According to its entry at the Word Detective, it is probably based on the fact that back when the term was coined (c. 1852) the name Joshua was a typically rural name. It’s based on the stereotype that rural folk are more easily fooled or tricked.
I’ve heard various times it was named for a man named Josh who was one of the people who gold-plated nickels to pass them off as $5 coins (they looked similar, and the nickels didn’t say “CENTS” on them until a few years later).
That’s the story they’re stating as fact on The History Channel (or A&E) in the program about counterfeiting. “Josh” didn’t use gold-plated 5-cent pieces though. He dusted the coins with a few cents worth of gold. According to the program, he had “a perfect alibi”. He was deaf and mute. He never said his coins were $5 coins. He just handed them over and the counterman gave change for a five. IIRC, he was convicted, searved a short term, and then disappeared.
In any case, this is the point where the program states that “joshing” comes from this person.
“Josh” was a pseudonym Samuel Clemens used for some humorous newspaper columns early in his career (ca. 1862). I always wondered if the word didn’t come from this pseudonym, but if the word was coined ca. 1852, I guess not.
The US started making something called a “V” nickel, also called a Liberty head nickel, in 1883. They had no denomination on them, save the Roman numeral five(V). The head on the front resembled the Liberty head on the $5 gold coin of the period.
Now, some clever person started gold-plating these nickels, and paying for purchases with them, hoping that some poor careless soul would give them back change from $5. I’m quite sure this happened.
But this didn’t happen until 1883! So, the Josh reference couldn’t have come from this.
The 1852 reference uses the term "jossin’ " you. There is an earlier reference from 1845, which says…"and if you must Josh, why, give a private one.
But, in any event, the origin has nothing to do with the coins.
According to the Facts on File Encyclopedia of Word and Phrase Origins:
josh. The best guess is that the Americanism josh, for “to kid” or “fool around,” is a merging of joke and bosh. The pseudonym of an American writer may have something to do with the word, though. Henry Wheeler Shaw (1818-85) wrote his deliberately misspelled crackerbox philosophy under the pen name Josh Billings. Employing dialect, ridiculous spellings, deformed grammar, monstrous logic, puns, malapropisms, and anti-climax, he became one of the most popular literary comedians of his time. The expression to josh was used about 18 years before Josh Billings began writing in 1863, but his salty aphorisms probably strenghtened its meaning and gave the term wider currency.