Depression of 1882–1885

[1] The downturn was preceded by a period of prosperity over the years 1879 to 1882, a growth powered by expansion of the American railroad industry and the opening of economic opportunities associated with the development of the transportation system.

[3] In addition, the United States experienced a favorable international balance of trade during the 1879–1882 period of growth — a fact which had the effect of expanding the country's money supply, facilitating credit and investment.

[6] Contemporary observers were baffled by the downturn and agents of the fledgling U.S. Bureau of Labor Statistics conducted extensive surveys on the matter.

In a published report by Commissioner of Labor Carroll D. Wright, it was found that explanation of the 1882 depression varied greatly according to the profession of the observer, with bankers and merchants tending to blame financial or commercial reasons, members of the clergy tending to blame social causes combined with divine providence, manufacturers apt to blame regulatory causes and the wage demands of workers, and workers tending to identify overproduction due to the introduction of new labor-saving machinery and low wage levels that made it impossible to consume the full amount of output.

[9] A lengthy alphabetical list of causes claimed by survey respondents was compiled by the Bureau, which included, among other proposed factors, defects in the banking system, place of credit in agriculture, the use of child labor, the negative effects of corporate monopoly, a lack of public confidence in the future of the economy, expansion of the role of silver in the money system due to an unequal price ratio between gold and silver, excessive immigration, the expanded use of labor-saving machinery, a growth of speculative investment and market manipulation, the decline of railway construction, negative effects of a high tariff policy, and the growing consolidation of wealth in the hands of a comparative few.