The deep beginnings of the Volcanic go back to Walter Hunt’s Volitional Repeater, which became the Jennings repeating rifle, which then became the Smith-Jennings repeating rifle when Horace Smith was brought in to improve it. Smith was able to make it more commercially viable than the Jennings had been, but he recognized that the system needed significant changes to really become successful. He had met a fellow gun designer who had similar ideas, by the name of Daniel Wesson, and the two would spend a couple years developing and refining the system. In 1854 they thought it was ready for production, and formed the Smith & Wesson Company.
Included in the original company was a man named Courtland Palmer, who owned the patent rights to the Jennings system. Smith & Wesson’s system would probably have been deemed an infringement of Palmer’s patents, and by bringing him into the company they avoided legal trouble. The fact that he was a relatively wealthy financier of the new company certainly didn’t hurt!
The pistol that S&W started producing was a manually repeating one with a tubular magazine under the barrel holding either 6 or 10 rounds. It was available in the .41 caliber Navy model (note: not actually adopted by the Navy) and the .31 caliber pocket version. In this first iteration, both used iron frames, which were all engraved lightly. The prices were pretty steep, and the guns suffered from some reliability problems and a fundamental problem of underpowered ammunition (the .41 caliber had a muzzle velocity of just 260 fps / 79 m/s). However, they did offer a much greater level of rapid repeating firepower than the muzzle loading revolvers of the period, and gained some loyal fans. In total, just 1700 of the guns were produced before the company went bankrupt, about a year after forming.
To recover from that setback, they reformed the company into the new Volcanic Repeating Arms Company, and sold stock in the new company to generate a new supply of capital. This allowed them to get back into production, and the Volcanic company would make another 3000 pistols, all .41 caliber Navy types, before also running out of money 19 months later in 1856.
At this point, Smith and Wesson decide to move in another direction, and one of the main creditors of the Volcanic company is able to acquire all of its assets and put the guns into production a third time. The name of this creditor? None other than Oliver Winchester. Winchester puts a new infusion of his own money into the company under the name New Haven Arms Company. This company produces another 3300 guns, both large and small frame by 1861. The New Haven company comes very near to bankruptcy itself before finally changing the design to create the Henry repeating rifle. The Henry’s rimfire ammunition finally solved the reliability and power problems of the Volcanic, and became the starting point for Winchester to become one of the predominant American arms making companies.