investors in calculating their current position instead of being hassled by the fractional changes in dollar and launched the Dow Jones stocks Index.

Charles Dow was neither a financier nor a broker; he was a journalist with the Wall Street Journal. At his time, people preferred bonds, securities that were backed by real machinery, factories and other hard assets. They preferred specific dates of maturity with a known rate of return on their investment as compared to shares in an organization, which are generally not secured or protected by the assets of the company.

People at his time used to find it difficult to analyze stock movement in quarters or decimals of a dollar, thus, he decided to devise an average which would help the average investor understand the movements of the market. The index was designed for the common investor and not specifically for the Wall Street people. It was one of several indices created by him and is the oldest U.S. market index.

The first averages published in the Customer's Afternoon Letter, a precursor to the Wall Street Journal, focused on the growth stocks, mainly transportation stocks of the time. The initial Dow Jones stocks index comprised of 11 stocks out of which nine were railroad stocks and the remaining two were of a steamship line and a communications company. It eventually came to be known as the Transportation Average due to the high concentration of transport stocks. Railroads were the biggest and strongest companies at the time when he launched the index and hence, they dominated Dows first average. Only a few industrial companies were traded at that time and those also were not considered

to be the safest bet. On May 26, 1896, Dow split the index into two different averages; the transportation and the industrial average, which came to be known as the Dow Jones Industrial Average.

The Dow Jones Industrial Average (DJIA) was first published on May 26, 1896 and represented twelve stocks comprising of some of the biggest American industries of that time. The twelve stocks that it comprised of were:

1. American Cotton Oil Company - a predecessor of Bestfoods, now part of Unilever

2. American Sugar Company currently known as Amstar Holdings

3. American Tobacco Company split up in 1911

4. Chicago Gas Company - bought by Peoples Gas Light & Coke Co. in 1897. Now named Peoples Energy Corporation.

5. Distilling & Cattle Feeding Company presently known as Millennium Chemicals

6. Laclede Gas Light Company - still in operation as The Laclede Group

7. National Lead Company - now NL Industries

8. North American Company (Edison) - electric company broken up in the 1950s

9. Tennessee Coal, Iron and Railroad Company - bought by U.S. Steel in 1907

10. U.S. Leather Company dissolved in 1952

11. United States Rubber Company - changed its name to Uniroyal in 1967, bought by Michelin in 1990

12. General Electric the only stock of the initial twelve to be part of the index even today.

When it was first published, the index stood at 40.94 but during the same year in the summers, the index plunged to its all-time low of 28.48. It was initially computed as a direct average by first adding the stock prices of all the industries it comprised of and then dividing the sum total by the number of stocks. On December 12, 1914, the Dow Jones witnessed its largest one-day percentage fall of 24.39% due to the gloom brought about by World War 1. In 1916, Dow witnessed an increase in its number of stocks from 12 to 20 which further increased to 30 by 1928. The 1920s were in the grip of a bull run, but the crash of 1929, followed by the Great Depression brought the index nearly to its starting average, a fall of 90% from its highest point, by 1932. A fall that took the index nearly 22 years to recover to the peak it had witnessed in the 20s. 1931 would also be remembered as the year in the history of Dow Jones as the largest one-day percentage gain of 14.87% and that also in the depths of the 1930 bear market. The index finally managed to cross the 1000 mark in November 14, 1972.

The 1980s and 90s saw a rapid increase in the DJIA with several corrections happening along the way. October 19, 1987, also known as the Black Monday, saw a 22.6% fall in the index, however, the index got back to its feet in a couple of days only. Within two days of the Black Monday, the index recovered by 10.15%. The index crossed the mark of 5000 on November 21, 1995 for the first time. March 29, 1999 would be edged as the day in the history of DJIA when the index crossed the mammoth mark of 10,000. Within a month, the index managed to cross 11,000 for the first time. On January 14, 2000 DJIA touched a record high of 11,750.28 during trading and closed the day at 11,722.98, a record it would not be able to break till Oct. 3, 2006.

The good run of the 80s and 90s led to bear market in the early 2000s. September 11, 2001 brought about a 7.1% drop in the index, which plunged to 14.3% by the end of the week. It took the Dow nearly 2 years to recover from this fall, even though several attempts were made in between. It did manage to cross 10,000 in mid-2002, however the markets could not stabilize and the index took another 2 years to touch the 10,000 level once again. Finally in January 2006, the index managed to cross the 11000 level and in October 2006, it breached the theoretical high of 12,000 breaking all its previous records. As of late 2006, the index stood at a high of 12, 342.56 points.