Ronald S. Gabriel in his book, "American & British Shotguns" suggests that the .410 was derived from the 44-40 Winchester cartridge and it certainly seems plausible since both cartridges have the same head diameter, rim diameter and rim thickness.
Initially 410 cases were only 2 inches long and were loaded with a paltry 3/16 ounce of shot. Soon however the 2 1/2 inch paper case became the standard with a heavier payload of 3/8 to 1/2 ounce of shot.
First standardized in Britain, the 410 shotshell took a few years to catch on in the United States. According to the July 1915 issue of the magazine, Recreation, Harrington & Richards claimed to be the first company to manufacture a .410 bore shotgun in the United States (Cave Jul. 1915, 1) when in 1907 they offered their model 1905 shotgun chambered for that gauge.
Another early American reference regarding the 410 gauge came from Edward Crossman, who makes an interesting sales pitch for this diminutive cartridge in his essay "SMALL BORING WITH THE SMALLEST BORE" which appeared in the September 1914 issue of the magazine, Outing. Writing in a tongue in cheek manner about his experiences with the 410 shotgun and 200 cartridges that he had shipped from Britain, Crossman indicates how uncommon this gauge was before World War One(685) when he writes "This little shotgun, possibly the first ever brought over here from the wilds of England, where they hunt the ferocious rat and sparrow in their lairs...". The shotgun used by him is described as a bolt action singleshot chambered for 2 1/2 inch, 410 gauge shells. The English paper shotshell loads that he used contained 4/10ths of an ounce of U.S. size 7 shot and 7/16ths of an ounce of U.S. size 7 1/2 shot.
His review of the new to the U.S. cartridge is pretty positive and he closes his article by saying, "I firmly believe that we will see this little but wonderful cartridge introduced into the United States" (Crossman 688)
Crossmans prediction quickly came true, the September 1915 issue of Recreation reported that Winchester had started producing 410 shotshells and that Peters was going to produce 410 ammunition as well. (Cave 105)
The next evolution of the 410 was the 3 inch shell introduced by Winchester in 1933 along with their newly designed Model 42 pump shotgun (Williams p.2). Winchester's new 3 inch shell was loaded with 3/4 of an ounce of shot, twice the weight of the then standard 3/8 ounce 2 1/2 inch 410 shell. The Model 42 became an immensely popular gun in the Winchester line. As a result, many of the major shotgun manufacturers came out with their own guns chambered for the new 3 inch shell.
You might be wondering why the 3 inch 410 gauge loads made today only contain 5/8 ounces of shot while decades ago, they had an eighth ounce more.
The answer lies in the wad columns used. Before plastic came into vogue, card and fiber wads were used in shotgun shells. The old type wad columns sealed the powder gas satisfactorily but they did not prevent the lead shot from being scraped along the bore. As a result, barrel leading and deformation of the shot were common problems in all gauges but particularly in the smaller ones. The .410 bore, with it's long thin shot column had a much greater percentage of the shot in contact with the barrel than any of the other gauges.
The newer plastic wad columns protect the lead pellets which results in more consistent patterns but at the expense of shot capacity. Even the thin walls of a modern plastic cup wad take up enough volume in a 410 shell to limit the shot payload to 5/8 ounce although with a somewhat greater muzzle velocity than with the old wad columns.
Cave, Edward (Ed.) "The RECREATION DEALER" Recreation Jul. 1915 p. 1 Google Books Accessed (Jan. 16, 2012)
Cave, Edward (Ed.) "The RECREATION DEALER" Recreation Sep. 1915 p. 105 Google Books Accessed (Jan. 8, 2012)
Crossman, Edward C. "SMALL BORING WITH THE SMALLEST BORE : The Showing for a .410 Caliber Shotgun That Our English Cousins Have Introduced" Outing Sep. 1914 p. 685-688 Google Books. Accessed (Jan. 8, 2012)
Dunkin, Roberts aka Snaffle "Gun Rifle and Hound in East and West" 1894 p. 357 Google Books. Accessed (Jan. 16, 2012)
"G. Kynoch & Co. Limited Advertisement " Illustrated Naval and Military Magazine, The Jun. 1, 1895 p. 560-562 Google Books. Accessed (Jan. 16, 2012)
Gabriel, Ronald S. "American & British 410 Shotguns" Krause Publications 2003 p. 30 Google Books Accessed (Dec. 21, 2011)
Williams, Marshall R. "The Maligned .410 bore - Page 2" http://www.fourten.org.uk/malignedpage2.html Accessed (Dec. 21, 2011)