<P> State banks in the West and South, unable to provide the required specie, began to call in their loans on the heavily mortgaged lands they had financed . Cash poor farmers and speculators found their land values dropping 50% to 75% . Banks began foreclosing on the properties and transferring them to their creditor: the Second Bank of the United States . </P> <P> When news arrived in January 1819 that the value of cotton had broke - dropping 25% in a single day - the ensuing panic drove the country into recession . Williams Jones resigned from his position as BUS president and was replaced by South Carolinian Langdon Cheves . </P> <P> The limited curtailment policy initiated by William Jones was rigorously applied by his successor, former Congressman from South Carolina, Langdon Cheves . Among his promoters were US President James Monroe, BUS directors Stephen Girard and Nicholas Biddle and those stockholders who wanted Bank leadership that was fiscally conservative and immune to political influence . </P> <P> The tight money policy Cheves implemented--a principled effort to cope with the financial disaster--had the effect of deepening the depression, undermining the recovery that was already underway . Through public land debt relief legislation, Cheves managed to reduce the Bank's land debt by $6 million within a year of assuming his position as BUS President . Specie drain was also reversed to a great extent, increasing from $2.5 million in 1819 to $3.4 million by 1820 . It further rose to $8 million by 1821 . As an added consequence, bank notes in circulation were reduced by about $23 million within a span of four years from 1816--1820 . </P>

What government regulations might have prevented the panic of 1819