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 the United States
In the Depression years, the United States remained focused on domestic concerns while democracy declined across the world and many countries fell under the control of dictators. Imperial Japan asserted dominance in East Asia and in the Pacific. Nazi Germany and Fascist Italy militarized and threatened conquests, while Britain and France attempted appeasement to avert another war in Europe. U.S. legislation in the Neutrality Acts sought to avoid foreign conflicts; however, policy clashed with increasing anti-Nazi feelings following the German invasion of Poland in September 1939 that started World War II. Roosevelt positioned the U.S. as the "Arsenal of Democracy", pledging full-scale financial and munitions support for the Allies – but no military personnel. This was carried out through the Lend-Lease agreements. Japan tried to neutralize America's power in the Pacific by attacking Pearl Harbor on December 7, 1941, which catalyzed American support to enter the war.