How did the tradition of giving a gold watch at retirement get started?

The tradition of giving gold watches originated back in the 1940s with Pepsi Co. It was a symbol of "you gave us your time, now we are giving you ours". Back then, the watches were traditionally 18kt gold. There were different versions of the watches given, depending on position and status within the company. In the late 60s and early 70s, to cut costs, the watches were gold plated. Now, very few companies give watches as it is looked at as "not cost effective".