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It wasn't until around 1560 when an Italian couple created the first blueprints for a wood encased pencil. It looked like an oval, more compact shaped pencil. They had to hollow out a stick of juniper wood to insert the graphite into the pencil. Shortly after, a better technique for creating pencils was discovered. The concept involved cutting a stick of wood in half, carving the inside to fit the graphite, inserting the graphite, and then glueing the halves back together. This is almost exactly the same method used today to create pencils.
The History of the Pencil: Part 4