This Spanish guitar was a gut string guitar. The actual origins of the Hawaiian steel guitar may never be known for sure. As Brad Bechtel outlines on his Lap Steel Guitar page:
"Steel guitars were originally invented and popularized in Hawaii. Legend has it that in the mid 1890's Joseph Kekuku, a Hawaiian schoolboy, discovered the sound while walking along a railroad track strumming his Portuguese guitar. He picked up a bolt lying by the track and slid the metal along the strings of his guitar. Intrigued by the sound, he taught himself to play using the back of a knife blade."
J.D. Bisignani in his Hawaii Handbook from Moon Publications adds to the story of Joseph Kekuku:
"Driven by the faint rhythm of an inner sound, he went to the machine shop at the Kamehameha School and turned out a steel bar for sliding over the strings. To complete the sound, he changed the cat-gut strings to steel and raised them so they wouldn't hit the frets. VoilĂ ! Hawaiian Music as the world knows it today."
Brad Bechtel adds, "Other persons who have been credited with the invention of the steel guitar include Gabriel Davion, an Indian sailor, around 1885, and James Hoa, a Hawaiian of Portuguese ancestry."
As explained by the Hawaiian Steel Guitar Association in their feature. "Some 'Steel' History..." "Until his death in Boston in 1932, Kekuku toured the United States and most of Europe teaching and popularizing the Hawaiian steel guitar."
"Although the popularity of steel guitar became firmly established in Hawai`i by the early 1900s, and soon after in the country music field, it had few teachers. Those early legendary steel players were so much in demand to perform and record that they had no time to teach others, had they wanted to. Thus, in the '60s the art and technique of playing Hawaiian steel was almost lost."
The art form itself has seen numerous offshoots and developments in its relatively short lifetime. As Randy Lewis explains in his The Steel Guitar - A Short History: "With the introduction of amplification in the 30's, the steel guitar (like the Spanish guitar) gained pickups and became the electric steel guitar. Since an acoustic body was no longer necessary and actually caused feedback problems, the steel guitar quickly acquired a solid body and became the first true lap steel."
"There is no one standard tuning for the steel guitar and the solid body electric steel allowed for instruments to be made with two, three and even four necks, each tuned differently. Multiple necks made holding the instrument on the lap almost impossible, and legs were added, making the first 'console' instruments, although a few single neck consoles were already being played by 'steelers' who preferred to stand. At the same time, the steel picked up two more strings (there were a few seven string steels) and by the end of WWII the double neck eight string console was fairly standard, although even today there are still many players who prefer a single neck six or eight, especially in Hawaiian and Western Swing music."
"In the early 50's several players began experimenting with adding pedals which raised the pitch of a string, and in 1953, Bud Isaacs was the first player to use a pedal steel guitar on a hit recording: "Slowly" by Webb Pierce. The sound quickly caught on and many steel players converted to playing the 'pedal sound'"
Over the years the sound of the Hawaiian steel guitar has found its way into many forms of American and world music including blues, "hillbilly", country and western music, rock and pop and also the music of Africa and India.
Source : http://gohawaii.about.com/cs/hawaiianmusic/a/steel_guitar.htm