Charles Dow facts for kids
Quick facts for kids
Charles Dow
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Charles Henry Dow
November 6, 1851 Sterling, Connecticut, U.S.
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| Died | December 4, 1902 (aged 51) |
| Resting place | North Burial Ground Providence, Rhode Island, U.S. |
| Occupation | Journalist |
Charles Henry Dow (November 6, 1851 – December 4, 1902) was an American journalist. He helped start a famous company called Dow Jones & Company. He did this with his friends Edward Jones and Charles Bergstresser.
Charles Dow also helped create The Wall Street Journal. This newspaper became one of the most respected financial news sources in the world. He also invented the Dow Jones Industrial Average. This is a way to measure how the stock market is doing. He created ideas for understanding how markets move. These ideas are now known as Dow theory and are the basis for technical analysis.
Contents
Charles Dow's Early Life and Career
Charles Henry Dow was born in Sterling, Connecticut, on November 6, 1851. His father, a farmer, died when Charles was six years old. Charles didn't get much formal education. But at age 21, he found work at the Springfield Daily Republican newspaper in Massachusetts. He worked there from 1872 to 1875. His boss, Samuel Bowles, taught him to write clear and detailed articles.
Moving to Rhode Island
After that, Dow moved to Rhode Island. He worked for the Providence Star and the Providence Evening Press. In 1877, Dow joined Providence Journal. The editor, George W. Danielson, wasn't sure about hiring the 26-year-old Dow. But Dow had worked for Bowles, so Danielson gave him a job writing business stories.
Dow loved writing about local history. He made history interesting by explaining how different industries grew. He also wrote about their future. For example, he wrote about steamship travel and the city of Newport, Rhode Island. He even reported on money made and lost in Newport's real estate. His careful research impressed his editor. So, Dow was sent to Leadville, Colorado, to report on silver mining.
Trip to Leadville, Colorado
In 1879, Dow traveled to Colorado with bankers, geologists, and investors. This four-day train trip taught him a lot about the world of money. He interviewed many successful people. He learned what information investors on Wall Street needed to make money. Businessmen liked and trusted Dow. They knew he would report what they said accurately.
Dow wrote nine "Leadville Letters" about his trip. He described the Rocky Mountains and the mining companies. He also wrote about the boomtown's gambling and saloons. He saw how fast people could become millionaires. In his last letter, Dow warned that mining stocks were risky. He said they were not for everyone. But for a careful businessman, they could be very tempting.
Working on Wall Street
In 1880, Dow moved to New York City. He knew this was the best place for business reporting. The 29-year-old found a job at the Kiernan Wall Street Financial News Bureau. This company delivered handwritten financial news to banks. John J. Kiernan asked Dow to find another reporter. Dow invited Edward Davis Jones to work with him. They had met before in Providence. Jones was good at quickly understanding financial reports. Both Dow and Jones wanted to report on Wall Street fairly. Other reporters could be paid to write good things about a company to make its stock price go up. Dow and Jones refused to do this.
Starting Dow, Jones & Company
The two young men believed Wall Street needed a better financial news service. In November 1882, they started their own company, Dow, Jones & Company. Their office was in the basement of a candy store. Charles Bergstresser helped pay for the new company. He was a silent partner. Bergstresser was very good at interviewing people.
In November 1883, the company started a two-page summary of daily financial news. It was called the Customers' Afternoon Letter. It quickly became popular, with over 1,000 subscribers. It was an important news source for investors. This letter included the first Dow Jones stock average. This average included nine railroad companies, one steamship line, and Western Union.
The Birth of The Wall Street Journal
By 1889, Dow, Jones & Company had 50 employees. The partners decided it was time to turn their news summary into a real newspaper. The first issue of The Wall Street Journal came out on July 8, 1889. It cost two cents. Dow was the editor, and Jones managed the daily work.
The newspaper told its readers its goal: "Its object is to give fully and fairly the daily news attending the fluctuations in prices of stocks, bonds, and some classes of commodities." Its motto was "The truth in its proper use." The editors promised that advertisers would not control the paper. The paper had special connections to get news from Boston, Washington, Philadelphia, and Chicago. It also had reporters in other cities, including London.
Dow often told his reporters not to trade slanted stories for stock tips. He fought for honest financial reporting. Dow would even publish the names of companies that didn't want to share their profit and loss information. Soon, the newspaper gained power and respect. Vermont Royster, a later editor, said Dow believed business information should not be just for "brokers and tycoons."
In 1898, The Wall Street Journal started its first morning edition. The paper now covered more than just financial news. It also reported on wars without strong opinions, unlike many other papers. Dow added an editorial column called "Review and Outlook." He also added "Answers to Inquirers," where readers could send investment questions. Edward Jones retired in 1899. Dow and Bergstresser kept working. Dow continued to write editorials, focusing on the government's role in American business.
Dow Jones Averages: Tracking the Market
The idea for the stock price average began on July 3, 1884. Charles Dow created it for the "Customer's Afternoon Letter." At first, it included 11 companies. Nine were railroads, and two were other types of companies.
In the 1890s, Dow saw that a tough economic time was ending. Many companies started joining together, forming huge corporations. These big companies wanted to sell their stock shares. The stock market was very active, and investors needed information. So, Dow created the Dow Jones Industrial Average (DJIA) in 1896. He tracked the closing stock prices of twelve companies. He added their prices and divided by twelve to get his average. The first DJIA appeared in The Wall Street Journal on May 26, 1896. Today, the DJIA is still one of the oldest and most popular stock indexes in the world.
On October 25, 1896, Dow changed the "20 Active Stock" index. He replaced two non-rail stocks with two rail stocks. This index became the Dow Jones Railroad Average (DJRA). It stayed a rail average until 1970. Then, it changed to the Dow Jones Transportation Average (DJTA). This new average included airline and trucking stocks.
Dow Theory: Understanding Stock Prices
In 1899, Dow started writing an editorial column in his newspaper. He wanted to teach regular readers about the stock market. He wrote these columns until he died in 1902. In these columns, he shared his ideas about how stock prices move. These ideas became the foundation of what is now called the Dow Theory.
Dow's main idea was that many things affect stock prices at the same time. This creates clear patterns in how prices move. By studying past data, you can see how these patterns relate to important factors. Then, by knowing what factors are at work now, you can guess how stock prices might move in the future. One of his most important ideas was his theory of the three main movements in the market.
If you want to learn more about Dow's writings, you can find them in these books:
- Samuel Armstrong Nelson, The A B C of Stock Speculation, 1902
- George W. Bishop, Charles H. Dow and The Dow Theory, 1960
- Laura Sether ed., Dow Theory Unplugged: Charles Dow's Original Editorials & Their Relevance Today, 2009
Personal Life and Death
When he was 30, Charles Dow married Lucy. She had a daughter from a previous marriage. Charles and Lucy did not have any children of their own.
In 1902, Dow started having health problems. Charles Bergstresser also wanted to retire. So, they sold their shares of the company to Clarence Barron. Dow wrote his last editorial in April 1902. About eight months later, on December 4, 1902, he died at his home in Brooklyn, New York. He was 51 years old and had a heart attack. Charles Dow is buried in North Burial Ground in Providence, Rhode Island.
See also
- Dow Jones Indexes
- William Peter Hamilton
