The concept of the pencil really hasn't changed since the first time early humans dragged the charred end of a stick across a cave wall and found that bits of charcoal would adhere to the surface. All of the innovations in pencil design have merely refined that simple concept.
The Early Office Museum website has a great article on the early development of the pencil, including the formulation of lead, here,
Up through the Nineteenth Century and into the beginning of the Twentieth Century, pencil manufacturers produced mainly leadholders rather than true mechanical pencils. A leadholder is simply a tube which holds a stick of lead, with no way to advance or retract the lead as it is used up. Wood pencils, as an example, are leadholders in which the lead is fixed, and the wooden leadholder that encases it is whittled or sharpened away tor reveal a fresh writing tip. Other leadholders were more elaborate, made of finely wrought metals, in which a piece of lead could be inserted and locked into position within the barrel. As the lead wore down, it could be released and repositioned manually.
Other nineteenth century designers came up with retractable leadholders, in which the writing tip could be pushed out of the barrel and locked into place with a simple slider. Many of these were equipped with two slides, one to advance a leadholder, the other to advance a dip pen nib.
A real innovation was the so-called "Magic Pencils," which were collapsable into a very tiny barrel (usually only between one and two inches) when not in use, but when the rear of the pencil was pulled outward, the tip would advance from the opposite end, so that when fully engaged the tiny barrel would become a full-sized writing instrument.
But handling sticks of lead is messy business, particularly in the days when lead was fairly soft. Inventors began to dablle with designing pencils that would advance and reposition the lead without the need to touch it. Early innovators in this regard were the Eagle Pencil Company and the American Pencil Company, both of which were manufacturing wood pencils and leadholders as well as crude screw driven mechanical pencils throughout the last half of the 19th Century. During these early days, lead sizes and composition varied wildly, so finding replacement leads was more difficult than today. Dip pens and fountain pens were far more prevalent as the century drew to a close, led by large manufacturers such as L.E. Waterman, Parker, Paul Wirt, and Conklin. but none of these companies produced pencils of any sort.
Then along came Charles Keeran, an inventor from Bloomington, Illinois who set about the task of building a better mouse trap, so to speak, when it came to pencils. His goal was to design a pencil which was easy to manufacture, reliable and durable, and in 1913, he applied for a pencil which met all of those criteria -- a pencil he called the "Ever Sharp."
While Keeran had plenty of good ideas, he did not have the capital to begin mass producing his Ever Sharp, so he sought out manufacturing companies to produce his pencil. At first, he employed Heath to manufacture his pencils, and by Christmas of 1913, his new pencil was introduced at Wanamaker's store in New York - and they sold very well, even at $2 to $3 (more than the price of most fountain pens at the time). In fact, Keeran discovered he could sell as many of his pencils as he could make, and he knew if he could make a lot more, he would sell a lot more. That led him to search out for a company that could mass-produce his pencils in earnest.
In 1915, Keeran moved his company to Chicago and came into contact with John C. Wahl and the Wahl Adding Machine Company, which had been incorporated in 1905. Wahl, which had machining and tooling capabilities but had never produced writing instruments before, agreed to begin producing Keeran's Ever Sharp pencil, leaving Keeran free to drum up sales orders. In 1916, Keeran also convinced Wahl that it would be a good idea to purchase the Boston Fountain Pen Company, so that the company could offer fountain pens to go with his pencils. Although this seems like backwards thinking now, at the time no major manufacturer was offering matching pen and pencil sets.
In fact, the concept was so revolutionary that Wahl decided to keep it to itself, forcing Keeran out of the company and commencing mass production of both pens and pencils in earnest in 1917. Almost overnight, Wahl catapulted itself from a subcontractor producing pencils into the position of one of the industry's leaders, selling pens and pencils by the millions.
Wahl's meteoric rise caught America's writing instrument industry completely flat-footed. An absolute torrent of innovation ensued, as other manufacturers scrambled to come up with products that could compete with Wahl and its "Eversharp." Sheaffer had a very good answer with its propel-repel-expel "Sharp-Point" in 1918; Parker followed soon after with a pencil that was not designed nearly as well. Waterman must have been convinced the mechanical pencil was just a fad and didn't get into the pencil business until at least 1922.
And in the meanitme, literally hundreds of other designs were patented. It was no simple coincidence that many of the pencils patented soon after the Eversharp entered into production had "crown-like" top caps. Even Sheaffer's original offerings had this stylistic feature. Throughout the early and mid 1920s, pencils (as was the case with fountain pens) were mostly flattop, angular pencils.
In 1929, Sheaffer dropped a style bombshell on the writing instrument industry with the introduction of the Balance line of pens and pencils, which were streamlined rather than boxy. Suddenly, many manufacturers quit trying to imitate Wahl and started imitating Sheaffer, and the design of pencils generally became more streamlined. Parker grudgingly rounded the ends of its pens and pencils slightly and called them "streamlined," although it didn't introduce a rounded-end product until the introduction of its Vacumatic line in 1933. Wahl did not capitulate entirely, but introduced the more tapered Doric line in 1931. Conklin simply rounded off the caps on its boxy Endura line for the time being, until the introduction of its streamlined Nozac line in the mid 1930s. Waterman chose to stay boxy, although its Ink-Vue line from the mid 1930s gave a nod to the streamlined look.
Shortly before the outbreak of World War II, Wahl formally changed its name to Eversharp, Inc. and introduced the Skyline, regarded by many as the pinnacle of art deco design. Around the same time, Parker introduced its 51 line and introduced the metal cap/plain colored barrel combination that would become the rage in decades to follow. The War all but shut down production of writing instruments, as steel was reserved for the war effort. Companies such as Wearever (which had military contracts to produce pens and pencils) and Starr (a dstributor that was put out of business over a war-profiteering scheme) flooded the market with very cheap, poorly made pencils.
After the War, the mechanical pencil suffered as much at the hands of the new ballpoint pen as did the fountain pen. With few exceptions, pencils were an afterthought to accompany either a ballpoint or a fountain pen. An Eversharp Symphony from 1953 was mechanically the same as the first Eversharp repeaters introduced in 1935; a Parker 45 pencil from the 1960s was only different from a 1933 Vacumatic on the outside. Innovation was largely abandoned, although Sheaffer continued to produce an intriguing variety of new designs.
One interesting post-war innovation, from Parker, was the introduction of the "Liquid Lead" pencil, which used a ballpoint-style refill cartridge containing a liquified graphite solution instead of ink to deliver graphite to paper. Unfortunately, the idea never caught on, and since no one has stepped in to produce replacement cartridges, Liquid Lead pencils are increasingly confined to being display pieces only as their cartridges run out.
It is fascinating today to tour the pencil display at an office supply store, because the direct descendants of the pencils in this museum are very much alive and well. There you will still see the great-great Grandsons of Eversharp Coronets, Eagle Magnum Pointers, Sheaffer utility pencils and many, many more. With any luck, after you browse this museum, you will see the family resemblance.
(click on pictures to enlarge)