Eleven Stocks and One Idea That Runs Wall Street
On July 3, 1884, Charles Dow published the first stock market average — eleven stocks that became the ancestor of the Dow Jones Industrial Average.
Every morning, the world asks one question — "how's the market doing?" — and answers it with a single number. That number was born on July 3, 1884.
Its father was Charles Henry Dow, a Connecticut farm boy turned financial journalist. Dow had moved to New York and reported for the Kiernan News Agency, where he met Edward Jones of the Providence Star. In 1882, the two men founded Dow Jones & Company, a tiny outfit that delivered handwritten financial bulletins — "flimsies" — to Wall Street brokerages by messenger. The last bulletin of each day included a two-page news sheet called the Customer's Afternoon Letter, the forerunner of The Wall Street Journal.
Dow saw a problem no one had solved: investors could see individual stock prices, but nobody could see the market as a whole. Was business getting better or worse? There was no way to tell at a glance. So Dow invented one.
On July 3, 1884, the Customer's Afternoon Letter published his first stock average: eleven stocks, nine of them railroads — the high-tech giants of the age — plus the Pacific Mail Steamship Company and Western Union. The list included names like the New York Central, the Union Pacific, and the Chicago & North Western. Dow's method was disarmingly simple: add up the eleven prices and divide by eleven. One number, and suddenly the whole market had a pulse.
Readers complained the mix wasn't quite representative, so Dow kept tinkering — refining the list in 1885, 1886, and 1894. Then, on May 26, 1896, came the debut of the average the world knows today: twelve industrial stocks, starting at 40.94 points. That index — the Dow Jones Industrial Average — would grow to twenty stocks in 1916 and thirty in 1928, becoming the most quoted market indicator on earth.
Dow himself went on to found The Wall Street Journal, publishing its first issue on July 8, 1889, and serving as its first editor until 1902. The original 1884 railroad average lived on too, eventually renamed the Dow Jones Transportation Average in 1970.
Why it matters: Dow's humble arithmetic became the language of global finance. When newscasters say "the Dow rose two hundred points," they're speaking a dialect invented in a two-page bulletin on a summer day in 1884.
No public-domain or Creative Commons image could be verified for this story at the required size and license, so it is published without one.
