What is the genesis of the Dow Jones Industrial Average?
In 1882, two reporters, Messrs. Dow and Jones, left their employer, the Kiernan News Agency in New York City, to form Dow Jones & Company. Their first office was on Wall Street, adjacent to the stock exchange. With the assistance of Charles Bergstresser, another former employee of Kiernan who later became a Dow Jones partner, news was gathered, handwritten and rushed by messenger boys throughout the financial district.
Mr. Charles Dow was the partner who devised stock averages to allow investors to discern price movement in the market as a whole and to compare individual stocks' performance to a broader measure. The Dow Jones Industrial Average, comprised of 12 'smokestack' companies, made its debut May 26, 1896. [Twelve years earlier, Mr. Dow's initial stock average, containing 11 stocks (nine of which were railroad issues) had appeared in Customer's Afternoon Letter, a daily two-page financial news bulletin that was the precursor of The Wall Street Journal.]
Although Charles Dow was the pre-eminent partner, Eddie Jones (not the Edward Jones of the Edward D. Jones & Co. brokerage firm) was more visible. He dealt with messengers scurrying in and out of the office, wrote and edited bulletins, and spent nights scouring for tips at the watering holes frequented by his racy friends, the pool operators and wheelerdealers of Wall Street. Ironically, he had nothing to do with the devising of the Dow Jones Industrial Average, which bears his name.
The austere Mr. Dow eventually grew uncomfortable with the fast circles of his friend Mr. Jones, who had grown up in a more affluent environment. Mr. Jones took on an air of calm and command during times of crisis. Mr. Jones gradually felt estranged from his two partners, and in January 1899, he left the newsletter and went into the brokerage business on Wall Street.
Charles M. Bergstresser--the third principal--deserves credit for bankrolling a publishing venture with cash-poor Charles Dow and Edward Jones, beginning in 1882. Unfortunately, he didn't get any. "Bergstresser" was too long to be included in the company's name, Dow Jones & Co. So he also missed out on being immortalized by the naming of the Dow Jones Industrial Average, which Mr. Dow invented 14 years later.
When Dow Jones & Co. turned its business newsletter into a full-fledged newspaper in 1889, it was the firm's unnamed partner who named it. Mr. Bergstresser dubbed it "The Wall Street Journal".
The first edition of The Wall Street Journal appeared July 8, 1889. Mr. Dow was editor. He maintained an active role in Dow Jones and the Journal, frequently writing editorials, until 1902, when failing health led him to sell the company to Clarence W. Barron, whose descendants continue to have a controlling interest in it.
Today, it is the editors of the WSJ--Dow Jones & Company's flagship responsible for monitoring the composition of the Dow Jones Industrial Average and selecting replacement stocks should changes be called for. (Drawn from documents in averages.dowjones.com/frameset.html, courtesy of Dow Jones & Company, Inc.)
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