I was under the impression that the US Census coined the word, "Hispanic" in 1980 because "latino" was too encompassing and vague and they wanted something more descriptive than the previous word, "white". Allow me to change the word, "Hispanic" in my previous post to "Spanish".
The term "Hispanic" was coined, using an antiquated and seldom used reference to the Latin name,
Hispania, for what is the present day Iberian Peninsula. "Latino" is a translation of "Latin", and that means that it could be construed, as is the English term "Latin" to persons from any Romance Language nation... including Brazil, French Guayana, Martinique, Monserrate and even St Pierre et Miquelon in this Hemisphere.
Because of the potential confusion and inclusion of groups not intended to be part of the category, such as Italian Americans, they appropriated the term "Hispanic". There was a certain urgency in creating a category for the 1970 census because of the laws and regulations that had been generated since the prior census that required more equal treatment of minorities.
The government found it had no quantification of what we now call Hispanics: people who spoke Spanish, or whose ancestors had spoken Spanish or even persons with little Spanish who came from predominantly Spanish speaking countries. So it included later generation persons born in the US to families that may have lived in US areas that were originally under Spanish rule. Or descendants of immigrants from Mexico or other parts of the Americas whose families had not spoken Spanish for generations. Or immigrants who spoke the indigenous languages of Mexico or other Spanish speaking nations.
The category was like a net that catches a lot of dissimilar things, but all of which fall under the general description of "fish".
As you mention, most of the folks we now call Hispanic were classified as "white" in prior decennial census tabulations. And, in fact, the vast majority of Hispanics now are racially classified as "white" today. But the Census, this year, expanded the "race" question to a more full option for persons who self identified as being of more than one race.
And this is further confused by the fact that in Spanish, "raza" does not totally equal the English "race". "Raza" also means "breed" as in dogs or horses. And, in Mexico "raza" means "brother" as in the English "bro". That makes for many confused Spanish dominant people when it comes to filling out the Census.
The term "Hispanic" was intended to be a cultural denominator, but by being an over-simplification it failed to take into account the enormous and diverse variety of peoples in the Spanish speaking nations of Latin America... ranging from the direct descendants of WW II refugees to immense numbers of Native Americans or indigenous peoples descendants from the Incas and the Mayas and other nations of the pre-colonial period.
Interestingly, each U.S. Census form since 1980... five in total... has changed a bit the descriptive language that aids a person in identifying, or not, as Hispanic.
As mentioned before, I was in Puerto Rico for the 1980 and 1990 Census process; in the first one when the Census taker knocked on the door, I answered, "¿Quién es?" and they automatically listed me as "Hispanic". I asked, and was told that "no gringo answers the door in Spanish. So we are told to base that question on the language of the first speech of the respondant." The same thing happened in 1990, with only a slightly different procedure which was "what language do you speak with friends and family" (I seldom if ever spoke English with my daughters and at work I only spoke Spanish). In both cases, I got checked off as "Hispanic" by the Census... and since the category is a political construct, I guess that is what I am.