Why is $e$ the Identity?

We germans (or Kraut, as you might call us) call the identity element "Einheitselement", and hence denote it by $e$ (even though of course not every one does). Similarily it is common to denote a field by $k$ for "Körper"; anyway a great deal of mathematical terminology is of german origin. Likewise the french often denote vector spaces by $E$ ("espace").