Was the East India Dutch Company Ever Worth $7 Trillion in Today’s Dollars?

Spoiler alert: No.

After Apple made history by becoming the first publicly traded company to be worth more than $1 Trillions in the US stock market, several news sources reported that, adjusting for inflation, the East India Dutch company was worth, at one point in the late 1600s or early 1700s, more than $7 Trillions. Here, for example, is a Time.com article putting its adjusted value at $8 Trillion.

There were only about 600 million people in the world at that point (source) mostly living off subsistence agriculture, and that would be more than $10,000 of today’s dollar per person! Maddison estimates the the world’s GDP at that time was about $90 Billion in 1990 dollars (source) or about $180 Billion in 2018 dollars (source for 1990-2018 adjustment) and the GDP of the Netherland at that time was about $4 Billion in 1990 dollars (source) or about $8 Billion in 2018 dollars. Could a company really be worth a thousand time the GDP of its country and 40 times the world’s GDP? Maddison’s estimates are controversial, but even Bairoch’s higher estimates put the combined GDP of North America, Europe, Russia and Japan at about $300 Billion in 2018 dollars (source).

So how much would the 1700s value of the Dutch East Indian Company be worth in 2018 dollars, and where did the crazy $7 Trillion come from? The answer to the first question is about $1 Billion, and the answer to the second question is not clear, but most likely someone named Alex Planes came up with that number with some creative methodology, and then the factoid made it to more and more prestigious publications, each one citing the previous occurrence, and this includes publications with high standards for fact-checking like the Atlantic.

Trying to answer the second question shows how completely broken fact-checking is whenever numbers are involved.

So let’s start with the second question: where does the $7-8 Trillion figure comes from?

The Time.com article cites a Motley Fool article from 2012, which says that the company was worth, at its peak, 78 million guilders, or  $7.4 Trillion.

Business Insider also mentions the factoid in 2017, attributing it to Visual Capitalist, which attributes it (in the comments!) to Motley Fool. The Independent mentions it without attribution. Several other publications have credited either Business Insider or Visual Capitalist, thus ultimately referring back to Motley Fool. For example, earlier this year, Wikipedia had the claim, referring it to Digg, which referred it to Visual Capitalist.

The Atlantic mentions it in 2015, and it references a 2010  Bloomberg article that is behind a paywall but mirrored here, which says that a recently discovered share of the company could be worth more than $700,000 at auction, because it is only the fourth such to have been preserved.

The Atlantic link is bizarre but Motley Fool also cites Bloomberg (not a specific article, just “Bloomberg”) and this is the only article in Bloomberg appeared before 2012 that I could find mentioning the East India Dutch company. Furthermore, I could not find any reference to the factoid before the Motley Fool article. So my guess is that it originated in the Motley Fool article, and that it is related to the Bloomberg article. Perhaps the company had 10 million stocks, and Alex Planes, the author of the Motley Fool article, simply multiplied what the certificate would sell for today by the number of stocks? This is also the theory favored in this reddit thread.

What about fact-checking? The Atlantic and the Independent are the kind of publications that would freak out if someone’s last name is misspelled and issue a correction, and if someone’s name was spelled Rxsfgw in the original draft, the copy editor would probably get back to the author and tell them that that’s probably not a real name.

I would argue that the notion that a company could be worth $7 Trillion of today’s dollar in the 1600s or 1700s should look more unlikely than someone’s name being Rxsfgw, and inspire the googling that shows the number to be off by three or four orders of magnitude.

So, how much was the company worth? The Motley Fool article (and all follows-up) say that at the top it was worth 78 million guilder. I could not find any reference to this claim before August 2012, so this could have also been made up in the Motley Fool article, but, taking it for good, this currency converter puts one guilder in 1700 as being about $17 in 2018 dollars (it returns a value in 2015 dollars, which I further adjusted) so that would $1,3 Billion (the reddit thread linked above reaches similar conclusions using other sources, and the value a guilder is estimated as being between $9 and $20).


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