May 26, 2023

The First-Ever Dow Jones Industrial Average

The First-Ever Dow Jones Industrial Average

May 26, 1896. In the aftermath of a financial crisis, the Wall Street Journal begins printing the Dow Jones Industrial Average, the nation’s oldest market index still in use today.


Cold Open

LINDSAY: This dry-aged for tenderness and flavor episode of History Daily originally aired on May 26, 2022.

It’s May 3rd, 1893 on Wall Street.

Inside his company’s headquarters, reporter and co-founder of The Wall Street Journal, Charles Dow opens the door to his office and takes a seat behind his desk.

Charles sighs as he takes a look at the enormous pile of financial reports littering his desk. 

He sifts through the papers, trying to identify the financial activities that his readers want to know about.

But, as Charles begins analyzing the reports, his office telephone starts to ring. Unwilling to distract himself from the work at hand, Charles ignores the call until the ringing stops.

But, then Charles hears a telephone in the newsroom outside his office begin to ring.

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

Charles hears his office phone ring again. And this time, he rushes to pick it up. Charles is met with the voice of one of his Wall Street contacts giving him a staggering update: the stock market is crashing.

For months, there has been a growing fear among Americans that an economic recession was on the horizon. On May 3rd, 1893, the panic finally struck Wall Street when a massive sell-off sent share prices tumbling. The next day, the National Cordage Company, 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 economic depression that will develop into one of the most severe financial crises in the history of the United States. It came to be known as the Panic of 1893.

Four years prior to the economic crisis, two reporters - Charles Dow and Edward Jones - formed The Wall Street Journal to arm investors with reliable financial information. And in the midst of this crisis that caused widespread economic pain to Americans of all walks of life, Charles Dow will seek to broaden his audience, eager to prove that business information should not be the “private province of brokers and tycoons.” In pursuit to produce business reporting that is digestible for both Wall Street and Main Street, Charles Dow will establish a new way to measure stock market activity, revolutionizing high finance with his publication of the Dow Jones Industrial Average on May 26th, 1896.


From Noiser and Airship, I’m Lindsay Graham and this is History Daily.

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 26th, 1896: The First-ever Dow Jones Industrial Average.

Act One: Modest Beginnings

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 belongings into a suitcase and prepares to leave his childhood home. Charles walks to his front door where he fights back tears as he hugs his mother goodbye. 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.

For years, Charles has been his mother’s primary helper. During his childhood, Charles’ father and two older brothers all passed away, forcing Charles to step up and help his mother 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.

So, Charles gives his mom a final squeeze before heading off to Springfield, Massachusetts. 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 chance on the eager young man. And, for the next three years, Charles finds his feet as a journalist, working as a city reporter for the newspaper.

After his years-long stint in Springfield, Charles moves to Providence, Rhode Island where he lands a job as the night 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 as a skillful reporter. Impressed by detailed and careful research, Charles’s editor assigns him to accompany a group of bankers and business tycoons who requested a reporter travel with them to Leadville, Colorado to cover the boom of that town’s silver mines. So, Charles packs his bag and boards the westward-bound train filled with men of business.

As he gets on the train, Charles spots a group of wealthy financiers laughing as they smoke cigars and play cards. Eager to take advantage of the men’s good mood, Charles rises from his seat and heads toward them, hoping to glean more information about the world of high finance.

Charles breaks out his pen and notepad as he approaches the group, and then greets them with a round of handshakes and joins in their small talk. Soon though, he steers the conversation toward the subject of investing. But the financiers only want to talk 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 state that current business reporting doesn’t give them the thorough and accurate information they need to make good investment decisions.

A skilled interviewer, Charles quickly earns the 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 fill.

Happy to have willing and receptive sources, Charles enjoys the men’s growing fondness of him. But in Leadville, he refuses to let that interfere with his reporting on Colorado’s mining industry.

Charles knows the bankers brought him on this trip for a reason: 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 a 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 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."

Charles' reporting is not the resounding endorsement many of the bankers and tycoons were hoping for. Still, they’re impressed by Charles’s objectivity. The trip to Leadville and the subsequent article helps establish Charles’ reputation as a man who can be relied upon to report the truth.

And after Leadville, Charles doesn’t let his new connections go to waste. Eager to fill the gaps in reporting that he heard so many describe, Charles will leave Rhode Island and move to New York City, ready to bring his reporting skills to Wall Street.

Act Two: The Wall Street Journal

It’s 1880 on Wall Street in New York City.

Inside the headquarters of the Kiernan Wall Street Financial News Bureau, Charles Dow sits at his desk, writing his latest news update that’ll be dispatched to the nearby banks and brokerages. But, the sound of someone calling his name interrupts him.

Charles looks up to see his boss hovering over his desk. After a brief greeting, Charles’ boss cuts to the chase: the bureau needs another reporter and he 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, Edward showed a strong commitment to unbiased reporting, a trait Charles knows is important for a business reporter, especially in New York.

On Wall Street, Charles has found it common for journalists to accept bribes to report favorably on certain companies to influence stock prices. Confident that Edward won’t compromise his journalistic integrity, Charles invites him to join the Kiernan Wall Street Financial News Bureau.

Soon, Edward accepts Charles’ offer and joins him in the Big Apple. But the two reporters don’t stay at 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.

In November of 1882, Charles Dow and Edward Jones strike out on their own, forming an agency called Dow Jones & Company. With a cramped headquarters located inside the basement of a candy store, a single typewriter, a telephone, and only four employees, the two reporters start their own operation, a news bulletin that will one day 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, hand-written news bulletins that they deliver to traders up and down Wall Street several times a day. But after a successful first year of 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.

Coined The Customer’s Afternoon Letter, the newsletter proves to be a hit with Wall Street. And before long, it achieves a circulation of over 1,000 subscribers, quickly earning a reputation as an important news source for investors.

For the next six years, Charles and Edward continue printing the newsletter and expanding their readership. Eventually, the pair convert their daily financial summary into a full-fledged newspaper, publishing the first issue of The Wall Street Journal on July 8th, 1889.

Eager to distinguish themselves from the various news organizations they’ve witnessed colluding with companies or conflating rumor and fact, Charles and Edward center the publication around a clear founding motto: “The truth in its proper use.”

From the beginning, the two men work toward an ethos of objectivity and integrity. They forbid their reporters from investing in any of the companies they cover; they publish the names of companies that don’t freely give information about their profits and losses; and, they even add a policy statement to the publication, committing themselves to give the daily news “full and fairly,” while striving to be “a paper of news and not a paper of opinions.”

It doesn’t take long for the newspaper to make its mark on Wall Street. The publication is commended by its readers for its accuracy and breadth of coverage. Over the coming years, Charles and Edward will expand their operations further, employing dozens of reporters and opening news bureaus in other cities. Eventually, the paper will turn Charles Dow and Edward Jones into two of the most respected names on Wall Street.

In the years after its first publication, the Wall Street Journals reporting will only grow more valuable as the nation plunges into a deep economic depression that leaves Wall Street in a state of panic.

Act Three: The Dow Jones Industrial Average

It’s May 25th, 1896 at Dow Jones & Company’s headquarters on Wall Street.

Sitting at his desk, Charles Dow examines a paper with an extensive report of 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 the economic crisis.

Set off by the collapse of two of the country's largest employers, the Philadelphia and Reading Railroad, and the National Cordage Company, the country fell into a financial panic three years ago and has been struggling to recover ever since. Charles has been toying with new ways to make business information easily accessible and digestible for the public at large. And today, Charles thinks he finally has a winning idea.

Looking at his summary of the day’s financial activities, Charles picks out 12 of the nation's biggest companies. He notes the closing stock price of each and takes an average. Charles reasons that the resulting index will be able to quickly capture the overall health of the nation’s biggest companies.

And the following day, May 26th, 1896, Charles runs his index in the Wall 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. 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 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 Wall Street Journal for decades to come, becoming one of the most popular indicators of the nation’s economic health. Persisting as the oldest US market index in use today, the Dow will evolve into one of the business world’s most iconic institutions, influencing investors from Wall Street to Main Street even 125 years after its inception on May 26th, 1896.


Next on History Daily. May 29th, 1953. Edmund Hillary and Tenzing Norgay become the first climbers to reach the summit of Mount Everest.

From Noiser and Airship, this is History Daily, hosted, edited, and executive produced by me, Lindsay Graham.

Audio editing and sound design by Mollie Baack.

Music by Lindsay Graham.

This episode is written and researched by Alexandra Currie-Buckner.

Executive Producers are Steven Walters for Airship, and Pascal Hughes for Noiser.