Red velvet's origins are from Victorian times when bakers added cocoa powder, cornstarch, or almond flour to make their cakes soft.  The chemical reaction between the cocoa powder and the baking soda/buttermilk does naturally color it a light red.  In the late 1930s or early 1940s, John Adams (owner of Texas-based Adams Extracts) decided to add red food coloring to boost sales of his dyes.  The cake grew in popularity, and by 1950 it was a popular dessert at the Waldorf Astoria hotel in New York City.