Oh heck, I'll play along:
Dago comes from the Spanish given name Diego. Its nautical in origin and originally referred to Spanish or Portuguese sailors on English or American ships. This usage dates to the 1830s. The meaning eventually broadened to include anyone from southern Europe, before narrowing again and restricting usage to Italians. The sense meaning Italian dates to at least the 1870s.
The term "Dago" by those who understand the correct context know that "Dago" in and of itself wasn't an insult or slur, but used in phrase such as "dumb Dago" would be accepted to mean "dumb Italian".
Somehow I am not surprised you had to ask and didn't understand the historical beginning, actual meaning or the way it became associated as a slur.
But then, based on your posts, you don't appear to me to be to bright or learned. Thanks for highlighting that for everyone to see.
dago