According to Michael Ettema, research curator at Grand Rapids Public Museum,
"Powered sanding machines probably appeared in furniture factories in the latter part of the nineteenth century, together with power transmission systems."
Early versions of power sanders -- simple devices --
consisted of sandpaper sheets attached to a rotating disk or drum, or a
sandpaper belt rotated between two cylinders. Actual sanding operations
required that workpieces be hand-held or placed on a table and advanced
to the sandpaper by hand. Gauging the amount of wood to be removed
depended on the operator's judgment. More complex variations of the
machine included a rotating sandpaper disk or belt mounted on a
flexible frame moved by hand across a large, flat workpiece such as a
table top. "Machines that automatically fed the work to sanding drums
appeared in trade literature by the 1880s."
Source: Michael Ettema, "Technological Innovation and Design Economics in Furniture Manufacture", Winterthur Portfolio 16 1981, pages 197-223.