According to Vol 1 of the MIT Radiation Lab. Series, "Radar System
Engineering" published in 1947, the selection of 50 ohms was based on a
practical compromise between the 77 ohm value giving minimum attenuation and
the 30 ohm value giving maximum power transmission (based on maximum voltage
gradient).

Fairly obviously, insertion of a suitable dielectric was part of the way
forward in the evolution of a practical flexible general purpose coaxial
transmission line and the then newly developed polyethelene, when used as a
dielectric, gave a characteristic impedance of somewhat more than 51 ohms.
This evolved fairly quickly, especially in the USA, to the now standard 50
ohm figure.

You can find a good summary of  the derivation of the 'minimum loss'
impedance etc at  the following URL-

http://e-insite.net/ednmag/contents/images/47191.pdf

and in a little more detail at-

http://my.ece.ucsb.edu/bobsclass/134/Handouts/why50ohm.pdf

My own primary reference on this is Chapter 1 of King, Mimno and Wing,
"Transmission Lines, Antennas and Waveguides", McGraw-Hill, 1945.
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Dave, ZL3FJ