DIVINE HARMONY: The Life and Teachings of Pythagoras,
by John Strohmeier & Peter Westbrook - Berkeley Hills Books, 1999

The story in this book on page 80-82 goes as follows...

"Although Pythagoras (560 BC) understood the power of universal harmonics and was successful at reproducing them, he believed the principles of music, as all other areas of knowledge, could not be firmly established in the minds of his students without a system of symbolic representation. For this reason he set out to discover a means by which to quantify and communicate the elements of music. As he was considering the problem, Pythagoras happened to pass by a blacksmith's shop, where he heard the sound of hammers striking a piece of iron on an anvil. He noted the sounds made by the hammers were all different. But, with one exception they were all in harmony with each other.

He went into the shop and carefully observed the work. To begin with, thinking the difference in tone might be due to the strength of the workers, he had them exchange hammers. The difference in tone did not stay with the men but rather followed the hammers. He observed further that this phenomenon arose not from the force of the stroke, nor the shape of the hammer, nor the changes in the beaten iron.

He then turned his attention to the weight of the hammers and found the ratios of the weights."

In this book the ratios described are the ratios found within a Fibonacci Square that forms the famous spiral 1.618. Pythagoras is first acknowledged with having discovered the Golden Ratio, Phi or 1.618, in several book references. His life, research and teachings continue to influence us even today.