This term for crossing the street in the middle of the block is U.S. slang dating to the early years of the 20th century. It comes from the sense of jay meaning a stupid person, a rube.
The earliest known use has the term in a slightly different sense, that of someone who is walking aimlessly. From the Washington Post on 7 May 1911:
Kansas City used to consider itself a town of jay walkers. That is another line in which New York deserves the discredit of being at the front of the procession. A typical Manhattan would be run over and trampled on the sidewalk if he tried to walk on State street in Chicago as he walks on Broadway, New York. He has never heard of the prehistoric principle of keeping to the right—he ambles all over the sidewalk.
This may be an isolated use, for the next earliest citation is in the sense we’re all familiar with. From the Atlanta Constitution, 27 August 1912:
Well, Bo, “Jay Walkers” are persons who cut across corners—dash across the streets cat-a-cornered—who have not the time to walk along the sidewalk to the proper crossing.
And the next day, the Times ran an article in response which gives an indication of the origin:
More than a little sympathy will be felt for the correspondent who expressed resentment yesterday at the official application of the word “jaywalkers"—a truly shocking name and highly opprobrious—to people who cross the city streets in the middle of the blocks instead of at their ends.
That may be a bringing of rustic habit into the city, and, on general principles, that is not to be commended, since it usually indicates indifference to the unlikeness of rural and urban conditions. But a proceeding is not necessarily “jay” because it is a country custom, and, as a matter of fact, city folk can give, and some of them do, a reason more than fairly good for crossing the streets where the police say they should not.
That being the case, if much more is heard about “jaywalking,” some bold person may suggest a law, not forbidding but commanding, for all the practice thus disrespectfully described.
The slang term jay, meaning a stupid person, is originally British and is a reference to the bird, which is famed for not being the brightest of creatures. From the Pall Mall Gazette of 19 December 1884:
The intending larcenist will strike up a conversation with a likely looking Jay in a public conveyance...and win his friendship.
(Source: Oxford English Dictionary, 2nd Edition; Proquest Historical Newspapers)
Copyright 1997-2013, by David Wilton