History of the Dow Jones Average
The Dow Jones Averages are just the average price of the stocks that make up that particular average. Since the companies that make up the Dow Jones Industrial Average are so diverse, true industrial stocks to high tech stocks, the Industrial Average is a good measure of how the stock market and the economy are doing.
There are actually three different Dow Jones Averages, although the DJIA is by far the most well know. The two other averages are the Dow Jones Transportation Average and the Dow Jones Utility Average. The members of the Transportation Average are as the name suggests, transportation companies. They range from airlines to railroad companies. The Dow Jones Utility Average covers different power companies that are out there.
The DJIA is currently made up of 30 companies. Those companies are: Alcoa, American Express, AT&T Corporation, Boeing, Caterpillar, Citigroup, Coca Cola, Disney, DuPont, Eastman Kodak, Exxon-Mobil, General Electric, General Motors, Hewlett-Packard, Home Depot, Honeywell, IBM, Intel, International Paper, Johnson & Johnson, McDonald's, Merck, Microsoft, Minnesota Mining Manufacturing (3M), Morgan JP, Phillip Morris, Procter & Gamble, SBC Communications United Technologies, Wal-mart.
The Dow Jones Transportation Average isn?t quite as large as the Industrial average but has some of the largest transportation companies in the world. The Dow Jones Transportation Average is made up 20 companies. Those Companies are: Airborne Freight, Alaska Air Group, Alexander & Baldwin, American Airlines, Burlington Northern Santa Fe, CNF Transportation, CSX, Delta Airlines, Federal Express, GATX, Norfolk Southern, Roadway Express, Ryder System, Southwest Airlines, United Airlines, Union Pacific, US Airways, US Freightways, XTRA, and Yellow Corporation.
The Dow Jones Utility Average is the smallest of the three averages with only 15 companies in it. The companies that make up the utility average are: American Electric Power, Columbia Energy Group, Consolidated Edison, Consolidated Natural Gas, Duke Energy, Edison International, Enron, Houston Industries, PECO, PG&E, Public Service Enterprise Group, Couther Company, Texas Utility, Unicom, and Williams Cos.

There is also a fourth, less known average called the Dow Composite Average. The Dow Composite Average is the average of the 65 stocks that make up the Industrial, Transportation, and Utility Averages.
The Dow Jones Average was created in 1884 by Charles Dow, Charles Dow was an economist for the Customer's Afternoon Letter. The Customer's Afternoon Letter was much today's Wall Street Journal, in fact it the CAL was the precursor to the Wall Street Journal. The first average consisted of 11 stocks, nine railroads, a steamship, and one communication company. It was not until 1896 that the first DJIA was published and contained only true industrial stocks. The original DJAI consisted of only twelve stocks. Those stocks were: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American Company, Tennessee Coal & Iron, U.S. Leather Pfd., and U.S. Rubber.
There was also a Railroad Average that was also created in 1896. It was created when the Dow Average became two separate averages, strictly industrial and railroad. The Railroad Average became the Transportation Average in 1979 when roadway companies and airlines were added to it.
The way the averages for the Dow Averages have changed considerably since the creation of the Dow. Originally Charles Dow simply added up the prices of the stocks and divided by the number of stocks. This can no longer be done for several reasons, one of which is to preserve historical continuity, but the most common is when there is a stock split and without an adjustment in the divisor there would be a distortion in the average. 		In the Beginning
The Early Years From 1900 to 1921 was like a coming of age for the Dow. It was when the Dow was climbing and beginning to break milestones. This era also saw its fare share of large drops in the average. During this time period the Dow had to prove that it could and would last.
Milestones:
The only big milestone during this time was on January 12, 1906 when the Dow closed above 100 at 100.25.
First Major Loses:
There were five bear market during this time period. A bear market is when there is a recession in the stock market or when prices are declining over a period of time.
The first of these bear market started on June 12, of 1901and continued until November 3, of 1903. From June of 1901 to November of 1903 the Dow dropped form 78.26 to 42.15, which was a loss of 46% over those two and a half years.
The second bear market considerably shorter spanning from January 1906 to November 1907. During this time the Dow dropped from 103.00 to 53.00.
The third bear market was nowhere near as severe as the previous two. This second bear market lasted from November of 1909 to September of 1911. The Dow dropped from 100.53 to 72.92. It was a drop of 24% during this time.
The fourth bear market of this was not quite as bad as the previous one but it was bad enough. From September of 1912 to July of 1914 the Dow dropped from 94,15 to 71.42. This was a drop of 24%.
The fifth bear market of time started in November of 1919 and went until August of 1921. Over these years the Dow dropped from 119.62 to 63.90. When this bear market ended it was the beginning of a new age, a Golden Age.
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