Here's the start of the story Callithumpian found in Wireless World (possibly volume 88, 1982):
In your February issue, Pat Hawker mentions "SNAFU" as a coinage of War II. I think he and your readers may be interested to know its pre-war origin.
During the said war it was my pleasure to work for a time with two clever and humorous American Western Electric telephone engineers, and they told me that their pre-war jobs had been to go to telephone exchanges where there was trouble and rectify it. Upon arrival at the site an engineer would make a brief estimate of how serious was the trouble, establish a telephone link to his headquarters and send back a code word. His home base would therefore know he had arrived where the problems were, have a rough idea of how long it would take to clear them and have a telephone number where he could be contacted if need be. There were three code words: SNAFU - Situation normal, all fouled up" (or words to that effect); TARFU - "Things are really fouled up"; and FUBAR - "Fouled up beyond any repair". The latter would be sent if, for instance, a telephone exchange had been seriously damaged by fire or flood, while SNAFU would be used for a situation where cables or machinery had been damaged but where repairs or replacement would be ...
Back to SNAFU. The OED says it's also originally US military slang, with the first citation from a September 1941 edition of American Notes & Queries, apparently in reply to a May 1941 article:
<< ARMY AIR SLANG (1:22 May '41)
The influence of air slang seems to have had no effect on army lingo here. There is very little, in all, that could be called really new: and most of it is unprintable. But if AN&Q would like these three — just for the record — here they are:
latrine-o-gram — baseless rumor (the latrine is the source of many a baseless rumor!)
snafu — situation normal
susfu — situation unchanged
Camp Forrest, Tenn.
This suggests SNAFU entered army slang from air slang.
Roaring Fish found another etymology of SNAFU from Don Taylor (wayback). Taylor says in April or May of 1941 (before Pearl Harbor) during radio network training at Camp San Luis Obispo, California, it came from a mechanical coding device that scrambled messages into five letter code groups. He and John Paup entertained themselves by forming initialisms from the codes.
Taylor's son Greg (wayback) writes:
One day, as he recalls, he received a code group S.N.A.F.U. from
"It was instantaneous, inevitable, and there was no question," the
words came to him; "SITUATION NORMAL, ALL F - - - - D UP! To Taylor
and other enlisted types, this perfectly described the military
growing pains before and just after Pearl Harbor.
Eventually S.N.A.F.U. spread like V.D. in an off base W - - - E house.
It went everywhere there was radio communication. The Pentagon literally survived on various levels of "SNAFU" until Warner Brothers picked up on it for their training film star!
As to how it spread, there is no way of knowing for certain. I think initially it got spread all over the 40th Infantry Division. At that point in time people were being sent to training schools such as Fort Monmouth, N.J., & Fort Benning Georgia. People from other divisions would be attending such schools and would take "SNAFU" back to their outfits when their training was completed. We also had people that were already proficient in certain jobs and they were sent in small groups to become the nucleus for new Divisions. There were also a number of individuals that were sent to Officer Candidate schools.
Taylor's story is discussed on the Snopes forums:
Fred Shapiro has provided evidence that "snafu" was in use at Camp Joseph T. Robinson (North Little Rock, Arkansas) in late July,
1941, a sighting that slightly antedates that which the OED provides.
(I've also found two instances of "snafu" in use in early August,
1941, also with regard to khaki field hats. As with Shapiro's July
find, soldiers from Kansas reported using the term at Camp Robinson.
There's no indication in these August newspaper articles that "snafu"
is an acronym, but a private does describe the new hats as "horrible,"
so one might assume that "snafu" generally referred to things and
situations "all fucked up.")
I guess a question, then, is whether there's enough time for an
acronym said to have been coined in San Luis Obispo in April/May 1941
to have made it to North Little Rock by late July. I think it's at
least possible, given that the explanation in the link in the OP
offers an origin in radio transmission and mentions that,
Quote: As to how it spread, there is no way of knowing for certain. I think initially it got spread all over the 40th Infantry Division. At that point in time people were being sent to training schools such as Fort Monmouth, N.J., & Fort Benning Georgia. People from other divisions would be attending such schools and would take "SNAFU" back to their outfits when their training was completed. We also had people that were already proficient in certain jobs and they were sent in small groups to become the nucleus for new Divisions. There were also a number of individuals that were sent to Officer Candidate schools.
Note that Shapiro's July find mentions that "[t]he sergeant went on to
explain that 'snafu' was a term the 35th division outfits that went on
maneuvers over in Tennessee last month [June] imported to Camp
Robinson." It's difficult to know whether the Tennessee usage referred
specifically to hats or whether this reflected a general usage of
"snafu" with its implication that things were "fucked up."
Shapiro's sergeant says the name first applied to khaki hats, and suggests the name came first and then "somebody decided it was a bunch of letters that stood for words". These hats references are interesting, and deserve more attention -- did why exactly was snafu used for hats in the first place?
There's also Tennessee again, where Private "W" wrote from in September 1941 (OED).
Barry Popik found this in the San Francisco Chronicle, 15 June 1941, pg. 5, col. 4:
"Snafu" means "situation normal, all fuddled up."
"Red Lead" is tomatoes, tomato sauce or ketchup.
Cream and sugar or salt and pepper are "sidearms." Salt, alone, is
Spinach is "seaweed."
Bonnie Taylor-Blake adds:
From Howard Needham's "Slanguage: Army Camps Developing a
Dictionary," The San Francisco Chronicle, 15 June 1941, p. 5.
Needham, a staff writer for the Chronicle, filed his report from
Hunter Liggett Reservation, southern Monterey County, California the
previous day. He attributed a crop of expressions new to Hunter
Liggett to some 35,000 troops who had arrived from Fort Lewis,
Acronyms in general
Back to the Wireless World story. The story tells of two telephone engineers who used SNAFU, TARFU and FUBAR as code words in their pre-war jobs at Western Electric (founded 1872, defunct 1995).
It's possible, but seems unlikely partly because there's no written evidence that these were used before World War II.
"TARFU" was our embellishment on "snafu." Snafu, already in use all over the US and not only in the military, meant "Situation normal, all fucked up." You were supposed to say this with a resigned shrug of the shoulders, indicating that the submoronic people and junky devices you had to deal with would naturally fail. We in troop carrier, responsible as we were for immensely delicate and complex machinery and saddled with impossibly ambitious flying assignments, had to go beyond snafu; so we used "Things Are Really Fucked Up!"
- And finally, apart from a few exceptions such as POTUS, "acronyms didn't become a common method of word formation in English until World War II", according to the Online Etymology Dictionary.