The idea for one of the most famous toys in history was inspired by a meter for testing horsepower on battleships. A torsion spring used in a testing meter fell from the desk of marine engineer Richard James and tumbled end-over-end across the floor.
James took it home to his wife Betty and said, “I think I can make a toy out of this.” This he did by devising a steel formula that allowed the spring to “walk.” 
Betty went through the dictionary for a fitting name for the toy and found it in SLINKY, which was defined as “stealthy, sleek and sinuous.”
In 1945, as Christmas neared, Gimbel’s department store agreed to provide counter space for 400 SLINKYs. Richard James was there to demonstrate the toy to a crowd of shoppers and within 90 minutes all 400 SLINKYs were sold. (James Industries)
Source: http://www.drtoy.com/toy_history/index.html