Before the rise of personal computing, the most significant use of cryptography was to keep war plans secret. Keep in mind that programmable computing as we know it essentially began with Turing's work breaking German codes in World War II, and the age of personal computing was beginning just as the Cold War was drawing to a close--not that anyone knew it at the time!
If you had an algorithm that could encrypt data such that the government couldn't read it, and it fell into the hands of the Russians, they could use this encryption to safely coordinate first-strike plans against the West, potentially setting up a nuclear attack. This was a very real fear back in the day, and even after the Soviet Union fell, neither the nuclear weapons nor America's enemies magically went away.
Therefore, the government classified strong encryption technology as "munitions", and exporting it was regulated under the same rules as military-grade weaponry. This lasted up until the dawning of the World Wide Web and the rise of e-commerce, which required strong encryption to foil eavesdropping and fraud, and enough of the Internet made enough of a stink about it that the rules were changed, in the name of economic progress.