E. Cobham Brewer 18101897. Dictionary of Phrase and Fable. 1898.
The original meaning is not mirthful, but active, famous; hence gallant soldiers were called merry men; favourable weather, merry weather; brisk wind, a merry gale; London was merry London; England, merry England; Chaucer speaks of the merry organ at the mass; Jane Shore is called by Pennant the merry concubine of Edward IV. (Anglo-Saxon, mra, illustrious, great, mighty, etc.). (See MERRY-MEN.)
Tis merry in hall, when beards wag all (2 Henry IV., act V. 3). It is a sure sign of mirth when the beards of the guests shake with laughter.