[In the mid-1500s] a storm in the northern English town of Borrowdale uprooted an oak tree, revealing a dark substance that local shepherds started using to mark their flocks. Before long, chunks of graphite were being sold around Europe as an amazing new way of writing.A 2010 article in the Wall Street Journal detailed the long and sometimes acrimonious history of lead pencil production by rival firms Staedtler Mars GmbH and Faber-Castell AG
Scribblers initially wrapped "black lead" in string to protect it and keep fingers clean. Soon, joiners began crafting wooden holders for ever-smaller slivers of the increasingly expensive carbon. The first man known to have registered a pencil business was the Nuremberg carpenter Friedrich Staedtler.
There's a well-done, interesting video at the link