Toronto's NHL team was originally known as the Arenas and later the St. Pats. The name Maple Leafs was adopted in 1927, and I am told it was named after the Maple Leaf Regiment that fought in World War I.
Of course, for those readers outside the Great White North, you'll recognize that the Maple Leaf is a well-known symbol for Canada, so it's quite appropriate.
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To actually answer the question: Toronto has always been a blue/white city. I'm not sure where it originated but it long predates not only the Toronto Arenas (original name of the Maple Leafs) but also the Toronto Blueshirts of the NHA. If you notice the Argonauts along with the Blue Jays also follow the Blue/White pattern.
The most commonly held belief is Smythe got the colour scheme from the University Of Toronto Varsity Blues, where he had been captain of the Ice Hockey team in 1915. Where UofT got theirs from, I don't know.
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