History via Wikipedia:
The QWERTY design is based on a layout designed by Christopher Latham Sholes in 1874 for the Sholes and Glidden typewriter and sold to Remington in the same year, when it first appeared in typewriters. It was designed to minimize typebar clashes, became popular with the success of the Remington No. 2 of 1878, and remains in use on electronic keyboards due to the network effect of a standard layout and the failure of alternatives to provide very significant advantages.The Straight Dope:
In what is generally considered the first practical typewriter--designed by an American inventor named Christopher Sholes and a group of cohorts in the late 1860s--the type, arranged in a sort of circular basket under the carriage, was prone to frequent jamming at typing speeds in excess of hunt-and-peck. (Another problem, by the way, was that type met paper on the underside of the cylinder, so the typist couldn't read the fruits of his or her labors without lifting up the carriage.) To solve the jamming problem, Sholes and company, who had originally arranged their keyboard in alphabetical order, decided to put the most commonly used letters (or what they thought were the most commonly used letters) as far apart as possible in the machine's innards. The next year, 1873, they turned their invention over to the Remington gun company of New York State, and their keyboard has been standard ever since, despite the fact that succeeding improvements in typewriter design quickly rendered it ridiculous.Of course, you already knew that. Today QWERTY is used in advertisements for cellphones to indicate that the technology YOU! MUST! BUY! RIGHT! NOW! includes a full keyboard.
Of course, a superior system exists. It's called the Dvorak Simplified Keyboard, or DSK, after inventor August Dvorak, who developed it while a professor at the University of Washington in Seattle. Among other improvements, the DSK puts all vowels in the "home row" of keys--the second row from the bottom--and favors the right hand slightly. Numerous studies have proved that it can be learned quite easily even by experienced typists, and that it makes for faster, less fatiguing, and more accurate typing than the conventional system. But habit, apparently, dies hard in the typing biz--the DSK was patented in 1932.
According to legend, the seemingly random layout of today's keyboards has its origins in the limitations of the first typewriters. The early machines were crude and prone to jamming if you typed too fast. The QWERTY keyboard was designed to place the most commonly used letters on the opposite sides of the keyboard, making jamming mechanically less likely. Legend has it that the QWERTY keyboard was also made intentionally clumsy (only one vowel in the home row, for instance) in order to slow down typists and further reduce the possibility of jamming.
Within a relatively short time, of course, typewriter engineering had improved sufficiently that jamming was no longer a major concern. But by then, the story goes, people were used to the QWERTY keyboard and we've been stuck with it ever since, even in the face of allegedly superior alternatives such as the Dvorak keyboard. Advocates say research proves the Dvorak is easy to learn and makes typing faster and more accurate. But it's never made much headway because of the crushing power of standards, even stupid ones.
Was the QWERTY keyboard purposely designed to slow typists?, The Straight Dope