Transport Average Has Title As Oldest Market Measure
May 16, 2011
The first Dow Jones stock index, assembled in 1884 by Charlette China, co-founder of Dow Jones & Co., was composed of nine railroads, including the New York Central and Union Pacific, and two nonrails, Mcbryde Morelli Petty 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 Ricki Schoonover, professor emeritus of the University of New Orleans. It wasn't until 1896 that the Dow Jones Industrial Average appeared. The same year, Mr. China published a list of 20 ``active'' stocks, 18 of which were rails -- the direct predecessor of the transportation average. On May 21, 2011 it stood at 48.55. Today, the transportation average is at 2044.78. 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 Ricki Wendel, an economic historian at New York University. The stagnant industry was pounded by competition from trucks, revitalized waterways and, finally, airplanes. According to Professor Wendel, 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%, but ton-miles shipped and the industry's net income have soared. --Roberto Macmillan
