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Charles Henry Dow (; November 6, 1851 – December 4, 1902) was an American journalist who co-founded
Dow Jones & Company Dow Jones & Company, Inc. is an American publishing firm owned by News Corp and led by CEO Almar Latour. The company publishes ''The Wall Street Journal'', '' Barron's'', ''MarketWatch'', ''Mansion Global'', ''Financial News'' and ''Private ...
with Edward Jones and Charles Bergstresser. Dow also co-founded ''
The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'', which has become one of the most respected financial publications in the world. He also invented the
Dow Jones Industrial Average The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity inde ...
as part of his research into market movements. He developed a series of principles for understanding and analyzing market behavior which later became known as Dow theory, the groundwork for
technical analysis In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the sam ...
.


Early life

Charles Henry Dow was born in Sterling, Connecticut, on November 6, 1851. When he was six years old his father, who was a farmer, died. The family lived in the hills of eastern
Connecticut Connecticut () is the southernmost state in the New England region of the Northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, New York (state), New York to the west, and Long Island Sound to the ...
, not far from
Rhode Island Rhode Island (, like ''road'') is a U.S. state, state in the New England region of the Northeastern United States. It is the List of U.S. states by area, smallest U.S. state by area and the List of states and territories of the United States ...
. 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 Massachusetts (Massachusett: ''Muhsachuweesut Massachusett_writing_systems.html" ;"title="nowiki/> məhswatʃəwiːsət.html" ;"title="Massachusett writing systems">məhswatʃəwiːsət">Massachusett writing systems">məhswatʃəwiːsət'' En ...
. He worked there from 1872 until 1875 as a city reporter for Samuel Bowles, who taught his reporters to write crisp, detailed articles. 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 ''The Providence Journal'', colloquially known as the ''ProJo'', is a daily newspaper serving the metropolitan area of Providence, Rhode Island, and is the largest newspaper in Rhode Island. The newspaper was first published in 1829. The newspape ...
''. George W. Danielson, the editor there, had not wanted to hire the 26-year-old, but Dow would not take no for an answer. Upon learning that Dow had worked for Bowles for three years, Danielson reconsidered and gave Dow a job writing business stories. Dow specialized in articles on regional history, some of which were later published in pamphlet form. Dow made history come alive in his writing by explaining the development of various industries and their future prospects. In 1877, he published a History of Steam Navigation between New York and
Providence Providence often refers to: * Providentia, the divine personification of foresight in ancient Roman religion * Divine providence, divinely ordained events and outcomes in Christianity * Providence, Rhode Island, the capital of Rhode Island in the ...
. Three years later, he published ''Newport: The City by the Sea''. It was an account of
Newport, Rhode Island Newport is an American seaside city on Aquidneck Island in Newport County, Rhode Island. It is located in Narragansett Bay, approximately southeast of Providence, south of Fall River, Massachusetts, south of Boston, and northeast of New Yor ...
's settlement, rise, decline, and rebirth as a summer vacation spot and the location of a naval academy, training station, and war college. Dow reported on Newport real estate investments, recording the money earned and lost during the city's history. He also wrote histories of public education and the prison system in the state. Danielson was so impressed with Dow's careful research that he assigned him to accompany a group of bankers and reporters to Leadville,
Colorado Colorado (, other variants) is a state in the Mountain West subregion of the Western United States. It encompasses most of the Southern Rocky Mountains, as well as the northeastern portion of the Colorado Plateau and the western edge of the ...
, to report on silver mining. The bankers wanted the publicity in order to gain investors in the mines. In 1879, Dow and various
tycoons A business magnate, also known as a tycoon, is a person who has achieved immense wealth through the ownership of multiple lines of enterprise. The term characteristically refers to a powerful entrepreneur or investor who controls, through pers ...
,
geologist A geologist is a scientist who studies the solid, liquid, and gaseous matter that constitutes Earth and other terrestrial planets, as well as the processes that shape them. Geologists usually study geology, earth science, or geophysics, althou ...
s, lawmakers, and investors set out on a four-day train trip to reach Colorado. Dow learned a great deal about the world of money on that journey as the men smoked cigars, played cards, and swapped stories. He interviewed many highly successful financiers and heard what sort of information the investors on Wall Street needed to make money. The businessmen seemed to like and trust Dow, knowing that he would quote them accurately and keep a confidence. Dow wrote nine "Leadville Letters" based on his experiences there. He described the
Rocky Mountains The Rocky Mountains, also known as the Rockies, are a major mountain range and the largest mountain system in North America. The Rocky Mountains stretch in straight-line distance from the northernmost part of western Canada, to New Mexico ...
, the mining companies, and the boomtown's
gambling Gambling (also known as betting or gaming) is the wagering of something of value ("the stakes") on a random event with the intent of winning something else of value, where instances of strategy are discounted. Gambling thus requires three ele ...
, saloons, and dance halls. He also wrote of raw capitalism and the information that drove investments, turning people into millionaires in a moment. He described the disappearance of the individual mine-owners and the financiers who underwrote shares in large mining consortiums. In his last letter, Dow warned, "Mining securities are not the thing for widows and orphans or country clergymen, or unworldly people of any kind to own. But for a businessman, who must take risks in order to make money; who will buy nothing without careful, thorough investigation; and who will not risk more than he is able to lose, there is no other investment in the market today as tempting as mining stock."


Working on Wall Street

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. When
John J. Kiernan John J. Kiernan (February 1, 1847 in Brooklyn, Kings County, New York – November 29, 1893) was an American politician from New York. Life Kiernan began work as a messenger boy with the Magnetic Telegraph Company, and later with Western Unio ...
asked Dow to find another reporter for the Bureau, Dow invited
Edward Davis Jones Edward Davis Jones (October 7, 1856 – February 16, 1920) was a U.S. statistician and journalist. Jones is best known as the "Jones" in the Dow Jones Industrial Average and as a co-founder of ''The Wall Street Journal.'' Early life Edward Dav ...
to work with him. Jones and Dow had met when they worked together at the Providence Evening Press. Jones, a
Brown University Brown University is a private research university in Providence, Rhode Island. Brown is the seventh-oldest institution of higher education in the United States, founded in 1764 as the College in the English Colony of Rhode Island and Providenc ...
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. The business' headquarters was located in the basement of a candy store. Charles Bergstresser was the chief financier of the fledgling company, but chose to be a silent partner. Bergstresser's strength lay in his interviewing skills. Jones once remarked that he could make a
wooden Indian The cigar store Indian or wooden Indian is an advertisement figure, in the likeness of a Native American, used to represent tobacconists. The figures are often three-dimensional wooden sculptures several feet tall – up to life-sized. They ar ...
talk and tell the truth. In November 1883, the company started putting out an afternoon two-page summary of the day's financial news called the Customers' Afternoon Letter. It soon achieved a circulation of over 1,000 subscribers and was considered an important news source for investors. It included the Dow Jones stock average, an index that included nine
railroad Rail transport (also known as train transport) is a means of transport that transfers passengers and goods on wheeled vehicles running on rails, which are incorporated in tracks. In contrast to road transport, where the vehicles run on a prep ...
issues, one steamship line, and
Western Union The Western Union Company is an American multinational financial services company, headquartered in Denver, Colorado. Founded in 1851 as the New York and Mississippi Valley Printing Telegraph Company in Rochester, New York, the company cha ...
. Simultaneously to his work in publishing, in 1885 Dow also served as a Partner in the NYSE brokerage house of Goodbody, Glynn and Dow where he remained until its dissolution six years later. His Partner, Robert Goodbody, was an Irish citizen and thus at that time ineligible to own a seat. By 1891, both men would part ways. Robert would start his own firm entitled Robert Goodbody & Co, which would become the fifth largest brokerage firm in the United States, before being bought by
Merrill Lynch Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated), previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investment ba ...
in 1971.


Birth of the ''Wall Street Journal''

In 1889, the company had 50 employees. The partners realized that the time was right to transform their two-page news summary into a real newspaper. The first issue of ''
The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'' appeared on July 8, 1889. It cost two cents per issue or five dollars for a one-year subscription. Dow was the editor and Jones managed the deskwork. The paper gave its readers a policy statement: "Its object is to give fully and fairly the daily news attending the fluctuations in prices of
stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a compan ...
s, bonds, and some classes of
commodities In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a co ...
. It will aim steadily at being a paper of news and not a paper of opinions." The paper's motto was "The truth in its proper use." Its editors promised to put out a paper that could not be controlled by advertisers. The paper had a private wire to Boston and telegraph connections to Washington, Philadelphia, and Chicago. It also had correspondents in several cities, including London. Dow often warned his reporters about exchanging slanted stories for stock tips or free stock. Crusading for honesty in financial reporting, Dow would publish the names of companies that hesitated to give information about profit and loss. Soon after that, the newspaper gained power and respect from the reading public. Vermont Royster, a later editor of the ''Wall Street Journal'', said Dow always believed business information was not the "private province of brokers and tycoons". In 1898, the ''Wall Street Journal'' put out its first morning edition. The paper now covered more than just financial news. It also covered war, which it reported without rhetoric, unlike many other papers. Dow also added an editorial column called "Review and Outlook" and "Answers to Inquirers," in which readers sent investment questions to be answered. Edward Jones retired in 1899, but Dow and Bergstresser continued working. Dow still wrote editorials, now focusing on the place that government held in American business. The ''Wall Street Journal'' set a precedent in reporting during the election of 1900 by endorsing a political candidate, the incumbent president
William McKinley William McKinley (January 29, 1843September 14, 1901) was the 25th president of the United States, serving from 1897 until his assassination in 1901. As a politician he led a realignment that made his Republican Party largely dominant in t ...
.


Dow Jones Averages

The stock price average was created on July 3, 1884, by Charles Dow as part of the "Customer's Afternoon Letter". At its inception, it consisted of 11 companies—9 railroads and 2 non-rail companies, Pacific Mail Steamship and Western Union Telegraph. On September 23, 1889, the “20 Active Stock” index was introduced. It included 18 railroad and 2 non-rail stocks.''Bryan Taylor, The Dow Jones Transport Average, August 23, 2020 ''
/ref> 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 A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
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 The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity inde ...
(DJIA) 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. Nowadays, the DJIA remains one of the oldest and popular stock indices in the world. On October 25, 1896, Dow replaced the 2 non-rail stocks in the “20 Active Stock” index with 2 rail stocks and the index became the Dow Jones Railroad Average (DJRA). The DJRA remained a rail average of 20 stocks until January 2, 1970, when the average was changed to the Dow Jones Transportation Average (DJTA)—9 railroad stocks were replaced by 9 airline and trucking stocks.


Theory of stock price movements

In 1899, Dow started an editorial column in his newspaper in order to educate the general reader until his death in 1902. The column dealt mainly with stock market activities and economic matters. It was in this column that he often put forward his ideas of stock price movements, which were the foundation of what was later called the Dow Theory. Unfortunately, his complete editorial writings are not available to the general reader. However, most of his writings can be found in the following books: # Samuel Armstrong Nelson
''The A B C of Stock Speculation'
, 1902 # George W. Bishop, ''Charles H. Dow and The Dow Theory'', 1960 # Laura Sether ed.
''Dow Theory Unplugged: Charles Dow's Original Editorials & Their Relevance Today''
2009 The basic idea of Dow is that the stock price is affected by various factors interacting at the same time, leading to distinct patterns of stock price movement. The first step is to establish from past data the relationship between these patterns and each important factor. Thereafter, by identifying the main factors which are presently working, we can predict the probable future movement of stock price. One of the most important contributions to stock market thought was his theory of the three movements in the market.


Personal

At age 30, having moved to New York City the prior year to accept a job offer, Dow married his wife Lucy, who had a daughter from a previous marriage. The couple had no children of their own. It was in NYC that Dow met Jones.


Death

In 1902, Dow began to have health problems and Bergstresser wanted to retire. The two sold their shares of the company to
Clarence Barron Clarence W. Barron (July 2, 1855, in Boston, Massachusetts – October 2, 1928) was one of the most influential figures in the history of Dow Jones & Company. As a career newsman described as a "short, rotund powerhouse", he died holding the pos ...
, their Boston correspondent. Dow wrote his last editorial in April 1902. About eight months later, on December 4, 1902, he died at his home at 161 Lefferts Place,
Brooklyn Brooklyn () is a borough of New York City, coextensive with Kings County, in the U.S. state of New York. Kings County is the most populous county in the State of New York, and the second-most densely populated county in the United States, be ...
,
New York New York most commonly refers to: * New York City, the most populous city in the United States, located in the state of New York * New York (state), a state in the northeastern United States New York may also refer to: Film and television * '' ...
, at the age of 51 after suffering a heart attack. Charles Dow is interred in North Burial Ground in
Providence, Rhode Island Providence is the capital and most populous city of the U.S. state of Rhode Island. One of the oldest cities in New England, it was founded in 1636 by Roger Williams, a Reformed Baptist theologian and religious exile from the Massachusetts ...
.


See also

*
Dow Jones Indexes S&P Dow Jones Indices LLC () is a joint venture between S&P Global, the CME Group, and News Corp that was announced in 2011 and later launched in 2012. It produces, maintains, licenses, and markets stock market indices as benchmarks and as the ...
* William Peter Hamilton


References


External links


Dow Jones HistoryDow Jones Indexes home pageDow Jones Averages historical, research and trivia page

{{DEFAULTSORT:Dow, Charles 1851 births 1902 deaths People from Sterling, Connecticut Massachusetts Republicans American male journalists Dow Jones & Company 19th-century American businesspeople Burials at North Burying Ground (Providence) The Providence Journal people People from Clinton Hill, Brooklyn