Everything Everywhere Daily: History, Science, Geography & More - The Original Dow Jones Companies

Episode Date: August 6, 2020

For many people, the Dow Jones Industrial Average is the measure of the health of the overall stock market. In reality, the Dow Jones Industrial Average is really just the performance of a collection of 30 blue-chip stocks. The index was created in 1896 and back then there were only 12 stocks in the index, and most of them are no longer household names.  Learn more about your ad choices. Visit megaphone.fm/adchoices

For many people, the Dow Jones Industrial Average is the measure of the health of the overall stock market. In reality, the Dow Jones Industrial Average is really just the performance of a collection of 30 Blue Chip stocks. The index was created in 1896, and back then there were only 12 stocks in the index, and most of them are no longer household names. Learn more about the original companies which made up the Dow Jones Industrial Average and what happened to them over the last 125 years on this episode of Everything Everywhere Daily. What if your perceptions about the past were wrong? ThruLine is a podcast that takes you back in time to uncover the parts of the story that may have gone unnoticed.

It effectively turned day and tonight. And how it shaped the world now. Time travel with us every week on the ThruLine podcast from NPR. This episode of Everything Everywhere Daily is sponsored by listeners like you. Creating a daily show like this isn't easy. Researching, writing, and recording a daily show takes quite a bit of time, and you have to do it every single day. Over on patreon.com, there is a small but growing community of listeners who support the show with their donations.

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As new projects, products, and events roll out over the next several months, patrons will have first dibs on everything. If you would like to be a sponsor, go to patreon.com slash everything everywhere, or click on the link in the show notes. If you ever see a report on how the stock market is doing in the United States, it'll probably be quoting the value of the Dow Jones Industrial Average. The Dow Jones is an index of the stock prices of 30 large American companies. While it's used to reflect the relative health of the economy,

it was really never designed to do that. The index isn't weighted by market cap, so the price of the 30 stocks are all treated equally, even though the companies may be of vastly different sizes. Likewise, the index isn't a just-eastern cost. for inflation, and poorly performing companies are removed and replaced every few years. First calculated on May 26, 1896, it is the second oldest stock index in the United States. The oldest being the Dow Jones Transportation Index, which dates back to 1884, and was created

to show the health of the railroad industry. The Industrial Index was created by Charles Dow, who was the editor of the Wall Street Journal, and Edward Jones, who was a statistician. Today, the list consists of companies you've probably heard of, Apple, Walmart, McDonald's, ExxonMobil, Visa, and Walt Disney. In the first 1896 iteration, there were only 12 stocks listed. The stocks are mostly ones you haven't heard of, but were representative of the economy at the time. Each of the 12 stocks has a really interesting story, and 11 of the 12 companies actually still sort of exist in some shape or another. So here are all 12 with the original Dow Jones Industrial Average companies from 1896, and what became of them.

American Cotton Oil Company In the 19th century, cotton mill owners began consolidating, and they eventually created a trust which dominated 80% of the industry. The fortunes of the company started going south and was acquired by Best Foods in 1931. Best Foods merged with Corn Products Company in 1958, which later split into Ingredion and Best Foods in 1997. Best Foods was then purchased by Unilever in the year 2000.

American Sugar Refining Company The company was created in 1891 when the sugar refineries company, also known as the sugar trust, was broken up by the Sherman Antitrust Act of 1890. In 1900, they changed their name to Domino Sugar, which is still a brand that exists today, and there is still a famous landmark sign for Domino Sugar in Brooklyn. In 1970, the company changed its name again to Amstar. And then in 1983, it was purchased in a leverage buyout by KKR, who then turned around in 1986 and sold it to Merrill Lynch, who then sold it to Taiton Lynch, a British company, who then sold Domino Sugar to a cooperative of Florida sugar producers who now run the company under the name ASR Group, which stands for American Sugar Refining, the exact same name it had back in 1896. American Tobacco If you want to put things like ethics and morals aside, then having a monopoly on an addictive substance has to be one of the best economic models in the world. This is exactly what American Tobacco had in 1896.

In 1907, the company was found to be in violation of the Sherman Act and was broken up and split into several different tobacco companies, one of which kept the original name. The company returned to the Dow Jones Index from 1924 to 1930, and again from 1932 to 1985. In 1990, the tobacco assets were purchased by British American Tobacco, who merged the major brands into their Brown and Williamson Division, who later merged that with R.J. Reynolds in 2004. The non-tobacco parts of the business now operate under the name Fortune Brands. Chicago Gas Company They didn't last long as they were absorbed by People's Gas, Light, and Coke Company in 1898.

People's lasted quite a while and were purchased by Integris Energy Group in 2007, who was then purchased by WEC Energy Group in 2015. Despite acquisitions and mergers, the company still basically does the same thing it did back in 1896. Distilling and Cattle Feeding Company Known as the Spirits Trust, this company was the creation of many of the largest distilling companies. At one point, they were responsible for 90% of alcohol consumption in the United States. Soon after being listed, they changed their name to American Spirits Manufacturing and later National Distillers. During and after prohibition, they got involved in more chemical manufacturing, and in

1957 changed their name to National Distillers and Chemical Corporation. In 1987, they spun off their alcohol business into Jim Beam Distilling and renamed the company Quantum Chemical. Quantum Chemical was then purchased, spun off, and eventually remnants are now in the hands of a German company Heidelberg Cement. General Electric If there's one company from the original 1896 list that you've heard of, it's General Electric. GE is still around today, the same company from 125 years ago. Since its original

founding by Thomas Edison, it has become a massive conglomerate covering many different businesses. They were only removed from the Dow Jones in 2018, and in 2020, sold off their lightbulb business, which was the original reason for the company being founded. Le Cleed Gas A natural gas company operating out of Missouri, it wasn't on the list very long. It began buying and merging with a series of local gas companies in Missouri, never changing the name of its business. In 2001, it became the Le Clead Group, and in 2017 changed its name to Spire. Despite the name changes, it's the exact same company, and it is one of the longest

continuously traded stocks in the country. National Lead Originally part of the Lead Trust, which was broken up in 1891, National Lead came out of it as the largest lead company in the U.S. They created the popular brand of Paint Dutch Boy in 1907. They changed the name of the company to NL Industries in 1971, which they still operate under today. Their paint business was sold to Sherwin Williams in 1980. North American Company

This very generically named company was a holding company for the industrialist Henry Valard and only lasted three months on the original index. The company amassed a collection of utility companies around the country and was eventually broken up by the Security and Exchange Commission in 1946. Many utility companies that exist today can trace the root-es back to the North American company, including Pacific Gas and Electric and Wisconsin Energy Group. Tennessee Coal Iron and Railroad The company, based in Tennessee, as you can guess from its name, stayed on the list until 1907,

when the economic crisis of that year allowed it to be purchased by J.P. Morgan and U.S. Steel. U.S. Steel still exists today. It changed its name to U.S.X in 1986. There is a factory originally built by the original company, which is still operating in Fairfield, Alabama. U.S. leather. Of all the companies on the original list, all of them still sort of exist in some form, except for U.S. leather. It was merged and renamed Central Leather Company in 1924 and later United States Leather Company in 1977. In 1952, after changes to the marketplace, the company was dissolved.

And finally, the last company, United States Rubber. It was created in 1892 after the merger of nine rubber companies in Nagatoc, Connecticut, In addition to tires, they also produced the first sneaker back in 1916 under the brand Keds, as well as other rubber products. They merged with Unaroyle in 1961 and then with B.F. Goodrich in 1986. The French company Michelin purchased them in 1990, and that's where the assets exist to this day. So as you can see, most of these companies have led very circuitous lives since they were put on the Dow Jones Industrial Average in 1896. One question which is often asked is how much an investment in the specific companies on the index in 1896 would be worth today? The answer really can't be calculated.

Some of the stocks are rather easy to track, but some are impossible to figure out because they diversified, spun off units, or were taken private. Suffice to say that an investment back then would have paid off handsomely, and any such investment would have led to substantial stakes in some of the largest companies in the world today. Executive producer of Everything Everywhere Daily is James Mackle. Special thanks to everyone who supports the show over on Patreon. Please remember to leave a review over on Apple Podcasts. Even a simple review can really help the show get discovered in the sea of other podcasts that are out there.