The Biggest Company in the World?
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There is a lot of talk these days about the ‘magnificent 7’ companies (Apple, Microsoft, Alphabet, Amazon, Nvidea and Tesla), and a general perception that these US companies are by far the biggest the world has ever seen. But are they?
Lots of British phrases involve the Dutch. And usually not in a friendly context: Dutch courage – needing alcohol to be able to fight; Going Dutch – penny pinching and splitting a bill; Double Dutch – unintelligible nonsense.
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And basically, that’s due to 17th century jealousy.
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Because if we sent you back to live in the 1600’s, the Low Countries would be the place to go. The UK was reeling from Henry VIII’s extravagances (marital and otherwise), while France, Spain and the Pope were locked in religious conflict.
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In the Netherlands though, trade was booming, politics was liberal(ish) and quality of life was twice as good as anywhere else, as measured by GDP per capita below.​
Political stability resulted in financial stability; Dutch merchants borrowed at interest rates of 4%, compared to around 10% in the rest of Europe (or even higher if your surname was Tudor.
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As so often happens, a period of prosperity led to financial innovation, including standardisation of futures contracts, currency and insurance exchanges, and a bank for international debt settlement.
 
The real piece of magic though, was the Vereenigde Oostindische Compagnie, founded in 1602. The VOC – or Dutch East India Company to us Brits – was the first modern corporation.
 
Letting merchants pool their capital and spread their risk was incredibly popular (plug for diversification!). You bought a share, and suddenly you were part of something much bigger.
 
How much bigger?
 
Well, the most common estimate for the VOC’s maximum value is around $8 trillion in today’s money. For comparison, Apple, today’s biggest global company, has a value of around $3 trillion currently.
It is worth remembering that history is littered with the corpses of huge, seemingly invincible (at one time) companies, so one should not assume that even the ‘magnificent seven’ will always be a safe bet. Even the biggest shares must always be subject to thorough analysis.
 
If you travel around Asia today, you can see the legacy of the VOC on buildings everywhere:
VOC crest, Galle, Sri Lanka
The first and biggest company ever, still leaving it’s mark 400 years later.
 
Will Apple’s logo stand the test of time in the same way?!
Article courtesy of 7IM investment management
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