For some centuries, it was believed that pearls were formed by tears of sea nymphs or angels, then it was believed, from Pliny the elder up until the 15th century, that they were drops of dew or rain. In certain seasons, the pearl oysters were said to rise out of the sea or river in the morning and to open and receive drops, then drop back into the water. The size, colour and shape of the pearl varied because of the weather when the dew drop was received. The next theory proposed in the 1600s was that the pearls were eggs of the oyster, and most were released into the water by the shellfish but some remained inside and were fed, growing in size. A second theory was that the oysters were diseased and the pearls were loose growths as a result. A third theory was that the pearls were formed from the inside shell of the oyster for some reason. The first microscopic examination of pearls and oysters was conducted in around 1717 and confirmed this third theory.
For the next few centuries, the concensus was that pearls formed when a grain of sand irritated an oyster, leading it to form a pearl cyst around the irritant grain and then to secrete shell constituents into that cyst and around that irritant. From the mid 19th century onwards, this theory changed to the extent that the irritant is rarely a grain of sand but is instead a parasite, or a piece of shell or coral that the mollusc covers in nacre.
Pearls can be found in any type of mollusc or shellfish but generally they are found in saltwater oysters or freshwater mussels. Natural pearls have traditionally been fished from the Persian Gulf and the Red Sea in the Middle East, and from the Gulf of Manaar between Southern India and Ceylon (Sri Lanka) in South Asia. Britain had a thriving pearl industry dating back from before the Romans arrived, with both saltwater and freshwater pearls .In the 1600s, they were also coming from the Spanish Indies, and the South China Sea, near Borneo. Broome in Australia was the centre of an active South East Asian mother-of-pearl industry until the introduction of plastic buttons. The Gulf region remained the foremost pearl supplier until the mid 19th century when there was a decline in output.
Pearls were also fished out of rivers, with thriving industries based in Scotland, France, Germany, Siberia and Russia, Japan, China, and the United States. The Mississippi River produced baroque pearls that were elongated, with a tooth-like appear, often described as a dog tooth pearl. Tiffany used a lot of freshwater pearls from North American rivers in its designs in the late 19th and early 20th century.
A good reference on pearl history is The Book of the Pearl by Kunz and Stephenson, 1908.