Question: How does algebra relate to this chess notation?

Why do they call this chess notation **algebraic**?

Answer: 
I think that Jonathan Garber is right. Much of algebra has to do with equation in an x y coordinate plane which is very similar to the way that algebraic notation denotes specific squares on the board. I have however not been able to find any specific source of the information.
Algebra is more than simply a branch of mathematics. The central element of it is using symbols as abstractions, the way the notation uses letters and numbers to represent the squares, as opposed to the systems where the square is more concretely described, as "King Bishop 4" for example.