It was considered a derogatory term

Captain Cook was known as a famous explorer but he is also famous for protecting the health of his crew. While the causes of scurvy were still being tested he required all his crew to take lime juice everyday and the result was an unprecedented survival rate from diseases among his ship crews. This also caused others to use the term ‘limeys’ to refer to British seamen.

(Book – The Discoverers : A History of Man’s Search to Know His World and Himself – Daniel J. Boorstin)

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