Charles Dow
Encyclopedia
Charles Henry Dow was an American journalist who co-founded Dow Jones & Company
with Edward Jones
and Charles Bergstresser
.
Dow also founded The Wall Street Journal
, which has become one of the most respected financial publications in the world. He also invented the Dow Jones Industrial Average
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
.
on November 5, 1851. When he was six years old, his father, who was a farmer, died. The family lived in the hills of eastern Connecticut
, not far from Rhode Island
. 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
. 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. Charles 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
. Three years later, 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. 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
, to report on silver mining. The bankers wanted the publicity in order to gain investors in the mines. In 1879, Dow and various tycoons, geologists, 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 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, 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."
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. 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. Jones once remarked that he could make a wooden Indian
talk.
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.
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 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.
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 that Dow always believed that 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 of the 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 started a precedent in reporting during the election of 1900 by endorsing a political candidate, the incumbent president William McKinley
.
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. The industrial index became a popular indicator of stock market
activity. In 1897, the company created an average for railroad stocks.
Dow also developed the Dow theory
, which stated that a relationship existed between stock market trends and other business activity. Dow felt that if the industrial average and the railroad average both moved in the same direction, it meant that a meaningful economic shift was occurring. He also concluded that if both indexes reached a new high, it signaled a bull market was underway. Dow did not believe that his ideas should be used as the only forecaster of market ups and downs. He thought they should be only one tool of many that investors used to make business decisions.
, New York, at the age of 51.
Dow Jones & Company
Dow Jones & Company is an American publishing and financial information firm.The company was founded in 1882 by three reporters: Charles Dow, Edward Jones, and Charles Bergstresser. Like The New York Times and the Washington Post, the company was in recent years publicly traded but privately...
with Edward Jones
Edward Jones (statistician)
Edward Davis Jones was a U.S. statistician, mostly known for being the "Jones" in the Dow Jones Industrial Average.A graduate of Worcester Academy in Worcester, MA, he co-founded the Dow Jones & Company in 1882 along with Charles Dow and Charles Bergstresser.He was not associated with Edward Jones...
and Charles Bergstresser
Charles Bergstresser
Charles Milford Bergstresser was an American journalist and, with Charles Dow and Edward Jones, one of the founders of Dow Jones & Company at 15 Wall Street in 1882....
.
Dow also founded The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
, which has become one of the most respected financial publications in the world. He also invented the Dow Jones Industrial Average
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
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
Dow Theory
The Dow theory on stock price movement is a form of technical analysis that includes some aspects of sector rotation. The theory was derived from 255 Wall Street Journal editorials written by Charles H. Dow , journalist, founder and first editor of the Wall Street Journal and co-founder of Dow...
, the groundwork for technical analysis
Technical analysis
In finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis incorporate technical analysis, which being an aspect of active management stands...
.
Early life
Charles Henry Dow, born in Sterling, ConnecticutSterling, Connecticut
Sterling is a town in Windham County, Connecticut, United States. The population was 3,099 at the 2000 census.-Local History:The town was incorporated in 1794 following approval of the CT Assembly, and was carved from northern part of the Town of Voluntown...
on November 5, 1851. When he was six years old, his father, who was a farmer, died. The family lived in the hills of eastern Connecticut
Connecticut
Connecticut is a state in the New England region of the northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, and the state of New York to the west and the south .Connecticut is named for the Connecticut River, the major U.S. river that approximately...
, not far from Rhode Island
Rhode Island
The state of Rhode Island and Providence Plantations, more commonly referred to as Rhode Island , is a state in the New England region of the United States. It is the smallest U.S. state by area...
. 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
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
. He worked there from 1872 until 1875 as a city reporter for Samuel Bowles
Samuel Bowles
Samuel Bowles may refer to:*Samuel Bowles *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. Charles 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, Rhode Island
Providence is the capital and most populous city of Rhode Island and was one of the first cities established in the United States. Located in Providence County, it is the third largest city in the New England region...
. Three years later, he published Newport: The City by the Sea. It was an account of Newport, Rhode Island
Newport, Rhode Island
Newport is a city on Aquidneck Island in Newport County, Rhode Island, United States, about south of Providence. Known as a New England summer resort and for the famous Newport Mansions, it is the home of Salve Regina University and Naval Station Newport which houses the United States Naval War...
'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
Colorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
, to report on silver mining. The bankers wanted the publicity in order to gain investors in the mines. In 1879, Dow and various tycoons, geologists, 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
Rocky Mountains
The Rocky Mountains are a major mountain range in western North America. The Rocky Mountains stretch more than from the northernmost part of British Columbia, in western Canada, to New Mexico, in the southwestern United States...
, the mining companies, and the boomtown's gambling
Gambling
Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods...
, saloons
Bar (establishment)
A bar is a business establishment that serves alcoholic drinks — beer, wine, liquor, and cocktails — for consumption on the premises.Bars provide stools or chairs that are placed at tables or counters for their patrons. Some bars have entertainment on a stage, such as a live band, comedians, go-go...
, 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 Kiernan asked Dow to find another reporter for the Bureau, Dow 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 UniversityBrown University
Brown University is a private, Ivy League university located in Providence, Rhode Island, United States. Founded in 1764 prior to American independence from the British Empire as the College in the English Colony of Rhode Island and Providence Plantations early in the reign of King George III ,...
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. 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. Jones once remarked that he could make a wooden Indian
Native Americans in the United States
Native Americans in the United States are the indigenous peoples in North America within the boundaries of the present-day continental United States, parts of Alaska, and the island state of Hawaii. They are composed of numerous, distinct tribes, states, and ethnic groups, many of which survive as...
talk.
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.
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 JournalThe Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the 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. 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
Stocks
Stocks are devices used in the medieval and colonial American times as a form of physical punishment involving public humiliation. The stocks partially immobilized its victims and they were often exposed in a public place such as the site of a market to the scorn of those who passed by...
, bonds
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
, 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.
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 that Dow always believed that 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 of the 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 started a precedent in reporting during the election of 1900 by endorsing a political candidate, the incumbent president William McKinley
William McKinley
William McKinley, Jr. was the 25th President of the United States . He is best known for winning fiercely fought elections, while supporting the gold standard and high tariffs; he succeeded in forging a Republican coalition that for the most part dominated national politics until the 1930s...
.
Dow Jones Industrial Average
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 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 averageDow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
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. The industrial index became a popular indicator of stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
activity. In 1897, the company created an average for railroad stocks.
Dow also developed the Dow theory
Dow Theory
The Dow theory on stock price movement is a form of technical analysis that includes some aspects of sector rotation. The theory was derived from 255 Wall Street Journal editorials written by Charles H. Dow , journalist, founder and first editor of the Wall Street Journal and co-founder of Dow...
, which stated that a relationship existed between stock market trends and other business activity. Dow felt that if the industrial average and the railroad average both moved in the same direction, it meant that a meaningful economic shift was occurring. He also concluded that if both indexes reached a new high, it signaled a bull market was underway. Dow did not believe that his ideas should be used as the only forecaster of market ups and downs. He thought they should be only one tool of many that investors used to make business decisions.
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, their Boston correspondent. Dow wrote his last editorial in April 1902. About eight months later, on December 4, 1902, he died in BrooklynBrooklyn
Brooklyn is the most populous of New York City's five boroughs, with nearly 2.6 million residents, and the second-largest in area. Since 1896, Brooklyn has had the same boundaries as Kings County, which is now the most populous county in New York State and the second-most densely populated...
, New York, at the age of 51.