Earlier quoted context omitted.
The irony is that the original "snake oils" actually were effective, just mislabeled (contained no actual snakes). "Snake oil" as used today in tech is the opposite -- accurately labeled, but ineffective.
"were effective" for what purpose? And do you have a source for that?
real Chinese snake oil was essentially some kind of omega-3 rich thing for topical application.
And, from the wikipedia: http://en.wikipedia.org/wiki/Snake_oil
"snake oil" as sold in the US was essentially capsaicin, which is used today, both as a topical treatment and others, for a variety of muscle/bone/tissue ailments. http://en.wikipedia.org/wiki/Capsaicin#Medical
Whereas snake oil in cryptography tends to be worse. In practice even snake oil algorithms are probably enough protection for short-term, limited use (no one is going to devote real cryptanalysis resources to high school notes), but it can encourage people to have a false sense of security and do things they wouldn't otherwise, or it ends up getting used for purposes not originally intended.