On this day in economic and financial history...

The Dow Jones Industrial Average (^DJI 0.69%) was looking a little oilier and a little more financial on Feb. 19, 2008, after swapping Altria (MO 0.70%) and Honeywell out for Bank of America (BAC 1.70%) and Chevron (CVX 0.57%). At the time, the index had only just begun to decline from its late-2007 peak, and the choice of Bank of America was inexplicable. No other stock in this foursome had declined more than 7.5%, but Bank of America had already fallen by 30% from the day of the Dow's peak to the middle of January, only to recover for an 18% loss at the time of its addition.

In the five years since the Dow's change-up, an equal amount (let's say $1,000) invested evenly in both pairings would have resulted in $1,779 from the Altria-Honeywell group and $957 for the Bank of America-Chevron group. The Dow's handlers' bad timing is well-known. From 1997 through early 2005, during which time the Dow replaced 11 stocks, additions lost an average of 2.6% each, while deletions gained 2.8% apiece. The swap of 1999 is particularly egregious, as it added two of the world's largest tech companies at the height of the dot-com bubble, only to watch them slide and never recover.

In fact, if the Dow had kept its original 30 stocks, simply holding those that didn't fail and doing nothing else, the nine remainders would have topped out at more than 30,000 points in late 2007. The difference in compounding would have earned you 66% more during those 79 years.

Chevron's 60% gain in five years, however, is worth roughly nine times Bank of America's 69% loss for the Dow thanks to the difference in their share prices and the index's price-weighting formula. Chevron currently holds more sway than all but one of the Dow's components, so despite Altria and Honeywell's combined growth, their subsequent superior gain may not have influenced the index more than Chevron's gain has. Five years later, one share of both stocks was still worth $10 less on a combined basis than a single Chevron share.

Happy birthday, Chevron
Chevron's return to the Dow was a nice birthday present for the then-129-year-old company. Established on Feb. 19, 1879, Chevron has played an integral role in the growth of America's oil industry, particularly in its development on the West Coast. Within a year of its creation, Chevron -- as Pacific Coast Oil -- had built California's largest and most advanced refinery, begun one of the nation's earliest concerted drilling efforts, and built one of the earliest oil pipelines.

It was an auspicious start, and the company's continued growth soon brought it to the attention of John D. Rockefeller, the legendary leader of the Standard Oil Trust. The two companies were initially competitors, but Standard's superior scale and financial wherewithal soon allowed it to dominate the West as it had the East. Pacific Coast Oil, unable to regain its original market position, sold itself to Standard Oil's California subsidiary in 1900.

Joining Standard Oil allowed the rebranded Standard Oil of California to thrive again. In 1910, the company's abandoned drilling efforts resumed in a big way when it struck a massive oil deposit in Kern County, Calif. A year later, Standard Oil was broken up, but Chevron continued to grow. In 1924, it became the first "baby Standard" to join the Dow, and it held on to this position until 1999, when it was removed in favor of the aforementioned tech companies. Along the way, it bought into two major industry developments. The first modern gas station was opened by Gulf Oil in Pittsburgh in 1913, and Chevron later acquired this company in 1985 in what was then one of the largest mergers in history. Chevron also acquired Texaco, the first major oil company to capitalize on the legendary Spindletop gusher in Texas. Today, it's the second-largest of the Baby Standards next to ExxonMobil, and it's one of the largest oil companies in the world by both market capitalization and daily oil-production volume.

So long, HD DVD
On Feb. 19, 2008, Toshiba finally discontinued its support of HD DVDs. This brought the eight-year high-definition format war to a close, and Sony's Blu-ray discs came out as the victor. It was a particularly satisfying victory for Sony after its crushing defeat in the earlier videotape war, during which it backed the losing Betamax format. Sony's decision to include a Blu-ray player in its PlayStation 3 console helped spur adoption, but Blu-ray had a wider base of corporate support from the beginning. When Time Warner's Warner Brothers decided to drop HD DVDs in January of 2008, just before CES, it sounded the death knell for the format.

The Blu-ray format continues to displace standard DVDs. Despite the popularity of digital video, an estimated 400 million Blu-rays are expected to sell in 2013.

Happy birthday, Kellogg's
Chevron isn't the only major dividend stalwart with origins on Feb. 19. Kellogg's was originally founded on Feb. 19, 1906 as the Battle Creek Toasted Corn Flake Company. It is one of the few companies that can claim to have been born in a sanitarium -- something one usually hears of only in horror films.

The Battle Creek Sanitarium in Michigan was run by Dr. John Harvey Kellogg beginning in 1876. The young doctor, a Seventh-Day Adventist, practiced vegetarianism and promoted dietary remedies for the clinically insane. Among these remedies, of course, were corn flakes, the result of attempting to roll stale cooked wheat into flat sheets. It turned out to be popular with patients, who were typically fed the dullest food possible as a method of treatment. Corn flakes were patented in 1896, and Will Keith Kellogg, John's brother, founded the company a decade later to bring corn flakes to a mass audience. His addition of sugar to the corn flakes angered Dr. Kellogg, and the brothers suffered a rift in their relationship as a result. The company was renamed Kellogg's in 1922.

Today, thanks to its 2012 acquisition of Pringles, Kellogg's is not only the most notable breakfast purveyor in the world, but also the second-largest snack-food company in the world. Dr. Kellogg would not have approved, but it's a good thing his brother thought taste should matter.

Kellogg's was instrumental in pushing a widespread dietary shift from hot, weighty breakfasts to cereal, but it wasn't the only sanitarium-born cereal company to become successful. By a twist of fate, C. W. Post, the founder of General Foods, stayed at the Battle Creek Sanitarium and was inspired to create his earliest successful breakfast products based on the dietary regimen Dr. Kellogg prescribed for him there. General Foods was the longtime corporate umbrella for Post cereals, and after playing a part in multiple mergers, acquisitions, and spinoffs since the 1980s, Post is now an independently traded public company, while the rest of General Foods remains part of Kraft.

Pipeline's progress
Chevron also shares its birthday with another notable oil industry first. The first known reference to an oil pipeline laid from a productive oil well was made in the Derrick Handbook of Petroleum on Feb. 19, 1863. As reported in that publication and later recounted by Samuel T. Pees of the Oil History site:

Barrows & Co. of Tarr Farm have for some time been conveying oil from the [Densmore wells] to their refinery, a distance of 800 to 1000 feet by this means and the plan was said to work admirably. A two-inch iron pipe was laid in 1863 from the Tarr Farm to the Humboldt refinery at Plumer, an oil line distance of two and a half miles. The oil was forced through this by powerful pumps.

Unfortunately, this early pipeline was hardly as sophisticated as those in use today, and its leaky joints and faulty pumping machinery could not handle the job over the long term. Despite these flaws, the pipeline so threatened transportation workers that had been moving the oil previously that they simply tore the pipeline apart rather than assisting in its repair.

Pipelines have since become an indispensable part of the oil value chain, and the United States maintains by far the largest energy pipeline network in the world. The country's 200,000 mile petroleum pipeline network was 10 times as large as that laid on the entire European continent in 2001. Kinder Morgan, which primarily operates its pipelines through MLP subsidiary Kinder Morgan Energy Partners (NYSE: KMP), is considered "the ExxonMobil of pipeline companies" following a 2011 deal that brought its total pipeline network (including natural gas) to a size of 80,000 miles.