Tabasco sauce is named after the tabasco peppers that it's made from. The peppers are named after the Mexican state of Tabasco, which is where they supposedly came from. However, there is some disagreement as to whether tabasco peppers originated in the state of Tabasco itself or whether they originally came from another part of Mexico or Central America. Tabascos (Capsicum frutescens) is the only kind of chili pepper whose fruits are not dry on the inside. Their juiciness is part of what makes Tabasco Sauce what it is. Other, similar, hot sauces are usually made from red cayenne peppers (Capsicum annum).
The "Tabasco Sauce" Backstory
The traditional story goes that "Tabasco Sauce" was created by Edmund McIlhenny. McIlhenny was from Maryland originally, but he moved to New Orleans, Louisiana to seek his fortune in about 1840. He found his fortune by going into the banking business. By the time of the War Between The States, he was a successful banker. However, the war and its aftermath destroyed his business. He went to Texas for a while, then moved in with his wife's family on Avery Island, Louisiana. He had acquired some tabasco pepper seeds from some source, and he planted them in his garden there on Avery Island. Sometime around 1867, McIlhenny began experimenting with a sauce made from the peppers. He crushed the red peppers from his plants, mixed them with the salt found naturally on Avery Island and aged the mixture for a month in crocks and jars and barrels. Finally, he mixed this with white wine vinegar and aged the result for another month. Thus was born Tabasco Sauce. In 1870 McIlhenny was granted a patent for his invention. He began marketing it along the Gulf Coast, and within a few years, it became popular around the country.
As is often the case, there is some controversy involved. Some say that McIlhenny got his idea and perhaps even his pepper seeds from an earlier sauce created by New Orleans-area entrepreneur Maunsel White. An article in the New Orleans Daily Delta newspaper dated January 26, 1850, titled "Pepper" noted that "Col. White has introduced the celebrated tabasco [sic] red pepper, the very strongest of all peppers, of which he has cultivated a large quantity with the view of supplying his neighbors, and diffusing it through the state." Furthermore, observed the newspaper, "by pouring strong vinegar on it after boiling, he has made a sauce or pepper decoction of it, which possesses in a most concentrated form all the qualities of the vegetable. A single drop of this sauce will flavor a whole plate of soup or other food."
White never marketed his pepper sauce, but his heirs advertised it for sale in 1864, a year after his death, as "Maunsel White’s Concentrated Essence of Tobasco [sic] pepper". Note that neither he nor they appear to have sought a patent for it. Note also that White's sauce does not appear to have had white wine as an ingredient. White's heirs appear to have stopped producing this sauce before 1900.
"Maunsel White's 1812 Sauce"
The McIlhenny Company denies all claims that Edmund McIlhenny obtained his pepper seed or pepper sauce recipe from Maunsel White. Maunsel White also created another sauce, called "Maunsel White's 1812 Sauce" in honor of the Battle of New Orleans. This sauce contains a mixture of wines, peppers, and spices. White's family still makes this sauce and sells it locally in the New Orleans area.