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.
History of South America
The Great Depression posed a challenge to the region. The collapse of the world economy meant that the demand for raw materials drastically declined, undermining many of the economies of South America. Intellectuals and government leaders in South America turned their backs on the older economic policies and turned toward import substitution industrialization. The goal was to create self-sufficient economies, which would have their own industrial sectors and large middle classes and which would be immune to the ups and downs of the global economy. Despite the potential threats to United States commercial interests, the Roosevelt administration (1933–1945) understood that the United States could not wholly oppose import substitution. Roosevelt implemented a good neighbor policy and allowed the nationalization of some American companies in South America. The Second World War also brought the United States and most Latin American nations together.