"When did machinists start using thousandths and leave fractions of an inch."

I believe that this started with the making of interference fits where a simple fraction was nowhere close enough to work with.

I have seen some 6" scales with 100ths on them, meaning 100 lines to the inch. Every line would be .010, try looking at that for some time, 1/64th is hard enough. And the scale better have a satin finish.

David