After 1812, there was a movement to teach the poor (in work houses/ poor houses) to knit. As a result, there was a flood of hand knitting and knitters wages collapsed.
By 1840, to be a professional knitter was to be poor. At this point, the tools and knitting methods of the professional knitter went out of fashion. Knitters started pit knitting so as not to be seen with a knitting sheath. And the knitting skills associated with using a knitting sheath were lost. Knitters stopped buying knitting sheaths, and the skills of making knitting sheaths were lost. Words for various specific tools and techniques were lost.
There were several contributing factors. Steam replaced sail reducing the need high quality seaman's sweaters. On the deck of a steam boat, a cheap felted pea coat is better than an expensive knit sweater. Frame knitting became much better, and "machine-made" become fashionable. Homes, businesses, churches, and transportation were better heated, requiring less clothing to stay warm. All in all, there was less need for fine hand knitting.
The entire culture of professional knitting was lost in 3 generations. Talented young knitters did not go into knitting (if they could avoid it) because because knitting as a profession did not promise respect in the community or good wages. Young people with elan went into other professions. Knitting as a craft form did not expand, and move forward.
Certainly, good Shetland lace was knit. This was supported by developments in wool breeding and mechanical spinning. However, all of that lace knitting kept those Shetland knitters in poverty. In 1885, a lady might buy a Shetland lace christening gown for her niece, but she bought it at Harrods, and would never actually talk to the knitter. The best that can be said is that those lace knitters were being exploited. Yes, they produced great quantities of fine lace, but that was despite their lack of tools and working conditions, not because of their poor working conditions. With better tools, better light, better shop conditions, and better yarns, they could have turned out better lace. The best yarn they had available was in the 12,000 ypp range, with some silk blends going a bit finer. It does take the finest tools and supplies to turnout the finest lace. If one is going to work at a professional pace with the finest needles, then one needs a knitting sheath to stabilize the needles. However, the skills of making such knitting sheaths were lost. One does not attempt the finest lace, if one is going to be blocking it outside. One only does the finest lace when one has a protected attic to dry/block the final object. One needs a dedicated work space for the finest knitting. Child care and a hearth (soot & sparks) are the enemies of the finest lace. In contrast, a hundred years earlier the lady wanting lace would have gone into the lace make's shop and talked to the knitter. In 1785, the knitter was more respected and better paid. In 1785, the better paid knitter had a better work-space, better light, better tools, and was able to do better work.
In Brugge, we looked at a good, private collection of lace. Of course there was a lot of Victorian stuff that looked nice - until you put it side by side with lace that was 100 years older.
Finally, any competent hand spinner can spin Rambouillet at 47,000 ypp producing 2-ply at 22,000 ypp, which is finer than Gossamer Cashmere. And worsted spinning produces a thin yarn with good tooth that displays well when knit with fine needles. These days, I do a fair amount of knitting on needles in the range of 1.0 mm - 1.5 mm. I found that I like those needles by working with finer needles. I am starting to have some ideas about lace.