"I should explain to your Lordship what is meant by crackers; a name they have got from being great boasters; they are a lawless bunch of rascals on the frontiers of Virginia, Maryland, the Carolinas and Georgia, who often change their places of abode. G. Cochrane, 1766, in "Letters," 27 June. OED

The term comes from the Scottish-northern English word crack (crake), meaning boasting, which has been used in that sense from 1460 in print. See OED, 1971 and later eds.

Georgia apparntly was first called the Cracker State in print in 1808, in "Balance," Verses by a Cracker Planter.