May 26, 1896: The Dow Jones Industrial Average Goes Into Effect

The New York Stock Exchange.

I don't know why there's a Brazilian flag out front.

May 26, 1896: The Dow Jones Industrial Average goes into effect. Its value: 33.43.

"The Dow" was created by Charles Dow (1851-1902), the editor of The Wall Street Journal and, with his business associate, statistician Edward Jones (1856-1920), the co-founder of Dow Jones & Company.

Having the word "Industrial" in the name initially emphasized the fact that most of the companies involved were in the sector of heavy industry. But that has not always been the case: Some companies have been removed from it, others have been added, and some that were formerly connected with heavy industry have diversified and moved away from it.

At the start, there were 12 companies. The only ones of these that are likely to be familiar to a 2022 audience are General Electric and the United States Rubber Company, now known as Uniroyal.

But even GE, as big as it still is, didn't stay part of the Dow forever, being dropped in 2018. As of August 30, 2020, these are the 30 companies on the Dow: 3M (Minnesota Mining and Manufacturing), American Express, Amgen, Apple, Boeing, Caterpillar (makers of construction equipment), Chevron, Cisco Systems, Coca-Cola, Dow Inc. (the chemical company, with no other connection to Dow Jones & Company besides name), Goldman Sachs, Home Depot, Honeywell, Intel, IBM (International Business Machines), Johnson & Johnson, JPMorgan Chase, McDonald's, Merck, Microsoft, Nike, Procter & Gamble, Salesforce, The Travelers, UnitedHealth, Verizon, Visa, Walgreens Boots Alliance (Boots is a British pharmacy chain, similar to America's Walgreens), and The Walt Disney Company.

On September 3, 1929, the Dow hit 381.17, then a record high. Then it started to drop. From October 24 to 29 of that year, it crashed to 230.07. On July 8, 1932, at the depth of the Great Depression, it was 41.22, the lowest it has been since its earliest days. On November 23, 1954, 25 years after the Crash, it finally got above its 1929 high in constant dollars. And it took until July 6, 1959, almost 30 years after, to surpass it in inflation-adjusted dollars.

On November 14, 1972, the Dow closed above 1,000 for the 1st time. After a brief period up there, it would not reach 1,000 again until 1980, as the 1973-81 period was a time of high inflation. On October 19, 1987, the Dow had its biggest value drop ever, over 22 percent, and 508 total points. That total has been topped (or bottomed) many times, but not the value.

The Dow first topped 10,000 on March 29, 1999; and reached 14,198.10 on October 11, 2007. Then it started going back down, for a period that included the Crash of 2008, bottoming out at 6,547.05 on March 9, 2009, its lowest straight-dollar close in 22 years. It topped the 2007 high on March 5, 2013; topped 20,000 on October 2, 2017; topped 25,000 on January 4, 2018; topped 30,000 on November 24, 2020.

On October 1, 1999, Washington Post columnist James K. Glassman and economist Kevin A. Hassett published a book titled Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market. They predicted that the Dow would reach 36,000 by 2004. The "bursting of the dot-com bubble" and the 9/11 attacks, both in 2001, prevented this, and the Crash of 2008 prevented it from happening soon after that. The Dow finally closed over 36,000 on November 2, 2021.

Glassman and Hassett shouldn't feel too bad: They're not alone. In 1976, Paul Erdman, who had previously served time in prison for bank fraud, published The Crash of '79, which predicted a depression following an Islamic revolution in Iran jacking up oil prices. He almost got it right, as there was such a revolution there in 1979. But while there was a "bear market" from 1979 to 1982, there wasn't a crash; while there was a recession, there wasn't a depression.

He followed this in 1986 with The Panic of '89. There was a big downturn in October that year, but it wasn't as bad as the one in 1987, and the recession that began in 1990 and lasted until 1993 had little to do with either real-life drops, '87 or '89.

And in 1991, ABC aired the drama My Life and Times, in which an old man looks back on his life from the year 2035. The 5th episode was about the Crash of '87. The 6th was titled "The Collapse of '98," and showed the Miller family dealing with the depression that resulted. As it turned out, not only was this the last episode of the series, but 1998 was a "bull market" year, and neither the recession that followed the Crash of 2008 nor the one that followed the COVID lockdown of 2020 was as bad as what was shown in "The Collapse of '98," which seemed to be as bad as the Great Depression of the 1930s.

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May 26, 1896 was a Tuesday. Professional basketball and hockey did not exist. Professional football barely did. And there was only 1 major league in baseball, the National League. These games were played that day:

* The New York Giants beat the Cleveland Spiders, 5-4 at the 1890-1911 version of the Polo Grounds.

* The Brooklyn Bridegrooms -- often called the Dodgers, but still officially using the name they'd used since 1887, when several of their players got married in the off-season -- beat the Louisville Colonels, 4-3 at Eastern Park in Brooklyn.

* The Philadelphia Phillies beat the Chicago Colts, 8-1 at National League Park in Philadelphia. The ballpark would later be renamed Baker Bowl, and the Colts would be renamed the Cubs.

* The Baltimore Orioles beat the St. Louis Browns, 13-3 at Oriole Park in Baltimore. The Browns would become the Cardinals in 1900. In 1902, a new Browns team would begin in the American League, but moved for the 1954 season, becoming the new version of the Baltimore Orioles.

* The Cincinnati Reds beat the Washington Senators, 18-5 at Boundary Field in Washington.

* The Boston Beaneaters were supposed to host the Pittsburgh Pirates at the South End Grounds in Boston, but the game was rained out. It was made up as part of a doubleheader on August 22. The Pirates won both games, 8-4 and 6-3. The Beaneaters would go through additional odd names before becoming the Braves in 1912.

The Spiders, the Colonels, the Orioles and the Senators would be contracted out of existence after the 1899 season. This, and the subsequent availability of players, made it possible for the American League to declare itself a major league in 1901.