In 1564, an enormous deposit of graphite was discovered at the site of Seathwaite Fell near Borrowdale, Cumbria, England. The locals found that it was very useful for marking sheep. This particular deposit of graphite was extremely pure and solid and it could easily be sawn into sticks. This was and remains the only deposit of graphite ever found in this solid form. Chemistry was in its infancy and the substance was thought to be a form of lead. Consequently it was called plumbago, (Latin for "acts like lead"). The black core of pencils is still called "lead", even though it does not contain the element lead.
The so-called lead pencil�a rod of graphite encased in wood�came into use in the 16th century. From the late 18th century, pulverized graphite was mixed with clay to bind it and to provide different degrees of hardness�the more clay, the harder the pencil. Today the mixture is forced through dies, cut to the required length, and kiln-fired. The rods are laid in grooves of a thin board, a similar board is placed over them, and the wood is shaped into pencils, usually of round or hexagonal cross section. Pencils are also manufactured with cores of colored pigments mixed with clay and wax and of other materials.... (More than you would ever want to know about pencils)...