
For a long time I had remembered the (now known to be) Urban Legend that while NASA (the US space agency) had spent millions of dollars to develop a pen that would work in space (in particular zero gravity) the Russians simply used a pencil. Today I found out that this wasn't really the case, in that a private company name Fisher Pen Co. had paid for the Space Pen development, with NASA (and later the Russian Space Program) buying the finished products.

NASA Didn't Pay the Space Pen Development Costs, A Private Company Did
While this very possibly could have been the case, NASA had previously dealt with public relations problems over the cost of mechanical pencils:
Originally, NASA astronauts, like the Soviet cosmonauts, used pencils, according to NASA historians. In fact, NASA ordered 34 mechanical pencils from Houston's Tycam Engineering Manufacturing, Inc., in 1965. They paid $4,382.50 or $128.89 per pencil. When these prices became public, there was an outcry and NASA scrambled to find something cheaper for the astronauts to use.
-Source
Why Using Pencils Wasn't a Good Idea

Both the US and Russian space programs had used pencils for a period of time. A big motivation to find a pen to replace these were due to concerns of:
- Pencils, made of wood, could burn, which is always a concern in space travel as experienced by the fire on Apollo 1.
- The graphite material in pencils left fine 'dust' particles, tips could break and debris from being sharpened (if not mechanical) could all get into their systems and cause problems.
How Did the Space Pen Work without Gravity
The Fisher Space Pen had a few main features that differed from a normal pen we would use. A special tungsten carbide tip was designed to ensure a perfect seal to prevent the ink from being able to escape (outside of when writing.) The ink itself was rather unique using thixotropic ink in a hermetically sealed chamber. The final piece of the puzzle was achieving 35 PSI of pressure in the ink chamber with nitrogen to provide a means of pushing the ink out as well as preventing the ink to evaporate or oxidize.
The End Result
In 1968 NASA ordered 400 of the Fisher Anti-gravity pens followed by the Russian order in 1969 for 100. Both space programs received 40 percent discount so they only had to pay $2.39 per pen instead of $3.98. For the US this was a huge cost saver compared to the $128.89 per pencil that had caused the public relations problems years before.
Text Sources:
Fact of Fiction: NASA Space Pen
Space Pen
The Truth Behind the Million Dollar Space Pen Hoax

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Image Sources:
Fisher Pen
Space Pen
Apollo 1 Fire