Dealer question -- first to show wins pot?

[Javanewt]

At a casino recently, neither of the players wanted to show their hand. Player 1 had bet the flop and player 2 had called. Checked down the rest of the way. They wouldn't show, even though player 2 told player 1 he was last to act and needed to show first.

The dealer kept quiet and finally said, "First to show me two cards wins the pot."

If the loser had shown first and then the winner had tabled his hand, could the dealer have given the first to show (loser) the pot? Was the dealer totally wrong in saying this?

I was upset with the dealer for not just telling player 1 to show. That's the rule, right? Last to act (bet/raise) shows first?