(this is mostly from memory; i can't find most of the references in print or on line, although i know they exist somewhere.)
tex, as a system created in the u.s., was based on lettersize paper -- 8.5in x 11in.
in the original tex setup, now ensconced in
plain.tex, the page size settings are
\vsize=8.9in, which results in 1 inch margins (exact horizontally, and very close vertically) when a full page is centered.
in the early days, there was also a need to set a default location for the upper-left-hand corner of a page when it was to be printed. either at an early tug meeting at stanford, or perhaps in a discussion within the tex project group, it became clear that this would be arbitrary (although required). david fuchs (who was writing a key output device driver) stated, by fiat, that the origin would be set at 1 inch down, and 1 inch from the left edge of the paper. with no overwhelming objections, that became the default.
i can't prove it, but my guess is that latex simply followed the lead of tex itself in using this setting.