In the early 1950s, Rolex and Blancpain created the prototype of the modern, serious dive watch with the now-classic rotating bezel, but they didn't invent the first watch used by divers. So what did divers use before dive watches?
Going back to World War II, undersea operations and the need for salvage and rescue became prominent (particularly by Italian Navy divers). This led to a dramatic increase in the need for water-resistant watches to aid in underwater operations while providing accurate timing and directionality. The 1940s saw the introduction of a variety of water-resistant watches, including canteen-style watches with a cap on the crown for increased water resistance. In the early 1930s, Panerai supplied Italian Navy divers with a variety of tools, as well as the first watches developed specifically for divers (in collaboration with Rolex).
In 1932, Omega introduced the Marine, a square-shaped wristwatch for more civilian use. It featured a patented case that could be removed by sliding left and right, and was (theoretically) water resistant to over 100 meters. The American naturalist and explorer William Beebe confirmed that the Marine was watertight even at a depth of 14 meters, and it was popular with pioneers of diver's watches, such as French naval officer Yves Le Prieur.
However, to get to the truly early days, we need to go back even further in time.
In the early 1920s, watch companies introduced a number of standard wristwatches and bracelet watches with waterproof cases, most notably the Rolex Oyster case worn by Mercedes Gleitze during her successful crossing of the English Channel in 1927. However, the underwater world targeted at divers was essentially nonexistent for the watch industry, as divers at the time moved through water by wading.

This was the era of divers wearing protective helmets. Beginning in the 1820s, brave souls began attempting to walk the ocean floor using tools originally designed for firefighting. Since air was constantly supplied from above, measuring time underwater wasn't a priority. As underwater exploration expanded and diving became industrialized, the first autonomous diving helmets were developed in the early 20th century. This created a growing need for divers to know how long they could spend underwater. The watch industry already had experience making waterproof pocket watches, for various reasons. Fortunately, the idea of a pocket watch worn on the outside of a diving suit was not pursued because it would not have been able to withstand the physical demands of a diver's work.
The solution was quite simple: divers wore pocket watches inside their diving helmets. This allowed them to keep track of the time along with their depth gauges, all in sight. This involved fitting a second watch case inside the helmet so the watch could be accessed whenever needed (see photo).
So, as soon as the divers heard the command to "put on your helmets," they could see and hear the ticking of a pocket watch, praying it wouldn't get submerged in water.
