It’s always been taken more or less for granted that the two progenitors of the Hobbit settlements in the west of Middle-earth, Marcho and Blanco Fallohide, represent a kind of private joke on Tolkien’s part, playing on the legendary brothers Hengest and Horsa, conquerors of England in the Fifth Century. As indeed they clearly are, historically. But since we know that in such borrowings Tolkien invariably had a linguistic source in mind as well, what about that angle? (No pun intended! :)
It’s believed that the names of Hengest and Horsa are both Germanic, with the meanings “stallion” and “horse”, respectively (though the latter has been disputed somewhat). Tom Shippey has argued that the names Marcho and Blanco mean more or less the same thing, from “Old English *marh, ‘horse’, blanca (only in Beowulf) ‘white horse’” . This has been taken up by other scholars, and has seldom been questioned. And why should it be? Bosworth-Toller indeed gives us mearh “a horse, steed” and blanca, blonca “a white or grey horse” .
However, we should remember that Hengest and Horsa were, after all, outsiders who traveled to English soil to capture the land from its native Celtic and Roman-British population. Why should they have English names? (Whether these names were bestowed later, by the subdued English population, is a possibility I will not take up, as this is clearly not applicable to the hobbits, Marcho and Blanco.) Their names are believed to be Germanic, but that allows for considerable geographical flexibility. Some say they were Jutes, others says Frisians — we really don’t know for certain. We only know they weren’t English, ab origine. And so, if Marcho and Blanco were modeled on them, could we look further abroad for the meanings of their names too?
Marcho need not be derived directly from OE mearh. Other possibilities that might readily suffice include Old Norse marr “horse, steed” and Old High German marah “battle-horse”, and these (according to Skeat) “are cognate with (if not borrowed from) Irish and Gael[ic] marc, W[elsh] and Corn[ish] march […]. Root uncertain.” . I have also seen the Cornish form recorded as margh, and additionally, the Breton as marc’h, either of which seems phonologically convincing. It’s somewhat surprising, isn’t it, to see Germanic and Celtic forms so similar, but on the other hand, all of these forms ultimately derive from Indo-European *marko “horse”. On the basis of the linguistic source alone, I don’t think we can really determine a precise geographical locus.
The case for Blanco is similar. While the presence of blanca in Beowulf (and only in Beowulf) is suggestive, there are other possible sources for the word. One thinks immediately of French / Old French blanc “white”, from which we derive Modern English blanch and blank. The French word, however, comes not from Latin (as did most of its vocabulary), but from a Proto-Germanic source, *blenk, *blank “to shine, dazzle, blind”. There is also Old Norse bleikr “shining, white”. Also closely related is Modern English blond, from Old French blond, from Frankish *blund, Proto-Germanic *blunda. It seems pretty clear to me that blanca = “white horse” more precisely = “white (merely applied in this case to a horse)”.
So, what is the upshot of all of this? Am I saying Marcho and Blanco’s names are definitely not taken from Old English? No, nothing so definitive. But I am suggesting that since Hengest and Horsa were “outsiders” to England, as Marcho and Blanco were to the Shire, then it might be worth considering linguistic sources outside Anglo-Saxon. And in doing so, one finds some pretty strong candidates — especially among the Celtic languages. Did Tolkien intend us to follow these names so far down the rabbit hole — or in this case, hobbit hole? Perhaps not, but I can’t think he would disapprove of our digging the hole a little deeper.
 Shippey, Tom. The Road to Middle-earth. Revised and expanded edition. Boston: Houghton Mifflin, 2003, p.102.
 Bosworth-Toller, pp.674 and 108, respectively.
 Skeat, Rev. Walter W. An Etymological Dictionary of the English Language. Second ed. Oxford: Clarendon Press, 1893, p.353. See also Alexander McBain’s Etymological Dictionary of the Gaelic Language, Gairm Publications, 1982.