BULLY (of uncertain origin, but possibly connected with a Teutonic word seen in many compounds, as the Low Ger. bullerjaan, meaning "noisy"; the word has also, with less probability, been derived from the Dutch boel, and Ger. Buhle, a lover), originally a fine, swaggering fellow, as in "Bully Bottom" in A Midsummer Night's Dream, later an overbearing ruffian, especially a coward who abuses his strength by ill-treating the weak; more technically a souteneur, a man who lives on the earnings of a prostitute. The term in its early use of "fine" or "splendid" survives in American slang.
Note - this article incorporates content from Encyclopaedia Britannica, Eleventh Edition, (1910-1911)