Pencil making Industry

Normally its belief that pencil is made of a mixture of graphite and clay not from lead.  Graphite, lead and the carbon have can only mark gray or black on the paper. In 1790's the french chemist had developed the mixture of water , graphite and clay  which harden and make possible to mark on paper mark on paper. Today the process still in practice. In 1870's the deposite of graphite discovered in New England. the american industry grew up around that deposit.

Source: http://www.ehow.com/how_5024388_make-pencil-lead.html