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Dow Jones History

It would be impossible to write the Dow Jones history without mentioning the founder of the institution, Charles Henry Dow. Together with two colleagues, Dow was the honored creator of the biggest, most important, and most influential public-private financial gauge of the stock market, the Dow Jones Industrial Average. For an enterprise of such magnitude, Charles Henry Dow came from a remarkably humble background. Born in 1851 to a farming family in rural Connecticut, Dow was not formally educated or very well connected.

Dow Jones History

Who Was Charles Henry Dow?

Following the death of his father when Dow was just a child, he was a young man of strong character and raging ambition. In 1872, he went afield to Massachusetts and began working at the Springfield Daily Republican newspaper.

Dow continued there for three years, honing his craft and learning to write interesting stories that captured the public’s imagination. Dow moved up, leaving the Springfield newspaper after landing a position on a Rhode Island paper, the Providence Star, where he was salaried as an editor. Eager to increase his finances, he sought out a second job as a writer at a competing Providence newspaper where he worked in his time off.

After only a year, Dow applied for a job at the mostly highly regarded paper in Providence, the Providence Journal. Despite his lack of formal education, Dow managed to impress the editor so much he was given a position writing business stories. That, as they say, was the start of a major institution. The Dow Jones history can be traced from this moment on.

The Dow Jones History

At only 26 years old, Dow found an affinity with the business world and threw himself into his writing. His stories on businesses, how they came about, and what they meant, enthralled local readers. Dow then found a publisher who began to print the books he turned out, all with a business angle, which were entertaining and informative to the general reader.

Dow next wrote a history of the real estate market in wealthy Newport, Rhode Island, and how that city had fallen and risen up as a playground of the famous and wealthy. This book garnered Dow a huge amount of attention and a nice size check as the book flew off bookstore shelves. Charles Henry Dow was indeed on his way.

Writing about Mining

Dow had impressed his editors so much that they sent him on a trip to Colorado to report on the silver rush after a large vein of silver was found in the region. Dow traveled with bankers and other businessmen who interested in finding out about investing in the project. He quickly became a friend and confidant of the wealthy, influential men who accompanied him on the trip to the Colorado silver mine. While there, Dow wrote a series of articles that sealed his own reputation as a writer, storyteller, and most important, a teacher of how the world of finance worked.

Dow’s articles focused on the silver prospectors and how their raw talent could make one of them a wealthy man overnight. The freewheeling era of the silver barons, and the more commonplace capitalism of that frontier country, fascinated Dow. That intense interest came through in his writing.

Dow’s missives back to his home newspaper in the east were so popular that some people sold everything they had, packed up, and traveled west to stake a claim it the hopes of striking it big with their own silver lode.

To Wall Street

Several years later, Dow moved to New York City and got a job writing for a financial news service, whose primary customers were brokers and bankers. Another reporter was needed for the financial service, so Dow recommended a colleague of his from his Providence reporting days, Edward Davis Jones.

Both Dow and Jones quickly received a reputation for fair and honest reporting, something that couldn’t be said about their competition. They were so good at their work that in 1882 they started their own financial services bureau, called Dow, Jones & Company, which was the start of the Dow Jones history. A year later, they put out a newsletter that explained and summed up financial news of the day.

This was the precursor to the Wall Street Journal, which appeared a few years later to great success.

What the Dow Jones Does

The Dow Jones has since become a major financial benchmark for evaluating the performance of the stock market. So, what is the Dow Jones? It is essentially an average value of the shares of stock in 30 companies.

The companies on the Dow Jones are selected based on their sector (the industrial sector) and the size of the companies. Typically, the company must be a “bluechip” company to be found on the Dow Jones. In other words, it must be established and it must be substantial and solid, economically speaking.

As the price of these 30 major companies changes and fluctuates, the average value of the shares change and the value of the Dow Jones industrial average changes with it. The Dow Jones industrial average is used as an indicator of the performance of the stock market as a whole, giving people a shorthand way to see how the market is doing and which way trends are going without having to watch a host of individual stocks.