Shortly before the outbreak of World War I, U.S. troops occupied the Mexican port at Veracruz. The occupation came at a cost to both sides: the Americans lost 20 sailors over the course of killing 150 Mexicans.
The violence leveled off after a few weeks, and life in the city became relatively routine. War correspondents traveling with the U.S. Atlantic Fleet became bored with the calm and started to focus on the troops' everyday life in the hopes that that might yield something their readership would respond to. One of these headlines was "The 'Happy Hour' Aboard Ship Makes Tars Contented."
According to the Early Sports & Pop Culture History Blog, one well-meaning Navy officer, Lieutenant Jonas Ingram, originated the practice of "Happy Hour" aboard his ship, the USS Arkansas. Since the Arkansas was the flagship of Admiral Charles Badger, the commander of the Atlantic Fleet, officers encouraged its spread to the other ships of the fleet and into the ships of the wider U.S. Navy. The practice would carry on throughout the coming world wars.
Admiral Badger doesn't give a sh*t.
The Arkansas' Happy Hours included athletic competitions (usually boxing), dancing, and a band while at sea. The enlisted men on board couldn't drink, as per Navy regulations since 1899 (though officers could). In port, dancing girls from local bars were the center of the fun. The sailors ashore had easy access to liquor. Navy regulations at the time only prohibited the sale or issue of booze aboard ship, not the consumption on land.
When sailors and soldiers returned home from the Great War, they introduced the idea of "Happy Hour" into the American vernacular. The idea of "happy hour" as we know it came from the use of the term in a "Saturday Evening Post" article in 1959, entitled The Men Who Chase Missiles. The article was about U.S. Air Force airmen working at remote island outposts in the Caribbean and how they saved money by not having anywhere to spend it... unless they spent it all at the local watering hole.
"Except for those who spend too much during "happy hour" at the bar – and there are few of these – the money mounts up fast."
The USS Arkansas, once a state-of-the-art modern battleship, found itself obsolete at the end of World War II and did its country one last service – this time in a more of an academic research role.