‘giggle-house’: meaning and origin

The colloquial Australian-English noun giggle-house designates a psychiatric asylum.
—Synonym: loony bin.

These are, in chronological order, the earliest occurrences of giggle-house that I have found—the first two texts in which this noun appears seem to indicate that giggle-house originated in the slang of the armed forces during the First World War:

1-: From Digger Dialects: A Collection of Slang Phrases used by the Australian Soldiers on Active Service (Melbourne and Sydney: Lothian Book Publishing Co. Pty. Ltd., 1919), by the Australian barrister and lexicographer Walter Hubert Downing (1893-1965):

GIGGLE-HOUSE—Lunatic asylum.

2-: From The Argus (Melbourne, Victoria) of Saturday 17th January 1920:

BOOKS AND MEN.
By ELZEVIR.

I had a horrible nightmare the other night. […] I dreamed that I was in a room full of Australian poets, who were all either writing verses or reading aloud what they had written. (Postpone your shuddering; the really appalling part has not come yet.) I was quite unable at first to understand a word of what they read, and jumped to the conclusion that they had all gone mad, as poets will; and I was hunting, in the frantic and futile way of dreams, for the door, when suddenly it dawned on me that they were perfectly sane—or at least as sane as usual—and that they were, as a matter of fact, merely practising poetic composition in the new Australian language that we shall all have to learn soon—the strange wild speech that our men have brought back with them from France and Egypt and Gallipoli and Mesopotamia and the uttermost parts of the earth, a speech apparently consisting of odds and ends from every known tongue. […]
[…]
[…] A well-known narrative poet, whose name it would be unkind to mention, came up to me and chanted steadily the following lines:—
“A gay gezumpher at Armentears it gave me a buckoo smack;
 You’d ha’ betted a brad to a packet o’ jits ’twas a dinkum ackety-ack;
 I reckoned myself ’twas a fair napoo, but I never chucked my seven,
 For the iodine-king was a snifter butch, and he sold a pup to Heaven.
“I’m only a pongo (blithered at that), as I was when the stoush began;
 My clobber includes no gilded pip, but my motto’s san ferry ann;
 I’m only a prive, but I’m still alive, and I wouldn’t change for a spell
 With a brass hat pushing the daisies up, or a junker west o’ hell.
“I haven’t much oscar left to pay for the paint on the mungoree,
 But I’ve had my divvy of strafing Fritz, and it’s quieter stunts for me;
 I’ll swing the banjo never again, for peace is a snodger game,
 And the silliest pinhead, Andy McNoon, in a giggle-house, says the same.”

3-: From the column In Town and Out, by ‘The Rouseabout’, published in The Herald (Melbourne, Victoria) of Tuesday 26th February 1924:

The Absurd Chain Letter
Periodically the idiotic chain letter makes its appearance, calling upon the addressee to copy it and send it to nine other fools, whereupon, after counting nine days, the sender will have great luck. The penalty for “breaking the chain” will be bad luck.
How in this year of grace there can be found stupidity gross enough to perpetuate such a device passes comprehension. I can only suppose that superstition is more rife than appears.
There are 59 names on the letter which has reached me—59 abject men and women who believe that luck is to be wooed by such artless proceedings. Well, I have broken the chain; I freely offer hospitality to the original curse pronounced by the sender, who purports to be a general, whose name is not upon any army register. He probably conferred the title upon himself in the “giggle-house,” where upon alternate Tuesdays and Fridays he is a general and the Pope of Rome.

4-: From the ninth chapter of Jack Berriman’s Harvest, a novel by T. J. Landy, published in The Age (Melbourne, Victoria) of Saturday 4th July 1925:

“You’re lucky. When a man gets this cursed love microbe—”
“Oh, come an’ have your tea; you’re goin’ dotty. A man’s got to get somethin’. When a man gets the love germ, he goes talking to himself and the trees till he’s fit for the giggle-house. When he gets the booze germ, like the aristocrat Berriman, he gets the horrors. If he gets the arrowroot germ, or some other crop beetle, he goes loony on that. If he gets the cattle-stealing germ, he gets gaoled—”

The noun giggle-house has come to be used in British English too—the following, for example, is from When stress rises to the name of the game, by Paul Weaver, published in The Guardian (London and Manchester, England) of Wednesday 27th January 1999:

With the weary hope that the players concerned are not otherwise engaged with their shrinks or wriggling in strait-jackets in the local giggle house, with the wistful dream that the 22 footballers might keep hold of their marbles for at least 90 minutes, I plan to attend a Premiership football match on Saturday.