The Dow Jones Industrial Average (DJINDICES:^DJI) has been around since 1896, and its antecedents date to 1884. This venerable index has refused to stand still ever since Charles Dow first sought to represent the American economy in a handful of companies. To date, the Dow has changed 49 times, with many moves occurring in clusters early in its history. What has become of the original Dow Dozen? Does any trace remain of the most notable industrial stocks of mid-1896?
Let's take a look to see just how important the Dow's original components actually were to the American economy and what eventually happened to them once they fell out of favor.
American Cotton Oil
This company was originally formed as a cotton oil trust in the 1880s, and it quickly dominated its niche. However, the American Cotton Oil Trust was dissolved in 1889 following a Louisiana antitrust lawsuit and reconstituted as a corporation. This company's stay on the Dow was brief, and it was gone in 1901. Following removal, the company was absorbed by a former subsidiary in 1929, changed its name to Best Foods in 1931, and merged with Corn Products Company -- now Ingredion -- in 1958. Corn Products, which had changed its name to CPI, split into Bestfoods and Ingredion in 1997, and Bestfoods was acquired by consumer products giant Unilever three years later.
Formed in 1891, American Sugar quickly became the dominant sugar-refining trust, and at one point it controlled virtually all processing capacity in the United States. The company remained a Dow component until 1930, by which point its power had waned. After first changing its name to Amstar in 1970, the company still exists today as Domino Foods.
Added in 1896, removed in 1899, added again in 1924, and removed again in 1930 before grabbing a spot in 1932 that it would retain until 1985, American Tobacco has a history almost as convoluted as its Dow membership. It was the original Tobacco Trust, but it was broken up in 1911 on the same day the Standard Oil Trust lost its antitrust suit. The Tobacco Trust became American Tobacco, R.J. Reynolds, Liggett and Myers (now a subsidiary of Vector Group), and Lorillard.
American Tobacco became a subsidiary of holding company American Brands in 1985, as the latter had been buying up various businesses since 1969. At one point, American Brands produced office supplies, golf products, home improvement products, and spirits. The company sold its tobacco business in 1994 and renamed itself Fortune Brands in 1997 to focus on its spirits and hardware segments. These business units split in 2011 to become Fortune Brands Home & Security and Beam (NYSE:BEAM), one of the most diverse liquor companies in the world.
A component for only two years, Chicago Gas was bought (and replaced on the Dow) by regional competitor Peoples Gas in 1898. Peoples remained a component until 1915, shortly before the index expanded to 20 components. It became Peoples Energy in 1980 and merged with a Wisconsin utility in 2007 to become Integrys. Integrys is still headquartered in Chicago.
Distilling & Cattle Feeding
This oddly named company became American Spirits Manufacturing mere months after the Dow's formation, but it was dropped from the list in 1899. Despite this rejection, American Spirits grew into a Whiskey Trust that controlled more than 70 distilleries on the eve of Prohibition. The company returned to the Dow as National Distillers in 1934 after the repeal of Prohibition, and it remained a component until 1959. During this time it expanded into chemicals and metals manufacturing. The company eventually sold its part of its alcohol business to Grand Metropolitan
General Electric Company
General Electric (NYSE:GE) is still going strong. It is one of the world's largest companies, with interests ranging from electric generators to mining and manufacturing. After a quick removal in 1898, GE returned to the Dow in 1907, and its steadfastness since then makes it the only member of the Dow's century club.
Removed after two years (the Dow was inconsistent in its formative years), Laclede Gas is still around. It's the largest natural-gas utility in Missouri and a subsidiary of holding company Laclede Group.
A more durable early member than most, National Lead held its spot until the Dow expanded to 20 components in 1916. National Lead, which became NL Industries (NYSE:NL) in 1971, is one of the oldest continuously operating lead-smelting businesses in the U.S.; its earliest predecessors were formed in 1772.
North American Company
This holding company lasted only until the very next change, when it was replaced by preferred shares of a rope maker. North American was formed to finance or acquire interests in utilities and transports, and the company grew into a multibillion-dollar venture -- leading to a brief second round on the Dow from 1928 to 1930 -- before its final dissolution in 1946 as a result of the Public Utility Holding Company Act. During its operating lifetime, North American held interests in numerous utilities and several railroads, many of which (including Laclede Gas) continue to operate today.
Tennessee Coal, Iron and Railroad
As its name indicates, this was a major transportation and mining company. It also grew into one of America's largest steelmakers by the turn of the century, contending with the predecessors of U.S. Steel (NYSE:X). However, the company fell on hard times during the Panic of 1907, and its struggle became a focal point in that crisis. Banking legend J. P. Morgan arranged for U.S. Steel to acquire TCIR during the darkest days of the panic, which marked the beginning of recovery and brought TCIR under U.S. Steel's umbrella. Today, the only remnant of that former industrial giant is one massive steel mill in Alabama, operating at a fraction of its maximum capacity.
U.S. Leather (preferred shares)
The original leather trust and the only preferred share on the original index, United States Leather was a massive operation in turn-of-the-century terms, boasting a market capitalization well north of $100 million by the time of the Dow's creation. However, it was dissolved in 1911 along with several other trusts, and the diminished company continued to hang in there until the early 1950s, when all of its assets were liquidated. It is the only member of the original Dow to be completely wiped off the corporate map.
Removed in the second Dow reformulation but added back in 1898, United States Rubber would hold on to its membership -- with occasional appearances by its preferred shares -- until 1928, when the index expanded to 30 components for the first time. U.S. Rubber grew through the 20th century, changing its name to Uniroyal in 1961. This company was taken private in the 1980s, but its tire operations were merged with Goodrich. This merger proved problematic, and French tire company Michelin acquired the Uniroyal Goodrich tire operations in 1990.
It can sometimes be hard to see the connections, but many of the largest industrial companies of 1896 are still with us today, in some shape or another. Will today's Dow components stand the test of time as well as many of its original dozen, or is the next century bound to be more tumultuous than the last?
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