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The Dow Jones
Industrial Average is the best-known U.S. stock index, but not
the oldest. The Dow Jones Transportation Average has that honor.
The first Dow Jones stock index, assembled in 1884 by
Charles H. Dow,
co-founder of Dow Jones & Company, was composed of nine
railroads, including the New York Central and Union Pacific, and
two non-rails, Pacific Mail Steamship and Western Union. That
was the ancestor of today's transportation average.
The iron horse powered the U.S. economy in the late 19th
century. "The really strong companies at that time were
primarily railroads," says Richard Stillman, professor emeritus
of the University of New Orleans.
It wasn't until 1896 that the Dow Jones Industrial Average
appeared. The same year, Mr. Dow published a list of 20 "active"
stocks, 18 of which were rails-the direct predecessor of the
transportation average. On Sept. 8, 1896, it stood at 48.55.
Over the years, railroads such as Union Pacific (the only
remaining original stock) have been joined in the average by the
likes of Delta Air Lines, Federal Express and Ryder System.
The story of the rails in this century is one of pride, fall and
partial revival. In 1916, 254,000 miles of rail lines
crisscrossed the country, nearly twice the current figure. But
regulation of prices and "featherbedding" by unions stunted
railroads, says Richard Sylla, an economic historian at New York
University. The stagnant industry was pounded by competition
from trucks, revitalized waterways and, finally, airplanes.
According to Professor Sylla, the Pennsylvania Railroad was the
country's biggest corporation in the 1870s. A century later, its
descendant, Penn Central, filed for bankruptcy.
Since 1980, deregulation has brought a revival of sorts.
Railroad employment has fallen nearly 60 percent, but ton-miles shipped
and the industry's net income have soared.
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DOW
Signals
Past 2 Months |
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3%
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7%
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Compound |
Compound
Margin |
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As of 7/23/2008 |
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