I have no idea where or when the expression appeared in print, however I can attest to it being in common use in rural Kansas around 1945 or so, since my grandfather and a couple of uncles used it in my presence fairly frequently then. It appeared then to be a "well worn phrase" that everyone understood.

Their explanation, which is one of the many commonly claimed, was that the cloth comes in 9 yard "bolts," and "buying the whole 9 yards (like yer grandma always does) means buying a bunch more than you need."

Since "the boys" didn't actually buy cloth, and didn't know that the bolts it came on actually started out with something more than 9 yards, grandma explained that many women would "take the whole 9 yards" if there was no more than that left on the roll; but if there was 10 yards left that sounded like too much. Sometimes, after estimating that there might be ten yards left, an offer to take the whole 9 yards resulted in the offer being accepted without measuring, and the lady made a profit. The other justification for taking more than needed was partly because nobody really trusted the measurements of the clerks (usually the shopowners) to measure accurately, and being "one foot in 9 yards cheated" was better than being a half a foot short of the yard you actually needed.

It should be noted that a feed sack from that time had about "a yard" of cloth in it, and almost any common kind of clothing could be made out of a sack, so buying cloth was sort of an extraordinary thing, and subject to separate debates among the men folk who couldn't understand why it was necessary and among the wimmen folk who knew why they needed it. The two separate "councils" were well aware that such discussion in a mixed group would lead to cold taters on the dinner plate for one of them.

John