This word appears to have been made up, probably as a joke, at Bell Laboratories in the 1960s, when they were developing keypads for use on telephones, to enable them to communicate with computers. They needed two special keys in addition to the ten number keys, and they chose the asterisk (which they started calling the 'star key') and the one that's also known as the hash sign (but which Wikipedia calls 'the number sign').
According to the excellent World Wide Words website (posted in 1999 and updated in 2010), "This word is beginning to appear in a few dictionaries, but still seems mostly to be a jargon term of the North American telephone business for the handset symbol #. It has reached semi–official status by being mentioned in international standards documents but that's no guarantee of a wide circulation any time soon."
World Wide Words goes on to say that the symbol has "a plethora of names", including several variations on octothorpe. The UK Post Office called it the square, and BT apparently still do (or did, in 1999).
World Wide Words gives five alternative explanations for the origin of the word 'octothorpe', but concludes: "Unfortunately, there's no corroborative evidence for any of these stories. Though [two of them] are anecdotally rich and circumstantial, they have to be regarded by etymologists with some caution because they aren't backed up by contemporary evidence. In fact, the first appearance of the word in print isn't until 1974 and that makes clear that the word was not widely known even then within the Bell telephone system."
The story that gets most credence, from Wikiquote as well as from World Wide Words, is that the sign was named in honour of Jim Thorpe, a Native American athlete who won two gold medals at the 1912 Olympics in Stockholm, but was disqualified because he was found to have accepted money for playing baseball three years earlier, which made him a professional. The story goes that in the early 1960s Don Macpherson, a Bell Labs engineer, went to instruct their first client, the Mayo Clinic, in the use of a new telephone system. He felt the need for a fresh and unambiguous name for the # symbol, and chose to start with 'octo' because of the eight points on the symbol. He was apparently active at that time in a group that was trying to get Jim Thorpe's medals returned from Sweden, so he decided to add 'thorpe'.
Jim Thorpe's medals were finally restored in 1983, thirty years after his death.
© Haydn Thompson 2017