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The source of the term is uncertain. According to Leo Rosten,
The word kike was born on Ellis Island when there were Jewish immigrants who were also illiterate (or could not use Latin alphabet letters), when asked to sign the entry-forms with the customary 'X,'* refused, because they associated an X with the cross of Christianity, and made a circle in its place. The Yiddish word for 'circle' is kikel (pronounced KY-kul), and for 'little circle,' kikeleh (pronounced KY-kul-uh). Before long the immigration inspectors were calling anyone who signed with an 'O' in place of an 'X' a kikel or kikeleh or kikee or, finally and succinctly, kike.
According to Rosten, Jewish U.S. merchants continued to sign with an 'O' in place of an 'X' for several decades, spreading the nickname kike wherever they went as a result.
According to the Oxford English Dictionary, it may be an alteration of the endings –ki or –ky common in the personal names of Jews in eastern Europe who immigrated to the United States in the early 20th century. The first recorded use of the term is in 1904.
According to Our Crowd, by Stephen Birmingham, the term "kike" was coined as a put-down by the assimilated U.S. Jews from Germany to identify eastern European Jews: "Because many Russian [Jewish] names ended in 'ki', they were called 'kikes'—a German Jewish contribution to the American vernacular. The name then proceeded to be co-opted by non-Jews as it gained prominence in its usage in society, and was later used as a general derogatory slur.."
One more theory traces the origin of the term much earlier in time, to the 16th century Pope Clement VIII, noted for his anti-Jewish stance. Among other things, he issued a prohibition on the reading of the Talmud, in which he made reference to the "blind (Latin: caeca) obstinacy" of the Jews. According to this theory, "caeca" developed eventually into "kike".
In addition to the mysterious origin of this term, is that in 1864 in the UK, the word ike or ikey was used as a derogatory term for Jewish, which derived from the name "Isaac", a common Jewish name. Eventually the term kike was developed in the United States in the 1880s, and was used primarily by American German Jews to disparage Jewish Russian immigrants.
Though there are many theories as to the actual origin of the word kike, the Encyclopedia of Swearing stated the most reasonable and most likely origin of the term is the one proposed by Leo Rosten, mentioned above.
According to different sources, some would say that the first use would have been evident in Ellis Island by all Americans as a labeling term for Jewish people, or it was used primarily by Jewish-Americans to put down Jewish immigrants. This word has even been found to be used in the United Kingdom. Regardless of who used this term in the beginning, whether used primarily by Jewish-Americans, just all Americans, or both Americans and English, this term has now become less popular in the United Kingdom, and has now become more apparent in the United States; and throughout its history, this term has been used as a derogatory word to disparage Jewish people.