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The primary cause of the Panic of 1819 was likely the credit tightening instituted by the directors of the Second Bank of the United States, who were skeptical of the risky lending policies practiced by the new wildcat banks in the West. When the Bank called in its loans, state banks had to follow suit. Loans made to land speculators and similar high-risk debtors typically defaulted, which bankrupted their lenders. These failed banks in turn pulled other banks down with them, along with the fortunes of their depositors. These problems were compounded by the strong price competition which domestic manufacturing faced from foreign goods, as well as a downturn in exports, in particular cotton. The factory and farm failures resulting from bank failures and low prices caused rampant unemployment.

Proposed remedies included:

• increase of tariffs (largely proposed by Northern manufacturing interests)
• reduction of tariffs (largely proposed by Southerners, who believed free trade would stimulate the economy and increase demand)
• monetary expansion; i.e., restriction or suspension of specieFor exchange rates, see here. A currency is a unit of exchange, facilitating the transfer of goods and services. It is a form of money, where money is defined as a medium of exchange rather than e. a store of value. A currency zone is a country or region payment
• rigid enforcement of specie payment
• restriction of bank credit
• direct relief of debtors
• public works proposals
• stricter enforcement of anti-usury law s
• abolition of the national bank (the Second Bank of the United States)

The worst of the crisis was over by 1824Events January 22 Ashantis crush British forces in the Gold Coast Cimetiere du Montparnasse established The Dutch sign the Masang Agreement temporarily ending hostilities in the Padri War March 17 signing of the Anglo-Dutch Treaty of 1824. March 11 The Un, and the rest of the decade saw a gradual recovery of the U.S. economy. It was the nation's first experience with the mysteries and miseries of the business cycleThe business cycle or economic cycle refers to the ups and downs seen somewhat simultaneously in most parts of an economy. They tend to repeat at fairly regular time intervals. The cycle involves shifts over time between periods of relatively rapid growth.

1 See also

• Panic of 1837The Panic of 1837 was an economic depression, one of the sharpest financial crises in the history of the United States. The Panic was built on a speculative fever. The bubble burst on May 10, 1837 in New York City, when every bank stopped payment in speci
• Panic of 1857The Panic of 1857 abruptly ended the boom times that followed the Mexican War. The immediate event that touched off the panic was the failure of the New York branch of the Ohio Life Insurance and Trust Co. a major financial force that collapsed following
• Panic of 1873The Panic of 1873 was touched off on September 18, 1873, when the Philadelphia banking firm Jay Cooke and Company closed its doors and declared bankruptcy. It was one of a series of economic crises in the 19th and early 20th centuries. The others occurred
• Panic of 1893The Panic of 1893 was a financial crisis that hit the United States upon the concurrence of several events. First, too many people attempted to redeem notes for gold; ultimately the statutory limit for the maximum amount of gold in federal reserves was re
• Great Depression