<P> The New Republicans and their American System--tariff protection, internal improvements, and the BUS--were exposed to sharp criticism, eliciting a vigorous defense . </P> <P> The United States and the United Kingdom signed the Treaty of Ghent on December 24, 1814, ending the War of 1812 . The British government effectively relinquished its mercantilist policies towards the United States, preparing the way for the development of free trade and the opening of America's vast western frontier . </P> <P> Europe was undergoing a period of disorganization as it readjusted to peacetime production and commerce in the aftermath of the Napoleonic Wars . The general effect was a decline in prices throughout the Western world, due to a scarcity of metallic sources of currency (i.e. gold and silver). Britain had advanced its industrial capacity to fully meet its wartime demands, but post-war continental Europe was temporarily too devastated to absorb Britain's surplus manufactured goods . Moreover, European agriculture production, exhausted by years of warfare, was unable to feed its own population . The economy of the United States was not immune to the chaos that afflicted Europe, and therein lay the roots of the Panic of 1819 . </P> <P> American manufacturers faced US markets swamped with British products, produced by low - paid workers and priced well below competitive rates and forcing many factories out of business . Continental Europe, its agrarian output crippled by the recent war, offered new markets for American staple crops, particularly cotton, wheat, corn and tobacco . As prices soared for agricultural goods, a speculative agrarian land boom ensued in the South and West United States, encouraged by liberal terms for government public land sales . "The entire postwar American economy" observed historian George Dangerfield was "based on a land boom". The inflationary bubble grew from 1815 to 1818, obscuring the general deflationary trends in world prices . </P>

What was the cause of the panic of 1819