This is from Martha Stewart's Martha Moments Blog This Week, I Love a History Lesson, Especially About Cupcakes!
Cupcakes originated in the United States in the late 1800s. They were so called because the ingredients for them were measured in cups instead of weighed, as had been the custom. They were first believed to have been called "number cakes" because of a numeric simplicity of the recipe: One cup of butter, two cups of sugar, three cups of flour and four eggs plus one cup of milk and one spoonful of soda. According to "Baking in America" by Greg Patent, this was revolutionary because of the tremendous time it saved in the kitchen. Whether it was a "cup," "measure" or "number" cake, the shift to measuring from weighing was indeed a significant one, according to "The Oxford Encyclopedia of Food and Drink in America." But it goes on to explain that the cup name had a double meaning because of the practice of baking in small containers -- including tea cups. The cups were for convenience because hearth ovens took an extremely long time to bake a large cake -- and early cakes, by the way, were enormous -- and burning was common. Gem pans, early muffin tins, were common in households around the turn of the 20th Century and cupcakes were then baked in those.
http://marthamoments.blogspot.com/2008/03/this-week-is-cupcake-week-on-martha.html
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