Little known to most Americans, the term “Hispanic” did not exist until the last thirty years—although its origins remain unclear. In addition, this label for Spanish-surnamed people is never used outside the borders of the United States. It is an American invention.
In 1960 the U.S. Census Bureau undertook a limited sampling of the U.S. population who were described as “white persons of Spanish surname.” In 1970, the U.S. Census Bureau began fully enumerating people of “Spanish origin or descent” within the United States for the first time. However, the term “Hispanic” was not used to describe this group in the 1970 Census.
The 1980 census used the term Hispanic for the first time. The Census Bureau was scrupulous in noting that Hispanics “may be people of any race.” In fact, to make this distinction clear, the Census Bureau has used the term “Non-Hispanic White” instead of simply “White” in all its reports since 1980. This distinction has been almost completely ignored by the media, academia and the corporate sector ever since. Since the 1980 census, the term Hispanic has been continually expanded in common usage until it has come to encompass an incomprehensible mix of nationality, ethnicity and race.
The origins of the term “Hispanic”
It is widely believed the term Hispanic first came into official use during the 1970s by the Department of Health, Education, and Welfare in an effort to identify and aid a collection of disadvantaged Spanish-speaking communities across Texas and California along with pockets of urban poverty in New York City and Chicago. The communities in Texas and California were primarily of Mexican origin while those in New York and Chicago were predominantly Puerto Rican. The communities’ common denominators were the Spanish language and impoverishment. In phenotype, Mexicans and Puerto Ricans are typically quite distinct. This well-meaning attempt to aid a group of disadvantaged “Hispanic communities” has morphed into a de facto racial label that has come to encompass all Spanish surnamed people in the United States.
Other myths…
Myth: Hispanics are a single race
Myth: The Hispanic label is harmless
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The Hispanic Myth 
A very important recently published book called “Making Hispanics” by Cristina Mora details exactly how and why it was created.
Mexican activists groups wanted to get federal minority benefits in the late sixties but they did not qualify because they were always considered white and were a regional group concentrated in just the South West. So in order to qualify for federal minority benefits, they had to reinvent their identity as “minorities” and project themselves as a National Group with the ambiguous “hispanic” classification, claiming that all people who speak spanish nation-wide were really one ethnic group. They promoted the concept in spanish speaking media and lobbied the feds and the census bureau to create the category.