Though the answer might not be, my question is simple: When and how did the custom of capitalizing names begin?
(I'm not entirely sure whether to ask this question here or in History.SE since it doesn't strictly concern itself with English specifically, but since it is true for English as well as for other languages, I felt it was better to ask here.)
Best Answer
David Foxon's Pope and the Early Eighteenth-Century Book Trade is the canonical Work on this Topic.
As to when the rule of capitals for nouns was inherited into English, that perhaps can never be known.
Since German capitalizes every noun there is speculation that this rule has been inherited from there, perhaps via Johannes Gutenberg and his famous printing press via the Gutenberg Bible (note that the Gutenberg press is not the first of its kind as the Chinese and Koreans already had this technology as early as 1000s). This could be where the Germanic rule of capitalizing nouns may have originated since the Gutenberg (and subsequent presses) were all German in origin and their language and grammar rules may have influenced the rules of printed words far and wide.
Capitalized nouns were a common occurrence and can be seen in many instances prior to the 1730s and seems to be a shift at this point. From this first issue of the Gentleman's Magazine published in 1731. Every noun has been capitalized. This heavy use of capitals seems to be common especially in the printed word. David Foxon wrote in his book entitled Libertine literature in England, 1660-1745 that "... the vogue for heavy caps may be associated with the eighteenth-century culture of sensibility." Also, "Heavy caps also seem to be associated with the more chatty, conversational style of prose that comes into fashion in the late seventeenth and early eighteenth centuries."
There is a steady drop of capitalizing every noun as can be seen by this volume of the Gentleman's Magazine printed in 1744. This starts to look familiar with printed and accepted usage by today's standard.