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 Kingdom
The Great Depression originated in the United States in late 1929 and quickly spread to the world. Britain had never experienced the boom that had characterized the US, Germany, Canada and Australia in the 1920s, so its bust appeared less severe. Britain's world trade fell in half (1929–33), the output of heavy industry fell by a third, employment profits plunged in nearly all sectors. At the depth in summer 1932, registered unemployed numbered 3.5 million, and many more had only part-time employment. Experts tried to remain optimistic. John Maynard Keynes, who had not predicted the slump, said, "'There will be no serious direct consequences in London. We find the look ahead decidedly encouraging."