Doing some research on this and this is what I came up with. Interesting reading.
The true reason why amateur radio operators came to be called "HAMS" is no longer known.
More specifically, the truth has been lost to time over the many years. Various speculations do exist, however, each with their own degree of believability. Presented below are some of the more common theories, presented in no particular order of importance or preference. The theories presented have been gleaned from internet searches, printed works, and word of mouth from some of our more experienced... (Older) hams !
Theory One: The three letters (H.A.M.) are initials, which pay homage to the last names of three of the great radio experimenters of bygone years. George HERTZ, who demonstrated the existence of electromagnetic waves in 1888, Edwin ARMSTRONG, who developed a resonant oscillator circuit for radio frequency work, and finally, Guglielmo MARCONI, the 1909 Nobel laureate in Physics, who in the year 1901 established the first transatlantic radio contact.
Similar to this name / initials honorarium of the past great minds of radio,
comes one based on slightly lesser minds, but nonetheless
most heroic in their own right. Let's look at:
Theory Two: This theory suggests that "HAM" is the combination of initials of the last names of three college students at Harvard, who supposedly had their own amateur radio station in the early nineteen hundred teen something. This was at a time when experimenters had free reign of the radio spectrum, and any legal administration, red tape or federally assigned callsigns were in their infancy or altogether non-existent. Their last names were (supposedly) HYMAN, ALMAY, and MURRAY, and they operated their little amateur radio station with a (self-assigned) call sign of "H.A.M." The three young men were merely identifying their station as "theirs" by using their names. ("H.A.M.")
Shortly after this fledgling station emerged, the government DID start proceedings to license, administrate, and "control" all radio operators, amateurs included. Amateur radio stations, Commercial broadcast stations, and rogue radio operators were springing up all across the nation. Some of these transmissions were causing interference, and thus the government was attempting to gain control and administration of the entire radio spectrum. Early amateur radio operators had quite a fight to maintain any radio spectrum what so ever for their use in their experiments. This fight for government control threatened to eliminate all amateur radio stations entirely by placing all radio transmissions under the control of the Department of the Navy. The Navy’s official position on this issue was, "the ONLY radio transmissions that should be authorized should be those of a military nature."
Now, with that brief history concerning the control of radio spectrum in mind, let’s get back to our college students and their "H.A.M." station. "Supposedly", an impassioned speech was made on the floor of the US Congress in behalf and support of amateur radio operators and their commercial broadcast counterpart stations as well. The Harvard boys, which operated "H.A.M", became the poster child, so to speak, of ALL of amateur and commercial radio's experimental advancements and endeavors nationwide. They became known as "the little HAM station that could". This congressional speech, citing the station "H.A.M.", supposedly turned the tide and defeated the bill that would eliminate commercial and amateur radio entirely, and turn the airwaves completely over to the navy.
The problem with this theory is that an exhaustive search of the Congressional Record turns up no such speech, and the Harvard School histories have no record of the Amateur Radio station called "HAM". However, that having been said, it is also a very well known fact there were inaccuracies in the Congressional Record in the early part of this century, yielding it a dubious tool for proof or disproof of any topic. Before Congressional reforms were enacted later on in the 1900’s, the rules of Congress were very lax indeed. Enough so, that just about any member of congress could have just about anything posted as having been read into the congressional record, whether it was actually SPOKEN on the floor of Congress or not. Likewise, members of Congress who knew the "right people" and had enough "pull", could have certain "non-essential" items REMOVED from the Congressional record, under the guise of shortening an already impossibly large document. The potential here for misuse and abuse is obvious. Back then, many members of Congress could appease their constituents and special interests by claiming to have made an impassioned plea for their cause on the floor, and pointed to the "Congressional Record" as proof. This led to many obviously ridiculous paradoxes on "matters of record," such as speeches made by members days or weeks AFTER they boarded a plane or boat which crashed or sank, killing them. These paradoxes and inaccuracies have been documented, so the fact that no (congressional) record exists of the HAM debate remains suspect and subject to conjecture.
Theory Three: Drawing from the congressional "control" theory above, and in an attempt to explain "technical, radio, and electronic matters" to a non-technical congress and general public, here is yet another theory of why Amateur Radio operators are called HAMS: During the earlier days of radio communication, the commercial and Amateur Radio broadcasters had won their fight against the NAVY, (see above). The government (not the military) stepped in to organize and control frequency allocation of these new "short-wave" frequencies. When all was said and done, the government allowed radio amateurs to operate only on certain frequencies which were scattered in an amongst the other licensed (authorized) frequencies. This holds true to this day. The Amateur Radio frequencies were said to be sandwiched "like the HAM in a sandwich" between the other frequencies, and so Amateur Radio frequencies came to be known as the "HAM" segments of a particular band.
Theory Four: Another theory attributes the term "HAM" to: Hugo Gernsback, publisher of a magazine called "Home Amateur Mechanic" which was very, very popular back in the early days of radio. It was so well know, it was a household word, just as the magazines "People", or "Reader’s Digest" are today. Although it was primarily more mechanical in content, it did contain fairly regularly, Amateur Radio construction projects. Thus, when asked what sort of radio a person had, the reply, more often than not, was he: "had one of those "H.A.M." (using just the initials of the well known magazine name.) This theory becomes a bit more believable when you consider the Amateur Radio practice of using just initials or letters for many commonly understood words in order to shorten transmissions and ease sending of messages, especially when using Morse Code. "Home Amateur Mechanic" was simply shortened to H.A.M.
Theory Five: Some speculate the term "HAM" stands for "Help All Mankind" as reflected in the radio amateur’s long history of service towards people in distress during natural calamities, disasters and civil emergencies. In fine S.O.S. tradition, this gives us H.A.M.
Theory Six: Others believe the term "HAM" derives it’s origin from the British. From late in the nineteenth century forward, British sports writers used the "AM" to describe rank AMateurs in sports. It first came into the "electronics arena" from the "wire telegraphers" used by these sports writers. The telegraph operators originally applied it to the younger and inexperienced "cub" reporters. These young sports writers often provided illegibly written or poorly worded copy for the telegrapher to transmit. The professional news telegraphers had beginners in their own line of work, and they picked up the 'AM terminology from the sportswriters, and applied it to their own field. Often the inexperienced new telegraph operators were called "AMs", for the amateurish way they sent messages.
That theory is further explained in the following account...
Theory Seven: (or maybe theory: 6.5): This theory holds that the term "HAM" actually derives from what the seasoned commercial (professional) telegraph operators called the (hobby) amateur radio operators. When the inexperienced hobby radio enthusiasts began to venture on air with crude spark-gap transmitters, based on vehicle ignition coils, their code transmissions must have been pretty poor compared to the commercial telegraphs of the day. The commercial operators referred to the amateurs by using a modification of the old telegrapher's insult (from above) by saying the operator was "ham fisted", meaning that they weren't of professional skill. "Ham Fisted" referred to their style and proficiency of sending telegraph code which could have been done just as well by using a ham (the cut of pork) on the telegraph key to pound out their rudimentary code.
Theory Eight: Along those same lines of thought, came this theory linked to the stage and theater, where the term "HAM" is used to denote an actor of indifferent ability, or one who shows off his skill (or lack thereof), by performing in spite of and mostly oblivious to his own ineptitude.
Theory Nine: This following theory seems to combine the "ham fisted" and the "un-professional operator" theories from above, but also adds a bit more insight as to why amateur radio operators might be called "HAMS": Definition of HAM: "A poor performer. [in this case:] "An operator of poor performance and courtesy". Even before wireless radio, that's the gist of a definition of the word "Ham" given in the G. M. Dodge book: "The Telegraph Instructor." The definition never changed throughout wire telegraphy history. The first WIRELESS operators were, of course, originally land based (wire) telegraphers, who left their offices to go to sea or to man the coastal stations. They brought with them to their now jobs their old habits, both good and bad. Along with them came also slang terms, operating practices, and much of the tradition of their older profession.
In those early days, spark-gap radio transmissions were king, in fact it was the only type of transmission readily available, and every station occupied the same wavelength - or, more accurately perhaps, every station occupied a very large portion of the bandwidth with its broad spark signal. Government stations, ships, coastal stations and the increasingly numerous Amateur Radio operators all competed for signal supremacy, causing quite a cacophony noise and interference in each other's radio receivers. Many of the amateur stations were very powerful indeed. Two amateurs, who were just talking to each other across town or in neighboring cities, could effectively "jam" all the other operators in a very large area with their strong signals. When this happened, the frustrated commercial operators would telegraph the ship whose weaker signals had been blotted out by the amateurs and send: "SRI OM THOSE HAMS ARE JAMMING YOU." ("Sorry old man, those "HAMS, (meaning poor and discourteous performers), are jamming you’).
Amateur radio operators, who may have been unaware of the real meaning of that derogatory term "HAM", picked it up and applied it to themselves and wore it with pride. Much as the term "Yankee Doodle" started out as a derogatory term from the British, and then came full circle to be worn with pride to those it was once intended to ridicule. As the years advanced, the telegrapher's original meaning of inept and poor performing completely disappeared.
These past few derogatory theories may well be close to the true origin of the term, but it seems unlikely that amateurs would willingly adopt a term meant to be insulting to them as their name. However, consider this: There was an English professor at University of MD who pointed out that "bad" or "insulting" words sometimes fall into a period of disuse, which causes the meaning to become obscure, setting the stage for them to be (ironically) resurrected with more polite, or merely self-deprecating, meanings. Consider, for example, the word "naughty." In Shakespeare's time, it directly translated as "evil" or "demonic," and therefore fell out of polite usage in most social circles of the time. In current usage, however, it's much more benign, and often used to good-naturedly scold friends or even children. It would not be implausible then, for what started out as an insult, to later become adopted by the very group it was intended to ridicule. Today, to be "branded" a "good Ham", is one of the highest compliments an Amateur Radio operator can receive.