Virtue, Fortune, and Faith: A Genealogy of Finance

4. The Dow Jones Average and the Birth of the Financial Market

87 4 The฀Dow฀Jones฀Average฀and฀ the฀Birth฀of฀the฀Financial฀Market “They฀came฀to฀take฀the฀census.” “Yes,฀and฀what?” “And฀my฀mother฀told฀me฀to฀hide.” “What฀for?” “What฀for.฀That’s฀the฀point.฀I฀didn’t฀know฀what฀for.฀She฀thought,฀I฀don’t฀ know฀what฀she฀thought.฀I฀went฀and฀hid,฀you฀know.฀Two฀people฀at฀the฀door฀ with฀clipboards.฀She฀said,฀Get฀inside,฀stay฀down.” “Stay฀down.” “She฀said,฀Stay฀down.฀I฀don’t฀know฀what฀I฀thought฀and฀I฀don’t฀know฀ what฀she฀thought.” “It฀was฀only฀the฀census.” “Don’t฀say฀only฀the฀census.” don฀delillo,฀ THE฀POLITICS฀OF฀COUNTING In DeLillo’s novel Underworld, this dialogue takes place between a white Italian American from the Bronx and a black American from St. Louis, Missouri. Although both men are in their forties and have well-paid corporate jobs, the differences in their backgrounds become forcefully apparent when it seems impossible for the Italian American to understand how the taking of the census can be experienced as a threatening and intruding force by the black family. In fact, the history of census taking in the United States demonstrates the political power of population counting and justifies the black 88฀ ฀ ·฀ ฀ dow฀jones฀average mother’s apprehension toward the census takers. In the first U.S. census in 1790, black slaves were recorded as three-fifths of a person for purposes of representation in Congress (Cohen 1982, 159). Furthermore, as Patricia Cline Cohen documents, the 1840 U.S. census found that “the black population of the North appeared to be beset with epidemic rates of insanity, which suggested to some that ‘science,’ as revealed by tables of figures, had proved freedom to be detrimental to blacks” (1982, 177). Although the taking of the census is often assumed to consist of objective and unintrusive counting, processes of measuring, counting , and classifying form important operative domains for modern political power. That the politics of census taking are not just a historical aberration is demonstrated by the political controversy surrounding the 2000 U.S. census (Hannah 2001). Because the 1990 census missed an estimated 4 million people, disproportionately from minority groups living in low-income areas, the Clinton administration proposed a new method for census sampling to be used in the 2000 census. This new method was rejected, however, in a January 1999 Supreme Court decision that held that the census should strive for an “actual enumeration,” as stipulated in the U.S. Constitution (530). The political stakes of the case were located in the fact that census figures provide the basis on which the seats of the House of Representatives are distributed among the states as well as the basis on which public and private moneys are channeled. While Democrats had hoped to be able to claim more grants for underprivileged and mostly Democratic population groups, Republicans expressed fear that the new counting method would compromise the “integrity of the census” by replacing the actual and individual head count with statistical sampling (Greenhouse 1999; also Holmes 2000). This chapter discusses the powers of classifying, counting, and calculating that are not only inherent in census taking, but also in statistics in general and financial statistics in particular. While statistics have become accepted as objective and unmediated counting , they are permeated with political origins and consequences. As Hannah puts it, surveys and censuses are “technologies that manipulate or transform what they are supposed to represent” (2001, 516). Modern credit practices are perhaps understood to be inherently numerical and statistical, more so than the practices of democratic representation. However, as I will argue, the alignment of specula- dow฀jones฀average฀ ฀ ·฀ ฀ 89 tive practices with statistical measurement and management was neither natural nor unambiguous, but provided an important step in the emergence of a professional domain for financial participants. Charts, graphs, and tables of market activity did not so much represent “financial reality” as transform diverse and contingent credit practices into a coherent and measurable financial domain with a life cycle of its own. Furthermore, the virtues associated with statistics provided one way in which the moral superiority of speculators became articulated in the face of political critiques of the exchanges as discussed in the previous chapter. Of particular importance to the emergence of a coherent and observable professional financial domain was the birth of financial averages in the late nineteenth century in general and the Dow Jones...