As i remember the story, it was the late 50s or very early 60s. Doug was studying and exploding scaling. Who do things scale? Most things do not scale well. For example, as our height increases linearly, our weight goes up as a cube and the stress on our limbs grows faster. Moreover, the physical properties of our environment work in very different ways. E.g., surface tension changes at very small distances and viscosity even changes. Hummingbirds live in a very different world than humans. They move faster, their blood flows differently, air seems more like syrup, liquids cling in different ways, …
Jeff Rulifson on how Doug Engelbart originated Moore’s Law
Gordon Moore did get the idea from Doug and has credited him publically.
Anyway, Doug was applying his analysis of scaling to the newly invented transistors and semiconductors and gave a talk at a local IEEE meeting at NASA. Moore was in the audience, understood immediately, talked with Doug, and that was the start of Moore’s Law.
John Markoff also mentions the story here: http://www.nytimes.com/2005/04/18/technology/its-moores-law-but-another-had-the-idea-first.html?_r=0