History Daily: The First-Ever Dow Jones Industrial Average

Podcast Title: History Daily
Host: Lindsay Graham
Episode: The First-Ever Dow Jones Industrial Average
Release Date: May 26, 2025

Introduction

In this episode of History Daily, host Lindsay Graham delves into the origins of one of the most influential financial indicators in history: the Dow Jones Industrial Average (DJIA). By exploring the life of Charles Dow and the economic turmoil of the late 19th century, Graham illustrates how the DJIA was conceived as a response to the pressing need for reliable financial information during a national crisis.

The Birth of a Visionary: Charles Dow’s Early Years

The story begins in 1872 in a farm in eastern Connecticut, where a young 21-year-old Charles Dow prepares to leave his rural upbringing in pursuit of his dream of becoming a journalist. Having faced personal tragedies, including the loss of his father and two older brothers, Dow had long shouldered the responsibility of managing his family's farm alongside his mother. Yet, his passion for journalism propelled him towards a different path.

"It's time for me to leave the farm and move to the city," Dow reflects emotionally as he bids farewell to his mother at [05:15].

Dow's determination leads him to Springfield, Massachusetts, where he secures an apprenticeship with Samuel Bowles at the Springfield Republican. Despite lacking formal education, Dow's eagerness and commitment help him thrive as a city reporter. His career later takes him to Providence, Rhode Island, where he becomes the night editor for the Providence Star, and subsequently joins the Providence Journal focusing on the business beat.

Navigating the Financial Landscape

During his tenure at the Providence Journal, Dow's meticulous reporting earns him respect. An assignment to cover the silver mines in Leadville, Colorado, exposes him to the deficiencies in contemporary financial journalism. As Dow interacts with affluent financiers on the train journey to Leadville, he uncovers a pervasive dissatisfaction with the availability of reliable business information.

"Current business reporting doesn't give them the thorough and accurate information they need to make good investment decisions," Dow notes at [07:29].

This experience underscores the necessity for objective and accessible financial reporting, laying the groundwork for Dow's future endeavors.

Founding Dow Jones & Company

By 1880, Dow is deeply entrenched in Wall Street’s financial reporting while working at the Kiernan Wall Street Financial News Bureau. Frustrated by the rampant corruption and biased reporting prevalent in New York, Dow teams up with Edward Davis Jones, a fellow journalist known for his integrity.

"We need to create an agency dedicated to honest and objective financial reporting," Dow resolves as narrated at [12:23].

In November 1882, Dow and Jones establish Dow Jones & Company in a modest basement office. Their initial focus is on delivering handwritten news bulletins to traders, a venture that quickly gains traction. By November 1883, they introduce the Customer’s Afternoon Letter, a comprehensive afternoon summary of the day's financial activities, which garners over 1,000 subscribers and solidifies their reputation for reliable reporting.

Creating the Dow Jones Industrial Average

Amidst the Panic of 1893, an economic depression triggered by the collapse of major companies like the Philadelphia and Reading Railroad and the National Cordage Company, Dow seeks innovative solutions to simplify the overwhelming financial data.

At Dow’s desk on May 25, 1896, he contemplates a way to distill the complex stock market information into a single, comprehensible metric. His breakthrough comes with the idea to average the closing stock prices of 12 of the nation’s largest companies.

"The resulting index will be able to quickly capture the overall health of the nation's biggest companies," Dow explains at [17:25].

On May 26, 1896, the first Dow Jones Industrial Average is published, standing at $40.94. This index not only provides a snapshot of market trends but also serves as a vital tool for investors navigating the tumultuous economic landscape.

Impact and Legacy

The DJIA rapidly gains prominence, extending its influence beyond Wall Street. By the 1920s, as ordinary citizens begin investing in stocks, the Dow becomes an essential indicator of economic health for the general public. Over the years, the index expands to include 30 major companies, maintaining its status as a reliable barometer of market performance.

Despite Charles Dow’s declining health, leading to his resignation from Dow Jones & Company just seven years after the DJIA’s inception, his legacy endures. The Dow Jones Industrial Average remains the oldest U.S. market index in use today, continually adapting while upholding Dow’s original vision of objective and comprehensive financial reporting.

"Persisting as the oldest US Market index in use today, the Dow will evolve into one of the business world's most iconic indicators," the narrator concludes at [18:27].

Conclusion

This episode of History Daily vividly portrays how Charles Dow's dedication to unbiased reporting and innovative thinking led to the creation of the Dow Jones Industrial Average. Amid economic uncertainty and financial chaos, Dow’s initiative provided a much-needed tool for both investors and the broader public, fundamentally shaping the landscape of financial journalism and market analysis.

Notable Quotes:

• "It's time for me to leave the farm and move to the city,"
  — Charles Dow at [05:15]

• "Current business reporting doesn't give them the thorough and accurate information they need to make good investment decisions,"
  — Charles Dow at [07:29]

• "We need to create an agency dedicated to honest and objective financial reporting,"
  — Charles Dow at [12:23]

• "The resulting index will be able to quickly capture the overall health of the nation's biggest companies,"
  — Charles Dow at [17:25]

• "Persisting as the oldest US Market index in use today, the Dow will evolve into one of the business world's most iconic indicators,"
  — Narrator at [18:27]

By presenting a comprehensive narrative interwoven with direct quotes and precise timestamps, this summary offers a thorough understanding of the episode’s exploration of the Dow Jones Industrial Average’s origins and enduring significance.