Douglas Harper's Etymology Dictionary
whole cloth
early 15c., "piece of cloth of full size," as opposed to a piece cut out for a garment; figurative sense first attested 1570s.
Wiktionary
whole cloth
adv. (context idiomatic English) in full extent, wholesale, entirely, without changes or additions n. 1 A newly made textile which has not yet been cut. 2 (context figurative used attributively or preceded by various prepositions English) The fictitious material from which complete fabrications, lies with no basis in truth, are made. 3 Something made completely new, with no history, and not based on anything else.