The terms sell short and short position seem to have arisen in US stock and commodity markets about 1850; the earliest use I have found is from The Merchant's Magazine, and Commercial Review, Vol. XXVI, Jan-Jun 1852, and it is already coupled with selling long:
Note that the writer (somewhat disingenuously) equates selling short with a contract for forward delivery. That’s the transaction; what has always been understood by a ‘short’ sale, however, is that the seller does not at the time of sale possess the commodity or stock which is sold. He is in fact, ‘short’ of the good in question, as is explained in this definition from The Bryant and Stratton Business Arithmetic, 1872.