1. In a pure free market with a Gold Standard deflation is the norm rather than the exception because the number of goods increases while the money supply (gold) increases a lot slower. As a result the value of money increases which leads in a continued fall in prices. Falling prices is of course good!
This might be interesting: http://mises.org/document/3726/Deflation-and-Liberty
2. The 19th century was marked by deflation because the U.S. was for the most time on a Gold Standard. During this period took place the Industrial Revolution and the U.S. economy grew enormously!