Although the paper bag is a common household article, no one knows who first invented it. Many inventors, however, have improved on the original product. The first, and probably most significant improvement made in modern times came from American inventor Margaret Knight. In 1869, while working in a shop that produced paper bags, she devised a machine that would mechanically fold square-bottomed paper bags. This was a big improvement since it meant the bag would stand on its own. Although Knight came up with the idea in 1867, it took two years for the machine to be installed. In February 1872, Bostonian Luther Childs Croswell improved on Knight's square-bottomed design by adding two longitudinal, inward folds. This made the bag easier to store and better able to stand. Between 1884-1894 William Purvis, an African-American inventor, devised 10 different machines for making paper bags. He also invented a fountain pen, hand stamp and had three patents on an electrical railway. He later licensed his paper bag inventions to Union Paper Bag Co.of New York.

Beginning in the early 1970s, an effort was made by retailers to offer only plastic bags, which had been designed in Sweden and introduced in the United States at that time. With the advent of money-saving automated production in the early 80s plastic bags became a much less expensive alternative for supermarkets and other vendors, and customers had to request paper bags. However, questions about the recycling aspects of plastic bags have led many commercial establishments to offer shoppers a choice of paper or plastic packaging. Nonetheless, the vast majority of bags used today are plastic.