battle-axe n.

"fight or hostile engagement between opposing forces," c. 1300, from Old French bataille "battle, single combat," also "inner turmoil, harsh circumstances; army, body of soldiers," from Late Latin battualia "exercise of soldiers and gladiators in fighting and fencing," from Latin battuere "to beat, to strike" (see batter (v.)).

Battle-cry is from 1812; battle-flagfrom 1840; battle-scarred is from 1848. Phrase battle royal "fight involving several combatants" is from 1670s.

"edged instrument for hewing timber and chopping wood," also a battle weapon, Old English æces (Northumbrian acas) "axe, pickaxe, hatchet," later æx, from Proto-Germanic *akusjo (source also of Old Saxon accus, Old Norse ex, Old Frisian axe, German Axt, Gothic aqizi), from PIE *agw(e)si- "axe" (source also of Greek axine, Latin ascia).

The spelling ax is better on every ground, of etymology, phonology, and analogy, than axe, which became prevalent during the 19th century; but it is now disused in Britain. [OED]

The spelling ax, though "better on every ground, of etymology, phonology, & analogy" (OED), is so strange to 20th-c. eyes that it suggests pedantry & is unlikely to be restored. [Fowler] 

The meaning "musical instrument" is 1955, originally jazz slang for the saxophone; rock slang for "guitar" dates to 1967.

To have an axe to grind is from a Sept. 7, 1810, essay in the Luzerne (Pennsylvania) "Gleaner" by U.S. editor and politician Charles Miner (1780-1865) in which a man flatters a boy and gets him to do the chore of axe-grinding for him, then leaves without offering thanks or recompense. It was published in a collection in 1815 titled "Essays From the Desk of Poor Robert the Scribe." The story ("Who'll Turn the Grindstone?") has been misattributed since late 19c. to Benjamin Franklin, a mistake continued in Weekley, OED print edition, "Century Dictionary," and many other sources (Bartlett's "Familiar Quotations" has gotten it right since 1870).