Something I actually know about!

The Greek system was originally intended to be of semi to entirely secret societies which fostered academic growth and betterment of members through higher standards of academia and overall sophistication. Some wer reserved for people who knew and studied classic languages (hence the Greek letters). Amost all founding constitutions of Greek organizations point to fostering brotherhoods that enable people to accomplish more than they could alone and individually (in addition to each fraternity's specific ideals).

Around the turn of the century, most of the organizations you know today gave up secrecy in order to expand membership. Sororities (female fraternities as most technically are), which started forming in the late 19th century, followed suit. In the interest of mingling with like-minded people, the Greek "community" formed. Banquets, parties, and formal social events sprung up in the late 1910s. So drinking and partying are nothing new to the scene. Like many cultural facets in American life, post-WWII life drove what we now see.

With the GI Bill, thousands of men flooded college campuses, looking for education and a good time that wasn't on a base in the Pacific. This is when the party scene took off. Hazing, on the other hand, was around far before, with chapters rampantly getting away with things now viewed illegal. The anti establishment movement took a hit on the Greek system before rocketing in the 70s and 80s (see Animal House). 90s counterculture took another big hit, and the system has been improving since due to internet exposure.

Hazing and partying have been ingrained in the 20th and 21st century Greek system. Administrations have always acted against it, but now are expected to have tighter grips. The behavior of members hasn't changed much but rather the tougher standards universities hold them to.

Source: taught Greek system history for my fraternity. Was given plenty of literature to substantiate this.

You might be interested in the system of college fraternities in Germany and Austria, a topic which is (in my opinion) quite fascinating.

These fraternities originated in the Middle Ages, when you'd go all over Europe to study and form groups with other people from your area, e.g. there would be a group of Bavarian students in Paris who would hang out and study together and maybe also rent a place to stay at. These fraternities evolved further and during and after the Napoleonic wars and the struggle for liberty, German freedom (and later unification) led to the founding of the so-called Ur-Burschenschaft in Jena in 1815. Soon, Burschenschaften formed in every University town in what is today Germany, Austria, German-speaking Switzerland and also some Universities in the Habsburg Empire that were German-speaking. In those days, almost every student belonged to a Burschenschaft.

The Burschenschaften then started campaining intensively for German unification, which of course they eventually got. At the same time, however, Catholic fraternities began to form. The are similar in looks and rituals to the Burschenschaften, and both are very conservative, but the Burschenschaften are quite anti-church and there were often fights between the two groups of fraternities, also leading to fatal injuries.

The rise of anti-semitism in the late 19th century was picked up by both the Burschenschaften and the Catholic fraternities and there were many instances of protest and also hate crimes, for example many fraternities opposed Jewish professors at their universities and would boycott their lectures.

In the time between the two world wars, Austria is especially interesting regarind the fraternities, as the Burschenschaften there lobbied intensively for unification with Germany. They were even more anti-semitic than their German counterparts (also the Catholic fraternities). After the Anschluss in 1938, the two groups drifted apart, as members of Catholic fraternities began to join the resistance movement against the Nazi regime (in fact, the Catholic branch of the resistance was basically organised and led by the CV, a group of most Austrian Catholic fraternities), while the Burschenschaften triumphantly dissolved themselves as they saw their purpose (unification with the German "fatherland") achieved. Many members of Burschenschaften rose to careers in the SS.

After the war, the CV fraternities retained some of their popularity and there are quite a few still around. They are male only, Catholic, very conservative, traditional, and drink a lot.

The Burschenschaften also still exist, but are positioned on the very right of the political spectrum. Even though they themselves claim to be "only" patriotic and libertarian, many of their members (and there aren't that many) have been convicted for various crimes that can be seen as right extremist (denying the Holocaust, defiling Jewish graveyards, etc).

Not directly related to the question but if you found it interesting, check out the English Wiki page which is quite good. Unfortunately, I am not aware of any good English books on the topic, they're all in German.