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 discussion
 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 industry
 in general accepted his point of view. In establishing
 a $5.00 minimum day-wage in the Ford Motor Company
 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 stimulated
 by greater consumption. Under these conditions,
profits per unit of output would decrease, but the aggregate
 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 placing
 the country on an assured basis of prosperity.
Industry in general, however, refused to change its traditional
 attitude until long after the war, and, even then,
only after the adoption of the policy of wage and price deflation
 in 1921 had been found futile as a means of reviving
 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 “normalcy”
 of pre-war conditions as to wages and prices.!
With the new idea once practically and officially sanc-1

 See pp. 79-83.