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Prior to the mid-1500s, "pencils" were small paintbrushes (made of camel hair) or styluses (thin metal sticks).
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In the first half of the 1500s, a large deposit of graphite was found in Cubmria, England. This graphite was used for a number of purposes, including for writing. Because graphite is soft, the first graphite "pencils" were wrapped in string or sheepskin for stability. (Note: Graphite was thought to be a form of lead. Though graphite does not contain the element lead, pencils' centers are still referred to as "lead.")
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Italians Simonio and Lyndiana Bernacotti created a flat pencil by hollowing out a piece of juniper wood and inserting graphite.
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Building on the Bernacotti's pencil-making technique, an unnamed inventor discovered that it was more effective to carve two wooden halves, insert a graphite stick, and glue the halves together. This is the approach to pencil making used today.
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The first mass-produced pencils were created in Nuremberg, Germany.
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An Austrian (Joseph Hardmuth) and a Frenchmand (Nicholas Jacques Conte) perfected a way of making graphite rods of varying hardness. This involved mixing powdered graphite with clay, shaping the mixture into rods, and firing these rods in a kiln. This is how pencil cores are made to this day.
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Although versions of mechanical pencils existed earlier, a mechanical pencil discovered aboard the sunken HMS Pandora is believed to be the first "true" mechanical pencil.
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William Munroe of Massachusetts made the first wood pencils in the USA.
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The first patent for a refillable mechanical pencil was granted.
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Ebenezer Wood used a circular saw to make both hexagonal and octagonal wooden pencils. He shared his invention widely (did not patent it), including with Eberhard Faber who became a leader in American pencil production.
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Hymen Lipman attached an eraser to the end of a pencil, an invention which he patented.
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Joseph Dixon discovered a way of mass-producing pencils in the USA.
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The L & C Hardmuth Company of Austro-Hunfary introduced the first yellow pencil intented to be the "world's best and most expensive pencil" (Wikipedia, 2014). At the time, most pencils were dark colors or unpainted.The yellow pencil has become commonplace in many parts of the world.
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Incense cedar was found to be an available and effective wood for wood-casings of pencils. Incense cedar is now the most common form of wood used in pencil manufacturing.
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Harold Grossman of the Empire Pencil Company invented the first plastic pencil or "EPCON" pencil. This pencil has a plasticized graphite mix inside a wood-composite core.
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The first stackable pencils were invented by the Taiwanese Bensia Pioneer Industrial Corporation.