168 INDUSTRIAL REVOLUTION AND WAGES 
that low prices might also occur along with a high level of 
compensation to workmen. 
Prior to the war, however, these truths had received 
very little, if any, practical consideration and application. 
They had been recognized through the years, but their dis- 
cussion had been limited to academic circles. The first 
practical adoption of the theory as a working basis was 
made by Mr. Henry Ford in 1914. He was the pioneer of 
the new era as to wage theories, but it was years before in- 
dustry in general accepted his point of view. In establish- 
ing a $5.00 minimum day-wage in the Ford Motor Com- 
pany plants in the above-mentioned year, he pointed out 
that high wages could be paid and lower costs realized by a 
wider adoption of machines and machine processes, and if 
prices at the same time were lowered, sales would be stimu- 
lated by greater consumption. Under these conditions, 
profits per unit of output would decrease, but the aggre- 
gate of profits in money terms would increase. If this 
policy were extended to industry in general, he claimed, it 
would result in increasing general consumption and in plac- 
ing the country on an assured basis of prosperity. 
Industry in general, however, refused to change its tra- 
ditional attitude until long after the war, and, even then, 
only after the adoption of the policy of wage and price de- 
flation in 1921 had been found futile as a means of reviv- 
ing prostrate trade and industry. Conditions were altered 
only after such leaders as Herbert Hoover, Secretary of 
Commerce, Julian M. Barnes, President of the United 
States Chamber of Commerce, and many others, had 
pointed out the fallacy of cutting wages as a stimulus to 
prosperity or of attempting to return to the so-called “nor- 
malcy” of pre-war conditions as to wages and prices.! 
With the new idea once practically and officially sanc- 
1 See pp. 79-83.