Twice each year Americans reset their clocks to accompany the beginning or end of Daylight Saving Time. Most of us will make the change with little thought about why we’re doing it. And if we do ponder the reason for it, we’ll blame the farmers.

It’s generally accepted that Daylight Saving Time “(DST) was instituted to give farmers more daylight hours to tend to and harvest their crops. Not so. Farmers vigorously opposed the implementation of DST when it was first introduced in World War I.

If you want to blame someone, blame the bankers.

Before I explain the bankers’ role in DST, the father of DST is considered to be Englishman William Willett. He formulated the idea in 1905 on a pre-breakfast ride. In his opinion, Londoners slept too late in the morning during the summer months. He was also an avid golfer and calculated that an extra hour of daylight in the summer months would allow him to finish his rounds with plenty of sunlight.

Credit: Library of Congress via

Willett lobbied the British Parliament to adopt Daylight Saving Time until his death in 1915. It wasn’t until Germany implemented DST during World War I that the British goverment, and eventually the U.S., followed suit. The Germans reasoned that DST would alleviate coal shortages. After the war, the U.S. and Germany eliminated DST, but Britain continued to observe the twice-a-year time change.

Even before the war, the U.S. Chamber of Commerce was an ardent supporter of DST as a means to improve business efficiency (i.e. boost retail sales), according to Michael Downing’s book “Spring Forward: The Annual Madness of Daylight Saving.” Following the war, prominent businessmen in New York lobbied Congress to permanently adopt DST. Congress eventually repealed Daylight Saving (after two vetoes by President Woodrow Wilson), so in 1919 the New York City Board of Aldermen, with the support of the merchant associations and bankers, implemented a city ordinance establishing DST.

Back to the earlier question, “Why did bankers care about Daylight Saving?” One word: Arbitrage. Arbitrage occurs when a broker buys a security or commodity in one market and then immediately sells it in another market to take advantage of a price discrepency.

In his book, Downing notes that during the early 20th century the New York Stock Exchange opened at 9 a.m., while London’s exchange closed at 3 p.m. When both cities were on standard time, it was only 2 p.m. in London when the the New York exchange opened. That gave New York brokers 1 hour to make arbitrage trades before the London Stock Exchange closed. When the British moved the clocks forward an hour for DST in the spring and summer months, the “arbitrage hour” was lost because London was now 6 hours ahead of New York instead of 5 hours.

There can be good money in arbitrage trading, so the financial interests pushed New York City leaders hard to adopt DST. Of corse, once New York adopted DST to sync with London, Boston, Philadelphia and Cleveland quickly followed suit so their stock exchanges were not at a disadvantage.

A hodge-podge of cities and states adopted DST throughout the 1920s and 1930s. Daylight Saving was adopted nationally during World War II, but again to returned to local control following the war.

At the urging of the Transportation Department, Congress approved The Uniform Time Act of 1966 to establish standardized dates and times for the beginning (last Sunday in April) and ending (last Sunday in October) of DST. States, notably Indiana and Arizona, could opt out.

The Transportation Department’s interest in uniform time measures grew out of increased interstate commerce. There were more planes, trains and automobiles traveling through many more communities which made the hodgepodge of local time standards confusing for logistics.

In 1987, Congress agreed to move the start of DST to the first Sunday in April. Again it was the business community — not the farmers — who pushed for the change. Clorox, which manufactured Kingsford Charcoal, and 7-Eleven helped fund the Daylight Saving Time Coalition, as did the National Association of Convenience Stores, the International Association of Amusement Parks and Attractions and the Sporting Goods Manufacturer’s Association. Downing says in his book that the golfing industry urged Congress to add an extra month of DST because it would mean and additional $200 to $400 million in sales, while the barbecue industry said an extension would mean $100 to $150 million in sales.

An interesting side note: The former executive director of the Daylight Saving Time Coalition, James Benfield, told a  Congressional subcommittee in 2001 that in 1987 he was able to secure yes votes on the DST extension bill from both senators from Idaho by showing them that Hardees, McDonald’s and other fast-food chains posted better sales during Daylight Saving. More sales means more French fries, and thus, more potatoes purchased from Idaho farmers.

Congress again voted to extend DST in 2005, moving the start date from the first Sunday in April to the second Sunday in March, as well as moving the ending date from the last Sunday in October to the first Sunday in November.

This was a long post, I know, so here’s some potential questions for Wednesday’s trivia:

  1. Who is the father of Daylight Saving Time?
  2. Why did bankers care about Daylight Saving?
  3. According to the golf industry, by how much could sales improve by extending DST in the mid-1980s?