According to Merriam-Webster's Eleventh Collegiate Dictionary *(2003), echelon has been in the English language since 1796 and has a very clear source and literal meaning:
echelon n {F[rench] échelon, lit., rung of a ladder, fr. O[ld] F[rench] eschelon, fr. eschele, ladder, fr. L[ate] L[atin] scala} (1796)
The Eleventh Collegiate goes on to report that the earliest meaning of the word in English referred to a military formation:
1 a (1) an arrangement of a body of troops, with its units each somewhat to the left or right of the one in the rear like a series of steps
Subsequently, echelon came to be applied figuratively to "one of a series of levels or grades in an organization or field of activity" and to "a group of individuals at a particular level or grade in an organization," according to the same dictionary. The general sense of echelon as simply "rank or level" emerged fairly recently, however. As late as Webster's Fifth Collegiate (1936) the noun had just two definitions—one military and one naval, and both quite narrow:
echelon n. ... 1. Mil. An arrangement of troops with units drawn up in parallel lines, but each somewhat to the left or right of the one in the rear, like a series of steps; also, one of the divisions. 2. Nav. An arrangement of the vessels of a fleet in a line of bearing at an angle to the way the ships head.
This explains why Webster's Dictionary of Synonyms (1942) offers no discussion of the term echelon: at that time, its meanings had involved very little overlap with the meanings of other words. Merriam-Webster's first acknowledgment of a nonmilitary/nonnaval meaning of echelon appears as definition 5 of the word in the Sixth Collegiate (1949):
echelon ... 5. A fraction or subdivision of any arrangement consisting of a series of step, as one of the grades of command in an army, one of the levels of authority in an organization, one of the ordered steps in an operation or process.
For its part, the earliest meaning of rank in English (again according to the Eleventh Collegiate Dictionary) is not specifically military, although such definitions do emerge early on:
rank n {M[iddle] E[nglish], from A[nglo-]F[rench] renc, reng, of G[ermanic] origin; akin to O[ld] H[igh] G[erman] hring ring ...} 1 a : ROW, SERIES b : a row of people c (1) : a line of soldiers ranged side by side in close order (2) pl : ARMED FORCES (3) pl : the body of enlisted personnel d : any of the rows of squares that extend across a chessboard perpendicular to the files ... 2 a : relative standing or position b : a degree or position of dignity, eminence, or excellence : DISTINCTION ...
Unlike its 1942 predecessor, Merriam-Webster's Dictionary of Synonyms (1984) does cover the word echelon, in a group of words that also includes line, row, rank, file, and tier. Even so, the focus of its discussion of rank and echelon is strikingly military:
Line, row, rank, file, echelon, tier are comparable when meaning a series of things arranged in continuous or uniform order. ... Rank and file are found chiefly in military use, rank denoting a row of men side by side, file, a row of men behind one another ... {the front rank was ordered to take one pace forward} The conjoined use of these terms in rank and file is an idiomatic extension meaning the masses of men as distinguished from their leaders or rulers. Echelon usually implies a regular arrangement or formation in which each unit (as one of a series of parallel ranks of troops or one of fleet of vessels headed in the same direction) is a little to the left or right of the unit immediately behind.
This discussion seems anachronistic, given that the meanings "one of a series of levels or grades in an organization or field of activity" and "a group of individuals at a particular level or grade in an organization" for echelon have (with slight variation in wording) appeared in Collegiate Dictionaries starting with the Seventh Collegiate (1963).
In nonmilitary settings, it seems to me, the main difference between rank and echelon is that rank retains at least some sense of being primarily a horizontal row, viewed hierarchically relative to other horizontal rows above and below it, while echelon retains some faint suggestion of an offset step, as on a set of stairs. The historical memory of echelon's specific meaning as a particular military formation has faded as popular usage applies it to nonmilitary hierarchies—as in the familiar phrase "upper echelons"—and in such usage I think there is very little practical distinction between echelon and rank.
A side note on 'upper echelons'
A Google Books search for "upper echelons" yields matches starting in 1946. The first, not surprisingly, appears in a military context. From questioning of Admiral Claude Bloch by Admiral Thomas Hart on March 11, 1944, in U.S. Congress, Joint Committee on the Investigation of the Pearl Harbor Attack, Proceedings of the Hart Committee (1946):
Q. Do you remember whether or not the existence of that formally expressed opinion by those two officers [General Martin and Admiral Bullinger] who, presumably, were the most experienced in their on line, was generally known to the upper echelons of command around Oahu?
The same report includes two other instances of "upper echelons," used similarly to mean "highest-ranking officers in the relevant chain of command"—once by Vice Admiral Roland Brainard on May 11, 1944, and once by Admiral Hart (again) on June 6, 1944. These multiple instances suggest that "upper echelons" was established jargon in the U.S. Navy bureaucracy by 1944. However, nonmilitary instances of "upper echelons" appear as early as 1950. From The American Economic Review: Papers and Proceedings of the Annual Meeting of the American Economic Association (May 1950) [combined snippets]:
Trusteeship likewise changes the nature of the problems that must be considered by the upper echelons of management. This is because trustees cannot delegate their own power and responsibility to anyone. ...
During the interim of gradually acquiring experience, there will be sharp conflicts between the upper echelons, or trustee group, and the newly depressed echelons, or career management, of the different transportation units. ...
The farther echelon gets from the original stepwise military formation, the less distinction there is in popular usage between echelon and rank.
