The First-Ever Dow Jones Industrial Average

Summary

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

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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.

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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.

Transcript

[Lindsey Graham]

There are more ways than ever to listen to History Daily ad free. Listen with Wondry plus in the Wondery app as a member of Noiser plus at noiser.com or in Apple Podcasts. Or you can get all of History Daily plus other fantastic history [e-mail] It's.

[Charles Dow]

May 3, 1893, on Wall Street.

[Narrator]

Inside his company's headquarters, reporter and co.

[Charles Dow]

Founder of the Wall Street Journal, Charles.

[Narrator]

Dow, opens the door to his office and takes a seat behind his desk. Charles sighs as he takes a look.

[Charles Dow]

At the enormous pile of financial reports littering his desk.

[Narrator]

He sifts through the papers, trying to.

[Charles Dow]

Identify the financial activities that his readers.

[Narrator]

Want to know about. But as Charles begins analyzing the reports, his office telephone starts to ring.

[Charles Dow]

Unwilling to distract himself from the work at hand, Charles ignores the call until the ringing stops. But then Charles hears the telephone in the newsroom outside his office begin to ring.

[Narrator]

Then another, and another. Soon it sounds like every phone in the building is ringing off its hook. Charles rises from his desk and walks to his door. As he opens it, he's struck by.

[Charles Dow]

The chaos of the newsroom. All around him, reporters are on the phone, the feverishly filling their notepads.

[Narrator]

Charles hears his office phone ring again, and this time he rushes to pick it up. Charles has met with the voice of.

[Charles Dow]

One of his Wall street contacts, giving him a staggering the stock market is crashing. For months there had been growing fear among Americans that an economic recession was on the horizon.

[Narrator]

On May 3, 1893, the panic finally struck Wall street when a massive sell.

[Charles Dow]

Off sent share prices tumbling. The next day, the National Cordage Company.

[Narrator]

A leading manufacturer and Wall street favorite, declares bankruptcy. Already rattled by the recent demise of one of the country's biggest railroad companies, the collapse of the National Cordage Company will send investors reeling and spark an.

[Charles Dow]

Economic depression that will develop into one of the most severe financial crises in the history of the United States.

[Narrator]

It came to be known as the panic of 1893. Four years prior to the economic crisis.

[Charles Dow]

Two reporters, Charles Dow and Edward Jones, formed the Wall Street Journal to arm investors with reliable financial information.

[Narrator]

In the midst of this crisis that caused widespread economic pain to Americans of.

[Charles Dow]

All walks of life, Charles Dow will.

[Narrator]

Seek to broaden his audience, eager to.

[Charles Dow]

Prove that business information should not be.

[Narrator]

The private province of brokers and tycoons. In pursuit to produce business reporting as.

[Charles Dow]

Digestible for both Wall street and Main Street, Charles Dow will establish a new way to measure stock market activity, revolutionizing.

[Narrator]

High finance with his publication of the Dow Jones industrial average on May 26, 1896.

[Lindsey Graham]

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[Narrator]

From Noiser and Airship. I'm Lindsey Graham and this is history. History is made every day on this podcast. Every day we tell the true stories of the people and events that shaped our world. Today is May 26, 1896, the first.

[Charles Dow]

Ever Dow Jones Industrial Average.

[Narrator]

It's 1872 at a farm in eastern Connecticut, 21 years before the Panic of 1893. Inside his house, 21 year old Charles Dow packs up the last of his.

[Charles Dow]

Belongings into a suitcase and prepares to leave his childhood home.

[Narrator]

Charles walks to his front door where he fights back tears as he hugs his mother goodbye.

[Charles Dow]

Though Charles is eager to start a new life in the big city, he worries about leaving his mother to manage their family's farm on her own.

[Narrator]

For years, Charles has been his mother's primary helper.

[Charles Dow]

During his childhood, Charles, father and two older brothers all passed away, forcing Charles.

[Narrator]

To step up and help his mother.

[Charles Dow]

Keep the family business alive. When he got older, he even dropped out of high school to help manage the farm. But Charles has long harbored dreams of a life different from the one he knows as a rural farmer in Connecticut. Charles wants to become a journalist. Determined to make a name for himself as a reporter, Charles knows he can't put his dreams on hold any longer. It's time for him to leave the farm and move to the city.

[Narrator]

So Charles gives his mom a final.

[Charles Dow]

Squeeze before heading off to Springfield, Massachusetts.

[Narrator]

And once he arrives there, Charles approaches Samuel Bowles, the owner and editor of the Springfield Republican. He implores Samuel to give him a job as an apprentice. And despite his lack of formal education or training, Bowles decides to take a.

[Charles Dow]

Chance on the eager young man. And for the next three years, Charles.

[Narrator]

Finds his feet as a journalist, working.

[Charles Dow]

As a city reporter for the newspaper. After his years long stint in Springfield, Charles moves to Providence, Rhode island, where.

[Narrator]

He lands a job as the night.

[Charles Dow]

Editor for the Providence Star before joining the more prominent Providence Journal. There, Charles is assigned to the business beat. And there, over the next two years, he proves himself a skillful reporter.

[Narrator]

Impressed by his detailed and careful research.

[Charles Dow]

Charles, editor assigns him to accompany a group of bankers and business tycoons who requested a reporter travel with them to.

[Narrator]

Leadville, Colorado to cover a boom of.

[Charles Dow]

That town's silver mines.

[Narrator]

So Charles packs his bag and boards.

[Charles Dow]

A westbound train filled with men of business.

[Narrator]

As he gets on the train, Charles spots a group of wealthy financiers, laughing.

[Charles Dow]

As they smoke cigars and play cards.

[Narrator]

Eager to take advantage of the men's.

[Charles Dow]

Good mood, Charles rises from his seat and heads toward them, hoping to glean more information about the world of high finance.

[Narrator]

Charles breaks out his pen and notepad as he approaches the group and then.

[Charles Dow]

Greets them with a round of handshakes and joins in their small talk.

[Narrator]

Soon, though, he steers the conversation toward.

[Charles Dow]

The subject of investing.

[Narrator]

But the financiers only want to talk.

[Charles Dow]

About why it's so hard to find reliable information about the world of business around them. Throughout the rest of the four day journey west, Charles learns more about the shortcomings of financial journalism from its wealthy passengers. Time and again, he hears the men.

[Narrator]

State that current business reporting doesn't give.

[Charles Dow]

Them the thorough and accurate information they need to make good investment decisions.

[Narrator]

A skilled interviewer, Charles quickly earns the.

[Charles Dow]

Trust of these and many other businessmen on the trip, allowing him to learn even more about the art of investing and the informational needs that business reporters are currently failing to fulfill. Happy to have willing and receptive sources.

[Narrator]

Charles enjoys the men's growing fondness of him.

[Charles Dow]

But in Leadville, he refuses to let that interfere with his reporting on Colorado's mining industry.

[Narrator]

Charles knows the bankers brought him on.

[Charles Dow]

This trip for a to give publicity to the current mining frenzy and make more people invest in the burgeoning industry. But Charles allows neither his growing familiarity with the bankers nor his interest in their favorable assessment of the mining boom to sway his reporting. In his final report on Leadville, Charles makes sure to qualify his endorsement of the mining industry, writing, mining securities are not the thing for widows or orphans.

[Narrator]

Or country clergymen or unworldly people of.

[Charles Dow]

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.

[Narrator]

And who will not risk more than.

[Charles Dow]

He is able to lose, there is no other investment in the market today. As tempting as mining stock, Charles reporting is not the resounding endorsement many of the bankers and tycoons were hoping for. Still, they are impressed by Charles objectivity. The trip to Leadville and the subsequent.

[Narrator]

Article helps establish Charles reputation as a man who can be relied upon to report the truth.

[Charles Dow]

And after Leadville, Charles doesn't let his.

[Narrator]

New connections go to waste. Eager to fill the gaps in reporting that he heard so many describe, Charles.

[Charles Dow]

Will leave Rhode island and move to.

[Narrator]

New York City, ready to bring his.

[Charles Dow]

Reporting skills to Wall.

[Unknown]

Street.

[Lindsey Graham]

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[Charles Dow]

It's 1880 on Wall street in New York City.

[Narrator]

Inside the headquarters of the Kiernan Wall Street Financial News Bureau, Charles Dow sits at his desk, writing his latest news.

[Charles Dow]

Update that will be dispatched to nearby banks and brokerages. But the sound of someone calling his name interrupts him.

[Narrator]

Charles looks up to see his boss.

[Charles Dow]

Hovering over his desk. After a brief greeting, Charles boss cuts to the chase.

[Narrator]

The bureau needs another reporter, and he.

[Charles Dow]

Wants Charles to find a candidate. Charles smiles because he knows the perfect man for the job. During his time at the Providence Journal, Charles met another talented young journalist named Edward Davis Jones. From the start, Charles had a deep respect and admiration for Edward, a Brown University dropout who was a pro at analyzing financial reports. Throughout their time working together, Edwards showed a strong commitment to unbiased reporting, a trait Charles knows is important for a.

[Narrator]

Business reporter, especially in New York.

[Charles Dow]

On Wall Street, Charles has found it common for journalists to accept bribes, to report favorably on certain companies, to influence stock prices.

[Narrator]

Confident that Edwards won't compromise his journalistic.

[Charles Dow]

Integrity, Charles invites him to join the Kiernan Wall Street Financial News Bureau. Soon, Edwards accepts Charles offer and joins.

[Narrator]

Him in the Big Apple. But the two reporters don't stay at.

[Charles Dow]

The bureau for long. Disillusioned with the corruption they see on Wall street, the two men begin planning a joint enterprise, their own news bureau dedicated to honest and objective financial reporting.

[Narrator]

In November of 1882, Charles Dow and.

[Charles Dow]

Edward Jones strike out on their own, forming an agency called Dow Jones Co. With a cramped headquarters located inside the.

[Narrator]

Basement of a candy store, a single.

[Charles Dow]

Typewriter and telephone, and only four employees, the two reporters start their own operation. A news bulletin that will one day.

[Narrator]

Become the newspaper of record for financial journalism and one of the largest publications in the nation. But for their first year, Charles and Edward focus only on producing short, handwritten.

[Charles Dow]

News bulletins that they deliver to traders up and down Wall street several times a day.

[Narrator]

But after a successful first year of.

[Charles Dow]

Business under their belts, the partners are ready to introduce a new product in November 1883, an aggregated afternoon summary of the day's news and financial activities.

[Narrator]

Coined the Customer's Afternoon Letter, the newsletter.

[Charles Dow]

Proves to be a hit with Wall.

[Narrator]

Street, and before long, it achieves a.

[Charles Dow]

Circulation of over 1000 subscribers, quickly earning a reputation as an important news source for investors.

[Narrator]

For the next six years, Charles and.

[Charles Dow]

Edward continue printing the newsletter and expanding their readership.

[Narrator]

Eventually, the pair convert their daily financial.

[Charles Dow]

Summary into a full fledged newspaper, publishing the first issue of the Wall Wall street journal on July 8, 1889. Eager to distinguish themselves from the various.

[Narrator]

News organizations they've witnessed colluding with companies.

[Charles Dow]

Or conflating rumor and fact, Charles and Edwards center the publication around a clear.

[Narrator]

Founding motto, the Truth in its proper use. From the beginning, the two men work toward an ethos of objectivity and integrity.

[Charles Dow]

They forbid their reporters from investing in any of the companies they cover.

[Narrator]

They publish the names of companies that.

[Charles Dow]

Don'T freely give information about their profits.

[Narrator]

And losses, and they even add a policy statement to the publication, committing themselves.

[Charles Dow]

To give the daily news full and.

[Narrator]

Fairly, while striving to be a paper.

[Charles Dow]

Of news, not a paper of opinions.

[Narrator]

It doesn't take long for the newspaper to make its mark on Wall Street.

[Charles Dow]

The publication is commended by its readers for its accuracy and breadth of coverage.

[Narrator]

And over the coming years, Charles and Edward will expand their operations further, employing.

[Charles Dow]

Dozens of reporters and opening news bureaus in other cities. Eventually, the paper will turn Charles Dow and Edward Jones into two of the.

[Narrator]

Most respected names on Wall Street. In the years after its first publication, the Wall Street Journal's reporting will only grow more valuable as the nation plunges into a deep economic depression that leaves Wall street in a state of panic.

[Lindsey Graham]

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[Narrator]

Early CT mobile.com It's May 25, 1896, at Dow Jones & Company's headquarters on Wall Street. Sitting at his desk, Charles Dow examines.

[Charles Dow]

A paper with an extensive report of.

[Narrator]

The day's stock market activity. As he scans the rows of numbers, Charles tries to brainstorm a way to simplify and condense the information, something that might prove helpful for the Wall Street Journal readers. Currently grappling with an economic crisis set off by the collapse of two of.

[Charles Dow]

The country's largest employers, the Philadelphia and.

[Narrator]

Reading Railroad and the National Cordage Company. The country fell into a financial panic.

[Charles Dow]

Three years ago and has been struggling to recover ever since. Charles has been toying with new ways.

[Narrator]

To make business information easily accessible and.

[Charles Dow]

Digestible for the public at large. And today, Charles thinks he flies finally has a winning idea. Looking at his summary of the day's.

[Narrator]

Financial activities, Charles picks out 12 of the nation's biggest companies.

[Charles Dow]

He notes the closing stock price of.

[Narrator]

Each and takes an average.

[Charles Dow]

Charles reasons that the resulting index will.

[Lindsey Graham]

Be able to quickly capture the overall.

[Charles Dow]

Health of the nation's biggest companies.

[Narrator]

And the following day, May 26, 1896, Charles runs his index in the Wall.

[Charles Dow]

Street Journal, publishing the first ever calculation of what will come to be known as the Dow Jones Industrial Average. On its first date published, the Dow, as it's informally called, stands at just $40.94. But in the decades following, the Dow will achieve prominence even outside the bubble of Wall street. By the 1920s, ordinary citizens will begin investing in stocks, adding new significance to Dow's index.

[Narrator]

During this time, 18 more companies will get added to the index, bringing the total to 30 stocks, the same number it has today. Though failing health will force Charles Dow.

[Charles Dow]

To resign from the company. Just seven years after he printed the first Dow Jones Industrial Average, his index will remain a stalwart component of the.

[Narrator]

Wall Street Journal for decades to come, becoming one of the most popular indicators of the nation's economic health.

[Charles Dow]

Persisting as the oldest US Market index in use today, the Dow will evolve.

[Narrator]

Into one of the business world's most iconic indicators, institutions influencing investors from Wall street to Main street, even 125 years after its inception on May 26, 1896. Next on History Daily May 27, 1942.

[Lindsey Graham]

Two Czechoslovakian operatives assassinate the senior SS.

[Narrator]

Officer Adolf Hitler, described as the man.

[Lindsey Graham]

With the Iron Horse.

[Narrator]

From Noiser and Airship this is History Daily hosted, edited and executive produced by me, Lindsey Graham Audio editing and sound design by Molly Bond Music by Lindsey Graham. This episode is written and researched by Alexandra Curry Buckner. Executive producers are Steven Walters, Airship and Pascal Hughes. For Noise.

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