Charles Henry DOW
1896 - May 26 – Charles Dow's Dow Jones Industrial Average first appears in the Wall Street Journal.
"Charles Henry Dow, born in Sterling, Connecticut on November 5, 1851, was the son of a farmer who died when his son was six years old....
Dow did not have much education or training, but he managed to find work at the age of 21 with the Springfield Daily Republican, in Massachusetts... Dow then moved on to Rhode Island, joining The Providence Star, where he worked for two years as a night editor. He also reported for the Providence Evening Press. In 1877, Dow joined the staff of the prominent Providence Journal...
In 1880, Dow left Providence for New York City, realizing that the ideal location for business and financial reporting was there. The 29-year-old found work at the Kiernan Wall Street Financial News Bureau, which delivered by messenger hand written financial news to banks and brokerages. Dow invited Edward Davis Jones to work with him. Jones and Dow had met when they worked together at the Providence Evening Press. Jones, a Brown University dropout, could skillfully and quickly analyze a financial report. He, like Dow, was committed to reporting on Wall Street without bias. Other reporters could be bribed into reporting favorably on a company to drive up stock prices. Dow and Jones refused to manipulate the stock market.
The two young men believed that Wall Street needed another financial news bureau. In November 1882, they started their own agency, Dow, Jones & Company...
In the 1890s, Dow saw that the recession was ending. In 1893, many mergers began taking place, resulting in the formation of huge corporations. These corporations sought markets for their stock shares. The wildly speculative market meant investors needed information about stock activity. Dow took this opportunity to devise the Dow Jones industrial average in 1896. By tracking the closing stock prices of twelve companies, adding up their stock prices, and dividing by twelve, Dow came up with his average. The first such average appeared in The Wall Street Journal on May 26, 1896. The industrial index became a popular indicator of stock market activity. In 1897, the company created an average for railroad stocks.
Dow also developed the Dow theory, which stated that a relationship existed between stock market trends and other business activity. Dow felt that if the industrial average and the railroad average both moved in the same direction, it meant that a meaningful economic shift was occurring. He also concluded that if both indexes reached a new high, it signaled a bear market was underway. Dow did not believe that his ideas should be used as the only forecaster of market ups and downs. He thought they should be only one tool of many that investors used to make business decisions..."
May 26, 1896
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