Charles Henry Dow (November 5, 1851 – December 4, 1902) was an American journalist who co-founded Dow Jones & Company with Edward Jones and Charles Bergstresser. Dow also founded The Wall Street Journal in order to present business news in a simple, unbiased way. Dow also invented the famous Dow Jones Industrial Average as part of his research into market movements. He further developed a series of principles and stock averages for understanding and analyzing market behavior which later became known as Dow Theory, serving as the groundwork for technical analysis.
Dow's work remains a substantial contribution to society today. The Wall Street Journal isone of the most respected financial publications in the world; the Dow Jones Industrial Average is the oldest continuing U.S. market index, a vital source of financial information. His "Dow theory" continues to inform and inspire economists and financial analysts seeking to understand market behavior. Thus, despite having little formal education, Charles Dow's impact in the financial world is one of the most significant of his era.
Charles Henry Dow was born on November 5, 1851, in the hills of Sterling, Connecticut to a farming family. His father died when he was six years old. Though he would never finish high school, he opted out of the family business and instead pursued journalism. Without much education or training, in 1872 he found work with the Springfield Daily Republican in Springfield, Massachusetts at the age of 21. There he worked as a city reporter for Samuel Bowles until 1875.
Known for his crisp, organized, and detailed style of writing, Dow later joined The Providence Star of Providence, Rhode Island where he worked for two years as a night editor, also working on behalf of the Providence Evening Press. In 1877, at the age of 26, Dow was hired by the prominent Providence Journal writing business stories under editor Charles Danielson.
Dow moved to New York City in 1880 to become a reporter for a financial news service. In 1881 Dow married his wife Lucy; the couple had no children of their own, but raised a stepdaughter from Lucy’s previous marriage.
In New York, Dow met Edward D. Jones, and together they established the Dow Jones & Company, a firm that delivered financial bulletins to Wall Street firms leading to the founding of the The Wall Street Journal. They also began the Dow Jones industrial average, and Dow's editorials led to what became known as "Dow theory" of market analysis.
Charles Dow died on December 4, 1902, in Brooklyn, New York at the age of 52.
While writing for the Providence Journal, in addition to business writing Dow also specialized in articles of regional history. Here he covered the development of various industries and weighed their future prospects. In 1877 he published a History of Steam Navigation between New York and Providence, followed by Newport: The City by the Sea, a historical account of Newport, Rhode Island published in 1880. In this report Dow followed the settlement, rise, decline, and rebirth of the coastal town, and followed the area’s real estate market, reporting all monies earned and lost throughout the city’s history. In 1879 Dow’s impressive writing earned him an assignment based in Leadville, Colorado. There he accompanied a group of bankers, tycoons, geologists, and lawmakers to report on silver mining in order to attract investors to the mines.
During this trip, Dow took the liberty of interviewing many successful financiers and discovered the type of information that investors sought in order to make money on New York’s Wall Street. The investors spoke candidly to Dow, trusting his ability to quote them accurately but discreetly. When he returned, Dow published nine Leadville Letters describing the Rocky Mountains, various mining companies, gambling and saloons; he also wrote of capital investment, and the information that drove such investments.
In 1880 Dow went to New York City where he hoped to pursue business and financial reporting. At the age of 29, he took a job with the Kiernan Wall Street Financial News Bureau which was responsible for delivering financial news to banks and brokerages. Dow invited reporter Edward Davis Jones, a Brown University dropout, to join him at the Bureau. Having worked with him at the Providence Evening Press, Dow recognized Jones’ ability to skillfully and quickly analyze a financial report; he also recognized his commitment to unbiased reporting.
The pair quickly realized that Wall Street was in need of another financial news bureau. In 1882 the partners began their own agency, Dow, Jones & Company, and welcomed Charles M. Bergstresser as a third partner. Seeking financial news, Dow Jones reporters visited brokerages, banks, and corporate offices, sending hand written messages back to the Dow Jones headquarters where they were copied and run to Wall Street several times a day. Acquiring information from stock prices in London, Dow Jones began producing both a late edition and seven a.m. edition, followed by the Customer’s Afternoon Letter, a two-page summary of the day’s financial news. The publication quickly achieved a circulation of over 1,000 and was considered an important news source for investors of the time. Within the publication was the Dow Jones stock average, an index made based on nine railroad issues, one steamship line, and Western Union.
On July 9, 1889, the company transformed the two-page Customer’s Afternoon Letter into a newspaper, naming it The Wall Street Journal. With Dow as editor, the journal aimed to present fully and fairly the daily news of stock, bond, and commodity prices. With more than 50 employees, the company maintained private wire and telegraph connections with Boston, Washington D.C., Philadelphia, and Chicago, as well as various correspondents in several cities including London. Dow demanded of his reporters to remain unbiased, and often published the names of companies that refused to give information about profit and loss. In this way, Dow hoped to protect honesty in financial reporting. Even in its youth, The Wall Street Journal commanded both power and respect.
In 1898 The Wall Street Journal published its first morning edition which included more than financial news. The newspaper began publishing editorials under its Review and Outlook section, and answered various investment questions under its Answers to Inquiries heading. Though Edward Jones would retire in 1899, Dow, with Bergstresser, continued with the journal, writing numerous editorials tackling the role of government in American business. In 1900 The Wall Street Journal was the first newspaper to endorse a presidential candidate, supporting incumbent president William McKinley. In 1902, facing health problems, Dow along with Bergstresser sold their shares of the company to their Boston correspondent Clarence Barron. Dow published his last editorial in April of 1902, just months before his death.
At the end of the recession and the merging of various companies to form large corporations, Dow recognized the need for public information about stock activity. In 1896 he invented the Dow Jones Industrial Average by tracking the stock prices of twelve different companies and taking their average. Published in The Wall Street Journal, this marked a popular indicator of stock market activity and led to the formation of an industrial index for railroad stocks in 1897.
Dow also worked to develop the Dow Theory, which identified a relationship between stock market trends and various business activities. He believed that if the industrial average and the railroad average moved in the same direction, a meaningful economic shift would follow. However, Dow believed his theory to be one of many investor resources, and not the sole indicator of potential market behavior.
In a series of stunning editorials for the Wall Street Journal Dow laid out the foundation of what came to be known as the "Dow Theory" of the stock market. Following Dow's death in 1902, William P. Hamilton, Robert Rhea, and E. George Schaefer organized and collectively represented the ideas based on Dow's editorials. Officially developed and entitled after his death, Dow never used the term "Dow Theory."
According to trends throughout Dow's editorials, Dow Theory shows the stock market as having three movements, all of which go on at the same time. Dow Theory also recognizes three investment considerations, the first being the value of the stock in which the speculator proposes to trade, the second being the direction of the main movement, and the third being the direction of the secondary movement. In this way, Dow Theory proposes that stocks may fluctuate together, but that prices are controlled by values in the long run. Finally, Dow Theory explains the market as a serious, well-considered effort on the part of far-sighted and well-informed men to adjust prices to such values as exist or which are expected to exist in the not too remote future.
According to Dow, the method of making money in stocks was to study basic conditions and exercise enough patience to capture the major movements. One key problem with any analysis of Dow Theory is that Dow's editorials did not contain explicitly defined investing "rules" so some assumptions and interpretations are necessary.
Throughout his career, Charles Dow maintained a dedication to unbiased financial reporting and strict business integrity unrivaled by many businessmen of his time. Believing the world of business to go beyond that of brokers and tycoons, Dow aimed to present business news and market behavior in the language of everyday life. As a writer, and person, Dow is credited with never losing touch with mainstream society,  and maintaining an incorruptible sense of truth and simplicity that defined his style of writing. The founder of one of the most respected financial publications in the world, the inventor of the Dow Jones industrial average and the proponent of Dow Theory, Dow’s contributions to the world of business and financial reporting are continually relied upon well into the twenty-first century.
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