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Flowers worth a Trillion

Flowers worth a Trillion

Apple hit the $1 Trillion mark on the stock market at only 42 years of age, but it is not the first company to do so. There are multiple companies that were once worth more than $1tn but the most important and valuable of them was The Dutch East India Company. It is also known as VOC, i.e. Vereenigde Oostindische Compagnie, and was worth $7.9tn when adjusted to the inflation today.

The story starts in The Netherlands when it had the highest GDP per capita in the world, and Amsterdam was the financial capital of the world. 1600 was the Dutch Golden Age, and concerned by the rise of British dominance in global trade, the government created The Dutch East India Company in 1602.

They soon started monopolizing in Asian trade with Europe and hired around 70,000 employes in 1600s, which was 0.01% of the world population at that time. They had their own shipyards and warehouses in different countries, and even went as far as waging wars all through a publicly traded company; it is important to mention that the main source of its high valuation were not the things formerly mentioned, but the flowers they traded more specifically – tulips.

Its wealth was highly due to the profits it made during the tulip mania of the 1634. It was an economic bubble which burst in the February of 1637. “Economic bubbles collapse when there is this collective realisation that something is not intrinsically worth what its value is perceived to be”

When tulips were first imported in the Netherlands, they were considered exotic goods, and their popularity rose to the point that having tulips in your garden became an important status symbol. Tulips were rare and bloomed for a week in 6-7 months. This combined with the status symbol they possessed made tulips highly valuable. The Dutch set up a market where one could trade tulips all year round and the flowers were further valued based on type and rarity.

Things went out of control and prices pushed higher by investors expecting to sell the tulips for a profit. Some traders earned an equivalent of $62,000 a month, and everyone wanted tulips. Others countries started exchanging tulips at their stock markets, and this stage lead the company to grow to such a wealth that it was worth the value of today’s top 15 most valuable companies’ wealth combined, but the crash began when some of the buyers at an auction in the February of 1637 didn’t show up, which signalled sellers that people weren’t going to pay any higher, thus lowering the prices a little.

The lowering of prices further discouraged the buyers, who expected and waited for prices to be lowered a little more, from buying, which lead to a very low demand, and a snowball effect. Within a week, the prices were around 1/100th of the original price and lead to a global crash and losses to people who made huge investments in tulips yet the company -made weaker- still stood powerful until the mid 1700s and after some time it was overtaken by The Dutch government. This was the end of the biggest and the most influential company in history which lasted for 2 centuries.


About The Author

Hassan Ali

Civil Engineer, Book Reader, Passionate Art Enthusiast, and Obsessed with Animals.