dago: [18] Dago originated in the USA as a contemptuous term for a Spanish-speaking person. It is an alteration of Diego (the Spanish version of James), a common Spanish forename, which itself was used in English in the 17th century for ‘Spaniard’: ‘Next follows one whose lines aloft do raise Don Coriat, chief Diego of our days’. By the late 19th century the application of dago had broadened out to include anyone of Spanish, Portuguese, or Italian descent. => james
dago (n.)
1823, from Spanish Diego "James." Originally used of Spanish or Portuguese sailors on English or American ships; by 1900 it had broadened to include non-sailors and shifted to mean chiefly "Italian." James the Greater is the patron saint of Spain, and Diego as generic for "a Spaniard" is attested from 1610s.