The story of the slightly smaller Government-Letter sized paper (from Wikipedia):

There is an additional paper size, to which the name “government-letter” was given by the IEEE Printer Working Group: the 8 in × 10½ in (203.2 mm × 266.7 mm) paper that is used in the United States for children’s writing. It was prescribed by Herbert Hoover when he was Secretary of Commerce to be used for U.S. government forms, apparently to enable discounts from the purchase of paper for schools. In later years, as photocopy machines proliferated, citizens wanted to make photocopies of the forms, but the machines did not generally have this size paper in their bins. Ronald Reagan therefore had the U.S. government switch to regular letter size (8½ in × 11 in). The 8 in × 10½ in size is still commonly used in spiral-bound notebooks and the like.

An alternative explanation in the past for the difference between “government size” (as government-letter size was referred to at the time) and letter size paper was that the slightly smaller sheet used less paper, and therefore saved the government money in both paper and filing space. However, when Reagan prescribed the change to letter size, it was commonly stated that U.S. paper manufacturers had standardized their production lines for letter size, and were meeting government orders by trimming ½” each from two sides of letter-size stock; thus the government was allegedly paying more for its smaller paper size before Reagan abolished it. The different paper size also reportedly restricted the government’s ability to take advantage of modular office furniture designs, common in the 1980s, whose cabinets were designed for letter size paper.