Paper matches were patented in the 1880's.  The matchbook (the folder) was patented in 1892 by Joshua Pusey, a Philadelphia patent attorney.  The modern matchbook, as we know it, with the striking surface on the outside, was patented in late 1892  by Charles Bowman of Pennsylvania.  Pusey challenged Bowman in court, however Bowman prevailed.   Four years later, Pusey sold his patent to the Diamond Match Trust, but served as the company's patent lawyer.  Bowman's company, called The American Safety Head Match Company of Lebanon, Pennsylvania did not last much longer and Diamond Match Company adapted his design into their product, thus becoming the first mass producer of paper matchbooks.

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In the mid 1890's, matchbook covers started to be used as a form of advertising.  As collectors became interested, The Diamond Match Co. began selling advertising on the covers toting them as something people would see several times a day.  Among the very first companies to order the promotional matchbooks were American Tobacco Company, Wrigley's chewing gum and Pabst beer whom all started giving them away as part of their promotions. 

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