If this is a question, not an intro to your explanation, then: Hatters (in Britain) used mercury to cure the hides they used. Mercury vapor can cause brain damage. Enough hatters were visibly mad, that the saying arose.
If this is a question, not an intro to your explanation, then: Hatters (in Britain) used mercury to cure the hides they used. Mercury vapor can cause brain damage. Enough hatters were visibly mad, that the saying arose.