The general consensus about the origins of the Manhattan peg it to the The Manhattan Club in New York City in the late 19th century, about 100 years after the earliest known mention of the Old Fashioned. There are a few theories as to the exact circumstances that brought it to pass, but no real consensus. There’s also been a distinct evolution to the ingredients, like many of the old cocktails, and the one you drink today won’t be exactly the same as the one they drank in the 1800s.
One thing that does seem clear, though, is that this is one of the first drinks to popularize the use of vermouth in cocktails. It’s thought that until this point, vermouth was primarily consumed on its own as a medicinal tonic or as an after-meal digestif (the latter use is still common in some European cultures today). It was around this time that New York City bars started having Italian vermouths on hand, and some experimentation with whiskey and bitters led to this classic; one of the most perfectly balanced cocktails ever made.
2 oz rye
1 oz sweet vermouth
2 dashes Angostura bitters
Maraschino cherry to garnish
Add all ingredients to a mixing glass with ice and stir well. Strain into a chilled coupe or cocktail glass. Garnish with a Maraschino cherry or an orange twist as secondary choice.