The Panic of 1819 was the event that caused Americans to rethink the New Republicans and their American system which favored tariff protection, the Second Bank of the United States and internal improvements. The panic resulted from the efforts of the Second Bank of the United States to curtail inflationary practices. This occurred because many of the branch offices in the West has issued massive amounts of currency to land boom speculators and farmers. Most of these banks lacked hard currency to back up the paper currency. They did so by sharply reducing loans to western branches, which led to foreclosures on real property--farms and businesses. The panic caused financial panic, massive unemployment and bankruptcies.
