Harold Wentworth and Stuart Berg Flexner, Dictionary of American Slang
(New York: Thomas Y. Crowell, 1960), p. 314:
lead in [one's] pencil, have 1 [taboo] To have an erection; to be capable of and eager for sexual intercourse. 2 To be full of energy and vitality.
Sense 1 is apt in light of the etymological connection between pencil
. See The American Heritage Dictionary of the English Language
, New College Edition (Boston: Houghton Mifflin, 1979), s.v. pencil
Middle English pensel, pencel, from Old French pincel, from Vulgar Latin pēnicellus (unattested), from Latin pēnicillus, a brush, pencil, "small tail," diminutive of pēnis, tail.
and s.v. penis
Latin pēnis, tail, penis.