The University's arms were adopted by the University around 1400 by which time a book was regarded as the appropriate central feature for a University. The heavy volume with clasps (leather straps fixed to the edge of one cover and fastening on studs on the back of the other) was useful in protecting its leaves and symbolical of its character as a treasure chamber of knowledge. The number of clasps was not fixed at first and may have been dictated by the effectiveness of spacing for artistic reasons. Various suggestions have been made as to the significance of the clasps and their number (such as seven representing the seven subjects of the medieval curriculum or the 'labels with seals' on the Book in Revelation V, 1-5) but these are almost certainly incorrect.
The origin of the three crowns is not known exactly but may be connected with Thomas Cranley, Warden of New College from 1389 to 1396 and Chancellor of the University in 1390, who adopted them for his personal use in c1386. They were also given by Richard II to Robert de Vere, 9th Earl of Oxford, when he created him Duke of Ireland in 1386. Three crowns were also associated with King Edmund the Martyr, King Arthur and Jesus Christ.
The legend has had various forms. One of these, no longer in use, was Veritas Liberabit, Bonitas Regnabit, which may be translated as 'the truth will set (you) free, goodness will reign'. Veritas Liberabit may have been taken from the gospel of St John chapter 8, verse 32. The source for Bonitas Regnabit is unknown. Another legend previously in use was Sapientiae et Felicitatis, meaning 'of wisdom and happiness'. This is sometimes given as Sapientia et Felicitate, meaning 'by (or with) wisdom and happiness'. It is possible that this was taken from Aquinas' Summa Contra Gentiles.
The present legend, Dominus Illuminatio Mea (the opening words of Psalm 27, which may be translated as 'the Lord is my light'), was in at least occasional use by the second half of the 16th century. The current University device was designed in 1993. The device, which features the traditional arms within an encircling belt, is a registered trademark of the University.
Most of the above is derived from an article by EA Greening Lambourn in Oxford vol 5 (1938), pp31-49. Another account, which comes to different conclusions, can be found in the History of the University of Oxford, Volume 1 The Early Oxford Schools edited by JI Catto (Oxford University Press, 1984), pp94-5.
Oxford University Archives 2014