A little history of fly fishing reels:
Based upon what I have read, it was probably the Chinese that invented the fishing reel in 300-400 AD. Beyond reading several different articles on the subject, I could find no other specific evidence for this. There is very little else mentioned about fishing reels until sometime in the 17th century when there is another written reference to fishing reels when some obscure fisherman revealed that a "winder" was useful in landing larger fish. It should probably also be mentioned that the fishing line of the day was braided horse hair. These lines were fairly short and heavy and did not readily float. As a result, there was very little need for a reel.
By the late 1700's, anglers were starting to use reels more frequently but they were not yet common. There were even a few "multiplier" reels in addition to the "direct" drive reels. Anglers seemed to really like the multipliers as they provided a faster retrieval of the line. They, however, were highly unreliable as the gears were made from soft brass and wore down very quickly.
Fishing reel development proceeded very slowly until the mid 1800's. In the 1820's, an American by the name of George Snyder developed the first fishing reel in America. Although it was not a fly reel, anglers of all types began using it including fly anglers. "Another American, Charles F. Orvis, designed and sold a fly reel in 1874. This design was patented and it included a narrow, perforated spool. The “Trout Model” sold for $2.50 in a walnut case, probably a lot of money back then. The original model did not contain a click, but the next model did. Charles was the founder of The Orvis Company, a major player in fly tackle to this day"...(Hale Harris, Bighorn Fly Shop).
Back in England, things were also going forward. Hardy, an English company designed and manufactured a fly reel that became the prototype for many of today's fly reels. This model was named the Perfect, and it had a detachable spool and an adjustable click drag. The early Hardy Perfect reels have become very collectible.
Technological developments continues today with new designs and newer materials that are stronger and lighter. Perhaps the biggest development of the last 20-30 years is the advancement of "drag" systems.