Honest financial journalism is indispensable to ethical financial markets. It is hard to imagine a clean financial industry in operation if the state of its trade press was unchanged from that of the middle of the 19th century, when financial journalism could be summarized as the propagation of rumors, often with nefarious ends. The professionalization of financial journalism involved creating new rules and new methods of reporting the movement of markets. Charles Dow, Edward Jones, and Charles Bergstresser, the founders of Dow Jones & Co., were reformers who advanced the state of financial journalism and thus financial markets as well.
Charles H. Dow
Charles Dow was born in Connecticut in 1851. It was a case of modest beginnings. Dow worked on a family farm and little is known about his education except that it wasn’t much. Still, he began his journalistic career at Massachusetts’s Springfield Republican in 1872. There, Dow worked under editor Samuel Bowles, then as well-known as a newspaper man could get. He afterward wrote for newspapers in Providence, Rhode Island before moving to New York in 1879.
In Springfield and Providence, Dow learned from some of the best in New England’s newspaper business. Samuel Bowles’ Springfield Republican was likened to a journalism school and Dow had also worked for George W. Danielson, another accomplished newspaper man, while in Providence. There, Dow first became involved in financial journalism, covering mining firms and commodities. He had travelled to Colorado with financiers to cover a mining boom then underway.
After that story, Dow was fixated on financial markets. In 1879, he moved to the Kiernan News Agency in New York. Kiernan operated a news service delivering handwritten bulletins duplicated by carbon paper onto tissue paper sheets. These bulletins were subscribed to by banks and brokers in the city. The news agency’s offices were virtually the headquarters of New York’s financial press. Here, Dow gained a reputation for accuracy and confidentiality, becoming well known amongst his peers and their sources.
Edward D. Jones
One of Dow’s partners at Dow Jones & Co. was Edward Jones. He was born in Worcester, Massachusetts and received a more extensive formal education than Dow had, graduating from Brown University in 1877. More than just their education differed, Jones had an opposite personality, as excitable as Dow’s was quiet and measured. Still, Jones worked with Dow at the same Providence newspapers before he too joined the Kiernan News Agency in New York.
The Wall Street Journal
Dow and Jones left Kiernan in 1882 and started Dow Jones & Co. at 15 Wall Street soon thereafter. They were joined by Charles Bergstresser, another alum of Kiernan News Agency. Bergstresser, whose own name was judged too long to form part of the new firm’s name, would have been deserving of the honor. He provided most of the money and was also involved in its day-to-day work.
Like Kiernan, Dow Jones & Co. employed messengers who, in addition to delivering the news as and when it arose, also sold subscriptions, receiving a commission for each sale. The new company began publishing the Customer’s Afternoon Letter. This was a news sheet distributed to subscribers with the last delivery each day. It could be subscribed to separately from Dow Jones & Co.’s ad-hoc news bulletin service and this eventually evolved into The Wall Street Journal.
The Wall Street Journal itself was launched in 1889, printing its first issue on July 8th that year. The unremembered Charles Bergstresser had come up with the name. The newspaper launched at a time when financial journalism was hardly a clean profession. For one, there was a shortage of good financial news; after all, this was an era when even publicly listed companies had limited reporting requirements. Also, newspapers would collaborate with companies to manipulate markets, with journalists participating in the movement of a stock or other instrument on which they reported. By contrast, The Wall Street Journal barred its employees from investing in companies they were covering.
Dow Jones Industrial Average
Dow Jones & Co. published an index of transportation stocks in 1884, including it in the company’s Customer’s Afternoon Letter. This index was simply the average price of shares in eleven firms; nine were railroads and two were steamship companies. This and other indices were published in The Wall Street Journal after it launched; the others were also simple arithmetic averages of stock prices, useful for summarizing the market’s overall performance.
The most famous of these, the Dow Jones Industrial Average, was first published in The Wall Street Journal in 1896. It was then made up of twelve stocks of industrial companies; they were American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Leclade Gas, National Lead, North American Company, Tennessee Coal & Iron, U.S. Leather preferred, and U.S. Rubber. Besides its own set of indices, Dow Jones & Co. also distributed stock prices through a telegraph ticker business.
Since 1900
The beginning of the end for this early era in the history of Dow Jones & Co. came when Edward Jones left the company in 1899, in search of greater riches at a brokerage house. Clarence Barron, a newspaper proprietor with interests in papers in Boston and Philadelphia, acquired Dow Jones & Co. in March 1902 for $130,000 and Charles Dow died later that year. The Wall Street Journal had a circulation of 7,000 then but this rose to 50,000 by the time of Barron’s own death in 1928.
That year, near the peak of a stock market boom then underway, was also when the Dow Jones Industrial Average was enlarged to cover thirty stocks, its current size. After the Stock Market Crash of 1929, The Wall Street Journal’s circulation nearly halved and advertisers walked away. The length of the paper was reduced. It would recover of course; under a single managing editor, Bernard Kilgore, circulation rose from 33,000 to 1.1 million between 1941 and 1965. Ownership remained with Barron’s descendants until Dow Jones & Co.’s sale to News Corp in 2007.
Lesson
Whatever ridicule is flung at The Wall Street Journal and the Dow Jones Industrial Average today, their usefulness, at least in an era of less genuinely helpful financial news reporting, is undeniable. Charles Dow, Edward Jones, and Charles Bergstresser changed the financial journalism business for the better. Not only does the press circulate important information, it helps the investment community form expectations of the future. The indices Dow Jones & Co. introduced advanced the same project by summarizing the performance of the entire market and linking each trading day’s performance into a continuous data series. These projects improved the functioning of markets.
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Further Reading
1. Bishop, George W. “New England Journalist: Highlights in the Newspaper Career of Charles H. Dow.” Business History Review, vol. 34, no. 1, 1960, pp. 77–93.
2. Crossen, Cynthia. “It All Began in the Basement of a Candy Store.” The Wall Street Journal, Dow Jones & Company, 2 Aug. 2007.
3. “Dow and Jones: Wizards of Wall Street.” Presented by Jack Perkins, Biography, A&E Television Networks, 1997.
4. Markham, Jerry W. A Financial History of the United States. M.E. Sharpe, 2011.
5. Morris, Gregory DL. “Heard on the Street, and Around the World.” Financial History, 2014, pp. 20–22.
6. Siconolfi, Michael. “Roots of the Dow Industrials Include One Forgotten Man.” The Wall Street Journal, Dow Jones & Company, 30 Mar. 1999.
