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On the About GNU page of the GNU project, Richard Stallman himself states that the operating sysytem in use when he joined the MIT Artificial Intelligence (AI) Lab in 1971 was the Incompatible Timesharing System (ITS):
When I started working at the MIT Artificial Intelligence Lab in 1971, I became part of a software-sharing community that had existed for many years. Sharing of software was not limited to our particular community; it is as old as computers, just as sharing of recipes is as old as cooking. But we did it more than most.
The AI Lab used a timesharing operating system called ITS (the Incompatible Timesharing System) that the lab's staff hackers (1) had designed and written in assembler language for the Digital PDP-10, one of the large computers of the era. As a member of this community, an AI Lab staff system hacker, my job was to improve this system (...)
(1) The use of “hacker” to mean “security breaker” is a confusion on the part of the mass media. We hackers refuse to recognize that meaning, and continue using the word to mean someone who loves to program, someone who enjoys playful cleverness, or the combination of the two. See my article, On Hacking.
For more information about why the 'hackers' at MIT's AI lab felt they needed to invent a new time-sharing operating system, rather than using the CTSS system, or the Multics system then being developed by MIT's Project MAC, take a look at Chapter 6 in Steven Levy's Hackers: Heroes of the Computer Revolution, especially from p112.