That's a question I asked elsewhere. So I did a little research. And it seems that .38 bullets are actually .357 inches in diameter.
So why is it called the .38 caliber, rather than a .357 caliber? It has to do with the old days of cap-and-ball revolvers. Well, "cap and ball" is sort of a misnomer. This was the setup that made the American Civil War so deadly: you'd put the powder load in the chamber, followed by wadding, followed by a bullet with an expanding base. Then you'd put a percussion cap on the nipple that led to the chamber.
Anyhow, the deal is that you'd pull back the hammer, point at whoever you wanted to kill, then pull the trigger to let the hammer fall on the percussion cap. And then, just like the cap pistol you may have had as a kid, it'd go "pop!". But this "pop!" would send flame into the powder chamber. Which, if you packed the wadding in there tight enough, would then go "bang" and shove the wadding up against the base of the bullet, thereby expanding it to match into the rifling of the barrel, resulting in a muzzle-loading rifle that didn't require a freakin' sledgehammer to load it and indeed could be loaded just as fast as a smoothbore.
The expanding-bullet rifle changed warfare. Prior to this rifle, most battles were fought with smoothbores that were accurate maybe to 40 yards. You'd get enough time for a couple of volleys, then get after the enemy with your bayonet. Battles were won by bayonets, not by bullets. Rifles were acccurate to over 100 yards, but were too slow to load. But once the expanding-base bullet was created, you could have a bullet that was smaller in diameter than the rifling, and load from the muzzle without having to hammer the bullet all the way down from the muzzle to the base. Thus Picket's Charge at the Battle of Gettysburg, which would have been a glorious victory for the Confederacy in the pre-minie-ball day, was a senseless slaughter -- the new minie-ball rifle had enough range that the charging Confederates were cut down long before they managed to run across the wide field they had to go through to get to the Union lines.
Anyhow, this same system was used for revolvers. So the barrel was .38 inches in size, but the bullet was .357 inches in size so that it could be dropped down from the muzzle. The cylinder's chambers were .357 inches in size too so that you could pound the bullet in there with your loading rod so that your bullet didn't fall out the front of the gun. These early revolvers were loaded from the muzzle just like early rifles, you just did it six times. These early single-action revolvers didn't have the swing-out cylinders of modern double-action revolvers -- they were, frankly, a pain to load.
So anyhow, when the brass all-in-one cartridge was invented, the first thing gunsmiths did was bore out the rear of the cylinders of these single-action .38-caliber-barrel pistols and insert brass cartridges. Because the cylinders were designed to hold bullets that were .357 inches in size, that's what they put into them. Eventually gun-makers came out with guns explicitly designed to hold these cartridges, with barrels that didn't have the extra slop needed for muzzle-loaders, but they kept calling these guns .38's because the cartridges were the same ones that they'd originally fitted into the real .38's that they'd bored the ends of the chambers out of. So even though the bullets were only .357 in diameter, and the barrels only slightly above that, they still called it a .38.
Now, let's fast-forward to the early 1930's. Gangsters adopted early versions of body armor, and the metal-bodied cars were hard to penetrate with bullets. The venerable .38 Special cartridge from the late 19th Century just wasn't cutting it for the FBI. So a longer variant of the venerable .38 cartridge was created that held more powder and had a faster burn. Rather than call it a ".38 Special Special" or something stupid like that, the folks who designed the new cartridge called it by its real diameter -- the .357. And because a magnum flask of champagne is one that's larger than the regular one, they called it the .357 Magnum cartridge. Then they designed a gun to shoot this longer cartridge and voila, the .357 Magnum revolver was born.
There are larger calibers of revolver and pistols available nowdays, of course. Even with the .357 Magnum was created, there was the .45ACP (Colt 1911A and its clones), though its ballistics couldn't match the .357 Magnum's. When the .44 Magnum (Dirty Harry's favorite weapon) was created in the 1950's, it pretty much exceeded the limits of gun control in the gun nut use of the term -- i.e., it has so much kick that it's basically uncontrollable by most people. So the .357 Magnum is still a quite popular caliber. A revolver is simple and reliable, and the load is pretty much the heaviest load that most people can shoot and still adequately control. And because revolvers don't care how long their cartridge is, you can put the shorter .38 caliber cartridge into the chambers and have a reduced-kick pistol that is useful for target shooting and learning gun control (in the gun nut use of the term, i.e., "gun control means that you hit what you're shootin' at").
Nowdays revolvers aren't so popular. Blame it on the Feds, again. Once the Department of Defense decided to adopt the 9mm cartridge for handguns in order to have commonality of ammunition with our NATO partners, suddenly the old .38 Special and .357 Magnum just seemed, well, old. So police forces upgraded to 9mm automatics that could hold 15 or more cartridges in a magazine, significantly more than the 6 or 7 that a revolver can hold, and magazines can be loaded far faster than a revolver can be loaded even with speedloaders for the revolver. The problem is that the 9mm cartridge has about the same stopping power as the .38 Special, because of an interesting characteristic of an automatic: the bullet is pushed up into the bottom of the ejector chamber as the ejector chunks the spent cartridge out the side, and then is pushed forward into the actual chamber by the slide sliding back foward via the slide springs. Thus the bullet can't be a soft lead hollow-point that could hang up on any of the mechanisms. It pretty much has to be a jacketed round that will slide smoothly through this process, else it can jam, at which point you're in the same position as the poor GI's whose early M-16's jammed in Vietnam due to poor-quality ammunition, i.e., your pistol is now a rock or club, not a pistol.
Thus jacketed bullets. All autopistols use them. Soft lead rounds like are used in revolvers simply won't slide right through the mechanisms. The problem with a jacketed bullet is that while it might slide more easily through the mechanism of the autopistol, it doesn't expand as well when it actually hits something. A soft hollow-point .38 bullet will expend all its energy in doing damage to the bad guy. A jacketed 9mm bullet will pass right through him and do damage to the wall behind him. Unless you've got something against that wall, this isn't what you want.
So anyhow, the point is that it might seem that, say, a .40 caliber automatic such as is now issued to the FBI would have significantly more stopping power than the .357 Magnum. But that's simply not true. Bigger isn't better. It's just bigger. If the .357 bullet expands to more than .40 caliber when it slams into a body, and it has as much energy behind it, it'll do more damage than the .40. About the only advantage the automatic has is that its magazine holds more rounds. Which is fine if you're in a gunfight with a bunch of bankrobbers, but if you're just wanting to defend your home against a thief, it's way overkill. Not to mention another drawback of the automatic -- because it uses blowback or recoil to slide the slide back and eject the cartridge and allow the new cartridge to feed, if you "limp wrist" the pistol and allow it to kick back, it's possible that the energy needed to eject the cartridge will instead go into your body -- resulting in a jam. Meanwhile, a revolver is dirt simple, with nothing to jam. You point, you pull the trigger, you shoot. Repeat until done.
So anyhow, that's why revolvers are still an excellent home defense weapon despite all these fancy automatics that are so popular today, why a .357 Magnum has more stopping power than any automatic currently sold, and why a .357 will shoot .38 Special cartridges (because they're really only .357 inches in diameter!). Hope you enjoyed this little bit of gun-nuttia!
- Badtux the Libertarian Penguin