Silly Putty was a failure before it was a toy, and it had a different name before it was silly.
In 1942 Japan's advance into Southeast Asia cut the Allies off from their rubber supply. Chemists hunted for a synthetic substitute. At General Electric, James Wright mixed silicone oil with boric acid. At Dow Corning, Earl Warrick made the same compound on his own and applied for a patent in 1943. Wright applied a year later.
The result bounced and stretched, but it was no use as rubber.
Then a toy-store owner, Ruth Fallgatter, listed it in her holiday catalog as "Bouncing Putty." Her advertising consultant, Peter Hodgson, saw more in it than she did. When she lost interest, he borrowed money, bought a batch from the GE lab and secured the production rights.
He also changed the name. The Henry Ford museum puts his reasoning simply: "bouncing" did not cover everything the putty could do, so he called it Silly Putty. Etymonline records a claimed trademark use from July 1949.
Hodgson packed one-ounce portions into plastic eggs in time for Easter 1950. Sales were modest until a reporter found the eggs in a Doubleday bookstore. A short piece in The New Yorker on 26 August 1950 set off demand, and Hodgson sold millions of eggs within a year.
Both words in the name have long histories. Putty comes from French potée, literally the contents of a pot, and meant a plasterer's paste in English by the 1630s. Silly comes from Old English gesælig, "happy" or "prosperous." Over centuries it slid through "blessed," "innocent" and "pitiable" before reaching "foolish" in the 1570s.
The failed rubber went on to reach the Moon's orbit. The Apollo 8 crew carried Silly Putty in sterling-silver eggs in 1968.