From the 1969 ARRL "The Radio Amateurs Operating Manual"

                     
  Although Samuel F.B. Morse's code achieved nearly universal use on
the landline telegraph systems of America, the Europeans never did
like it. They felt that the "space" characters were likely to cause
errors in receiving. (The letter "O", for example, was sent "dit dit"
and the letter "I" was sent as in the now familiar International
Code:"didit".)  The Europeans developed a number of binary dot-dash
codes to suit their own needs.

  The code in use on the wires of the Prussian Empire in 1852 bore a
strong resemblence to the present International Code, but it used the
American Morse numerals.  Seven years later the "European Code" was
formulated, using the Austro-Prussian alphabet and adopting the
numerals we now use.  This was adopted for use by all European
countries and the name was changed in 1912 to "International Code",
although it is also known, even today, as the "Continental Code".

  The numerals themselves are interesting.  No known code of the
European continent shows anything which resembles them.  They just
showed up in the European Code.  However, the Bain Code, used on many
lines in the U.S. circa 1846, had numerals which closely match those
of the International Code.  From one through five, Bain and
International are identical.  Reversing the Bain Code numerals six
through zero produces the International numerals.  There is nothing
to prove that the Bain Code was the basis for the International
numerals, but the conclusion is almost inescapable that someone at
the Vienna conference at which International was adopted, was
familiar with Bain's numerals.  Bain's code was a modification of
the Davy code of 1836, so it is possible that the numerals we now
use are older than any of the alphabets.

    -Louise Ramsey Moreau   WB6BBO/W3WRE