This is a wonderful slang word for gossip and we have to thank sailors for it.
Water for drinking on a ship was kept in a butt, or a large cask. The cask was scuttled, that is, a hole was cut in it, usually with a hatch as a lid. The hatch could be lifted so the water could easily be scooped out of it.
Scuttle also has the meaning to sink a ship; originally this was by cutting holes in it.
In the same way that office gossip is supposed to take place around the water cooler, on board ship the sailors could take a few moments to exchange stories while having a refreshing drink at the scuttlebutt.
Scuttlebutt came to be used by sailors as slang for the gossip itself – it’s hard to imagine water cooler ever taking on the same meaning.
I was in the Royal Navy in WWII and the words at the water dispenser was “What’s the Buzz? Meaning what’s the latest rumour. I must tell you I was responsible for the Pacific wars end. I had just finished the war in Europe and I was sent out far east to take part in the Pacific war. Emperor Hirohito heard I was on the way and said we may as well pack it in Bob Cralke is on his way out here. Or so the rumour goes
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Bob Clarke