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.
Modern history
The depression had devastating effects in virtually every country, rich or poor. International trade plunged by half to two-thirds, as did personal income, tax revenue, prices and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by roughly 60 percent. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries suffered the most.
The Great Depression ended at different times in different countries with the effect lasting into the next era. America's Great Depression ended in 1941 with America's entry into World War II. The majority of countries set up relief programs, and most underwent some sort of political upheaval, pushing them to the left or right. In some world states, the desperate citizens turned toward nationalist demagogues—the most infamous being Adolf Hitler—setting the stage for the next era of war. The convulsion brought on by the worldwide depression resulted in the rise of Nazism. In Asia, Japan became an ever more assertive power, especially with regards to China.