Charles Dow, the financial reporter that founded the Wall Street Journal and the Dow Jones Industrial Average was born today in 1851. Now WE know em

charles-dow

Charles Henry Dow was born November 6, 1851 in Sterling, Connecticut.

His father died when he was only six years old and did not grow up with much education or training.

In spite of his apparent lack of skills, the 21 year old Charles Dow found work as a Massachusetts reporter with the Springfield Daily Republican.

His boss and editor was Samuel Bowles, who taught his reporters how to write crisp, detailed articles.

In 1875, Charles moved to Rhode Island to join the Providence Star and the Providence Evening Press as a night editor.

Then early in 1877, Charles Dow joined the staff of the prominent Providence Journal, writing business stories for editor Charles Danielson.

Charles specialized in articles on regional history, some of which were later published in pamphlet form. He made history come alive in his writing by explaining the development of various industries and their future prospects.

Later that same year, Charles published a History of Steam Navigation between New York and Providence.

Three years later in 1880, he published Newport: The City by the Sea. It was an account of Newport, Rhode Island’s settlement, rise, decline, and rebirth as a summer vacation spot and the location of a naval academy, training station, and war college.

Charles also 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.

His editor was so impressed with Charles’ careful research that he assigned him to accompany a group of bankers and reporters to Leadville, Colorado, to report on silver mining. The bankers wanted the publicity in order to gain investors in the mines.

Thus in 1879, Charles Dow and various tycoons, geologists, lawmakers, and investors set out on a four-day train trip to reach Colorado. Charles 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 Charles, knowing that he would quote them accurately and keep a confidence.

Charles Dow wrote nine “Leadville Letters” based on his experiences there. He described the Rocky Mountains, the mining companies, and the boomtown’s gambling, 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, Charles 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.”

Wall Street

Then in 1880, Charles 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.

Wall Street, 1867

Wall Street, 1867

When John Kiernan asked Charles to find another reporter for the Bureau, he 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.

Dow Jones & Company

In November 1882, they started their own agency, Dow Jones & Company. Their new companies headquarters were located in the basement of a candy store.

Dow Jones, and their four employees could not handle all the work, so they brought in Charles Bergstresser, who became a partner. Bergstresser’s strength lay in his interviewing skills.

Then 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 issues, one steamship line, and Western Union.

Wall Street Journal

In 1889, the Dow Jones 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 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.

first-wall-street-journal

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 stocks, bonds, and some classes of commodities. 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.

Charles 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.

Edward Jones retired in 1899, but Charles Dow and Bergstresser continued working.

Charles still wrote editorials, 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.

Dow Jones Industrial Average

In 1893, Charles noticed that 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.

In 1896, Charles took advantage of this opportunity and devised the Dow Jones Industrial Average.

By tracking the closing stock prices of twelve companies, adding up their stock prices, and dividing by twelve, Charles 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.

Charles Dow also developed the Dow theory, which stated that a relationship existed between stock market trends and other business activity. This became the groundwork for modern technical analysis.

lundeen101308d

Then in 1902, Charles began to have health problems and Bergstresser wanted to retire.

The two sold their shares of the company to Clarence Barron, their Boston correspondent.

Charles Dow wrote his last editorial in April of 1902.

About eight months later, on December 4, 1902, he died in Brooklyn, New York, at the age of 51.

Now WE know em

 

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