Early to Mid 18th Century
In the eighteenth century, they used a few methods to decide if people were lying. One test was the "Ordeal of Boiling Water." This test was you stuck your hand in boiling water, and if it didn't burn, you were innocent.
Mid to Late 18th Century
As men got better at lie detection, they started to base it purely on chance. A few popular ones where throwing a knife, or throwing stones, and based on how that went, you were deemed guilty or innocent.
An Italian criminologist, Cesare Lombroso, made a very primitive lie detector, called Lombroso's Glove. It attempted to record changes in blood pressure to determine if people are lying.
Dr. John A. Larson developes the fore-runner of the current day polygraph. The machine takes a permanent record of blood pressure, pulse, and respiration.
First major case with a polygraph in use. In Frye vs. United States, the polygraph was ruled inadmissible, or not valid evidence. The Frye case was a man being charged with murder, and he was found guilty. Before the trial, a polygraph determined he was telling the truth, and a few years into his sentence, another man confessed to having committed the crime.
A. R. Luria, a Russian, made an important contribution. He determined that when people are lying, they will grow more tense.
A legal change involving the polygraph happened. Prior to the change, stipulation between the prosecution and the defense brought in the polygraph. After the change, only a confession is admissible at trial level. The polygraph is currently used as an investigative tool.
Why it Matters
The lie detector, or Polygraph, as it's currently called, is extremely important in the working industry. Employers will sometimes use a polygraph on potential employees, or police to help with investigations. It cannot be used to incriminate suspects in court, unless they confess, as of July 1891, stated above. It's also used in the treatment of sexual offenders, to protect us from them. A very large part of how it works is psychological. If you believe it works, then it will. They explain how it works, and have to get your consent, before they use it.