The origins of Schwag / Shwag / Swag?

Knitting connection to what sidetracked ramblings follow:
Knitty.com (http://knitty.com/blog/2008/04/biggest-contest-knitty-has-ever-had.html)
is have a contest in honor of their 50 Millionth Site Visit.

"So we sat down and thought about how we could thank you guys for reading, linking to, talking about and knitting from Knitty magazine. And one thing came to mind: really great shwag."

There's that word again. Where did it come from?

Have you ever had one of those days where you hear the same term over and over again? And you realize that it isn't a word you remember being in the dictionary or on the spelling list at school? Well Schwag or Swag is one of those words for me. I was trying to figure out if it was an acronym for something. "Something Worthy As Gift" "Some With A Gift" "Stuff Can Happen With a Gift" "Special Happiness Wins A Grin" I don't know. I wanted it to mean something. So, I looked it up:

There was an article int Wired 9.01 (http://www.wired.com/wired/archive/9.01/schwag.html)

"As schwag has evolved into a status symbol, even the word itself is gaining respectability. Once it was slang for stupid, or for low-quality reefer, or, in the classical, dictionary sense - spelled swag - it meant ill-gotten gains or booty. Today schwag has morphed its way into the American lexicon, sans criminal undertones. And so, there's now The Schwag, a Grateful Dead tribute band, and "schwag hags" who covet "schwag bags" hawked at extreme sports events. And there are the industry professionals, who wish the word would just go back where it came from."

There's also the Urban Dictionary: http://www.urbandictionary.com/define.php?term=schwag
"The term is also used by many pot heads to describe anything that is low grade.
noun. low grade marijuana"

Yep, there once again, is a word that my Aunt Mary would have ROFL over. A word that not so many years ago might have gotten you detention. Out there in the mainstream with everyone, even knitting grannies, saying it without a clue as to what it means! Aunt Mary, believe it or not, convinced me that Reading The Dictionary Is FUN. I know, she brain washed me when I was young and vulnerable. They didn't used to prosecute people for those kinds of child abuse (kidding).

I keep a list of the words that my kids can say without even blinking, except when in my presence they give me "that look" because they know I'm obsessed about it. It's the list of things that I just cannot say in front of my MIL. I was going to list them here, but I want to keep the G-family rating. Even you would be amazed at the words on my list. Words that you use everyday that your great-grandmother would be scandalized by. Really.
Then there's the words that my MIL uses that have changed meaning: thong, hickey, shag, ...

Aunt Mary didn't ever want to rest in peace. She's up there; texting to me "LMAO" !