annual European GDP during the heyday of the VOC company in today’s dollars. 

The VOC company was Dutch. The Netherlands had a population of about 2 million people in 1700. That means Dutch GDP was about $10 billion in today's dollars. Yet the VOC company would have been worth $8 trillion, 800x Dutch GDP? Something doesn’t add up. How did they get this $8 trillion figure?

So how much was the company really worth? Let’s have a look at the net profit and market capitalization at the time. According to Wikipedia the company earned about 2 million guilders during its heyday in the late 1600’s paid out 3 quarters of its net profit and traded at a 3.5% yield at its height in 1720 with a share price of 642 guilders up from about 400 guilders from the 1680’s. That means the stock was trading at about 23-38x earnings, or a market cap of ~46-75 million guilders. 

What is a guilder worth in today's money? I found 2 sources, this one thinks a 1600s guilder was worth about $60 in 2016 dollars. And this one estimates the value of a 1655 guilder at $100 in 2013 dollars. Or $15 in 2014 dollars from 1680. They got 2 different sources. So say between $15-100. 

So that means the VOC company was probably worth between ~$1-10 billion in today's money in its heyday (further adjust above figures by 1.3x as they were 10 years ago). Off by about 800-8000x from the figure that is floating around on Twitter and on top of Google search results. And much more in line with ~$10 billion of Dutch GDP at the time.

This blog has an interesting list of articles about the VOC company for anyone wanting to know more about the subject. The author actually comes up with a value of just under $1 billion in 2020 dollars in this post.

And that is all for today.

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