E. Cobham Brewer 18101897. Dictionary of Phrase and Fable. 1898.
To sit on the woolsack. To be Lord Chancellor of England, whose seat in the House of Lords is called the woolsack. It is a large square bag of wool, without back or arms, and covered with red cloth. In the reign of Queen Elizabeth an. Act of Parliament was passed to prevent the exportation of wool; and that this source of our national wealth might be kept constantly in mind woolsacks were placed in the House of Peers, whereon the judges sat. Hence the Lord Chancellor, who presides in the House of Lords, is said to sit on the woolsack, or to be appointed to the woolsack.