The letters on type-casting machine keyboards (such as Linotype and Intertype) were arranged by letter frequency, so e-t-a-o-i-n s-h-r-d-l-u were the lowercase keys in the first two vertical columns on the left side of the keyboard. When an operator made a mistake in composing, he would often finish the line by running his finger down the first two rows of the keyboard and then start over. Occasionally the faulty line of hot-metal type would be overlooked and be printed erroneously. This happened often enough for "etaoin shrdlu" to be listed in the Oxford English Dictionary and in the Random House Webster's Unabridged Dictionary.
A documentary about the last issue of The New York Times to be composed in the hot-metal printing process (2 July 1978) was titled Farewell, Etaoin Shrdlu.
In the early days of computer studies of language, an examination of newspaper text and television news copy included a letter frequency count, followed by a journal article. Irving Fang concluded that the linotype machines got it nearly right, but that the actual frequency of letters in the English language is ETAONI RSHDLC.
Peter Norvig used in 2013 the Google Books Ngrams corpus for the frequencies, resulting in the order ETAOIN SRHLDCU.A Google Books Ngram for the phrase itself shows it appearing around 1919 and being most common during the 1930s, although it appears even today (despite the death of commercial hot metal typesetting) for reasons including computer science and continuing historical interest.
Appearance outside typography
A Linotype machine keyboard. It has the following alphabet arrangement twice, once for lower case (the black keys) and once for upper case (the white keys), with the keys in the middle for numbers and symbols: etaoin / shrdlu / cmfwyp / vbgkqj / xz
The phrase has gained enough notability to appear outside typography, including:
In H. Beam Piper's science fiction novel Four Day Planet, the protagonist is a "NewsTaper" reporting the local news; he sprinkles 1950s-era newspaper slang in his conversation. He uses Etaoin Shrdlu as imaginative "profanity" that could still be published in 1950s magazines, e.g.: "That's a double two-em-dashed lie, you etaoin shrdlu so-and-so!"
In 1942Etaoin Shrdlu was the title of a short story by Fredric Brown about a sentient Linotype machine. (A sequel, Son of Etaoin Shrdlu: More Adventures in Typer and Space, was written by others in 1981.)
Anthony Armstrong's 1945 whimsical short story "Etaoin and Shrdlu" ends "And Sir Etaoin and Shrdlu married and lived so happily ever after that whenever you come across Etaoin's name even today it's generally followed by Shrdlu's".
Edwin Morgan's poem "A View of Things", published in The Second Life (1968), contains the line, "what I love about newspapers is their etaoin shrdl".
Around 1970, Denys Parsons published his "Gobfrey Shrdlu" series of collections of humorous printers' errors and odd facts, which he attributed to typesetters being distracted by a supernatural being called "Gobfrey Shrdlu, and his Welsh wife Cmfwyp, and his sons Etaoin and Timoᾦthy". (Compare Titivillus.)