In 1852 American, Francis Wolle, invented and patented a paper bag machine and in 869 he and his brother, along with other paper bag makers founded Union Paper Bag Machine Company and opened a state of the art plant in Savannah, Georgia in 1935.  The plant is still there and operating today, owned by International Paper Company.
In 1870 the simple design was improved.  Margaret Knight, a prolific inventor, credited with at least 90 inventions and 22 patents, invented a device to cut, fold and paste paper bag bottoms while working for the Columbia Paper Company in Massachusetts.