From Steven Levy’s Hackers: Heroes of the Computer Revolution (Penguin Books: 2001): 23:
The core members hung out at [MIT’s Tech Model Railroad Club in the late 1950s] for hours; constantly improving The System, arguing about what could be done next, developing a jargon of their own that seemed incomprehensible to outsiders who might chance on these teen-aged fanatics … When a piece of equipment wasn’t working, it was “losing”; when a piece of equipment was ruined, it was “munged” (Mash Until No Good); the two desks in the corner of the room were not called the office, but the “orifice”; one who insisted on studying for courses was a “tool”; garbage was called “cruft”; and a project undertaken or a product built not solely to fulfill some constructive goal, but with some wild pleasure taken in mere involvement, was called a “hack.”
This latter term may have been suggested by ancient MIT lingo– the word “hack” had long been used to describe the elaborate college pranks that MIT students would regularly devise, such as covering the dome that overlooked the campus with reflecting foil. But as the TMRC people used the word, there was serious respect implied. While someone might call a clever connection between relays a “mere hack,” it would be understood that, to qualify as a hack, the feat must be imbued with innovation, style, and technical virtuosity.