Deflation
Deflation occurred periodically in the U.S. during the 19th century (the most important exception was during the Civil War). This deflation was at times caused by technological progress that created significant economic growth, but at other times it was triggered by financial crises — notably the Panic of 1837 which caused deflation through 1844, and the Panic of 1873 which triggered the Long Depression that lasted until 1879. These deflationary periods preceded the establishment of the U.S. Federal Reserve System and its active management of monetary matters. Episodes of deflation have been rare and brief since the Federal Reserve was created (a notable exception being the Great Depression) while U.S. economic progress has been unprecedented.
Looking Backward
The decades of the 1870s and the 1880s were marked by economic and social turmoil, including the Long Depression of 1873–1879, a series of recessions during the 1880s, the rise of organized labor and strikes, and the 1886 Haymarket affair and its controversial aftermath. Moreover, American capitalism's tendency towards concentration into ever larger and less competitive forms—monopolies, oligopolies, and trusts—began to make itself evident, while emigration from Europe expanded the labor pool and caused wages to stagnate. The time was ripe for new ideas about economic development which might ameliorate the current social disorder.