At the turn of the century. Wall Street was run by men in muttonchop whiskers, high square derbies, baggy trousers; they thought of stock prices as unrelated quotations on individual issues, often the result of manipulation. Charles H. Dow, a small, precise man, first editor of The Wall Street Journal, had a different idea; he had been keeping averages of railroad and industrial stock prices since 1897, had found beneath individual fluctuations a trend of the market as a whole.
Charles Dow died in 1902 without having made much impression on cynical Wall Street. A subsequent editor of the Journal, florid William Peter Hamilton, embroidered the idea, told men in pegtop trousers and telescope hats that the averages forecast both business and market trends. In 1922 he published The Stock Market Barometer, first comprehensive book on the Dow Theory. William Hamilton died in 1929—a few weeks after he announced that the greatest bull market in history had ended: "On the late Charles H. Dow's well-known method of reading the stock market movement from the Dow-Jones averages, the twenty railroad stocks on Wednesday, October 23 confirmed a bearish indication given by the industrials two days before. Together the averages gave the signal for a bear market in stocks after a major bull market with the unprecedented duration of almost six years."
Third and most influential champion of the idea is Robert Rhea (pronounced Ray), a Colorado Springs invalid, author of The Dow Theory, textbook published in 1932 at the bottom of Depression I. Printed at his own expense. 91,000 copies have been sold. Robert Rhea first went to Colorado Springs in 1910 with tuberculosis, in three years was pronounced cured. But in the air service during the War he had a minor crackup, got influenza and pneumonia, was discharged as permanently and totally disabled. Seeking relief from pain in utter exhaustion, he worked in bed at market studies begun earlier, finally completed the exacting task of charting Dow-Jones industrial and rail averages from January 1, 1897. These charts, magazine articles and his textbook covered his bed with fan correspondence from Dow Theorists. Then he started an interpretive-letter service, which is now prepared with the help of a staff averaging 25. Last week his 205th interpretive letter went to 5,565 subscribers throughout the world (by air mail in the U. S.). Typically, it commented on both the primary (year-to-year) and secondary (month-to-month) trends of the market; reminded subscribers that the former ''continues to point downward." said that the latter's trend will be shown by consistent upward cr downward swings of both averages.