After the war of 1812, the New York auction system was developed to dump cheap British goods on America, destroying the prices of American manufactured goods and contributing to the Panic of 1819.
When the war of 1812 ended, American manufacturing began to expand, but following the Treaty of Ghent which re-established trade, British merchants began to dump goods in the United States at low cost. As British merchants dispatched ships loaded with their manufacturing goods to the United States, many saw this as deliberate attempt to destroy local competition. Others argued that more likely, it was simply an outgrowth of changes in the British factory system, where strong competition encouraged economies of scale leading to excess goods with the United States becoming particularly attractive dumping grounds. Either way, it was not only creating foreign competition, but also revolutionizing the way business was carried out in the States. The traditional mercantile system became overburdened with the excess goods and a new auction system was introduced. The auction system allowed for a quicker distribution of excess goods and faster remittance of funds. Auction rooms soon became commonplace in large cities such as Boston, Philadelphia and especially New York. British manufacturers began increasing their output based upon speculations of being able to sell their products on the auction system rather than on actual demand. While American's enjoyed the efficiencies of the market and the cheap products, the auction system and cheap British goods were destroying the market for domestic goods. President Monroe saw this as one of the major contributing factors to the Panic of 1819, or what he called a "depression". According to Monroe, it was the "pecuniary embarrassments" or financial crisis in European countries that had led manufacturer's to ship their goods to the United States and "in many instances sold at a price below their current value at the place of manufacture". While this may only be temporary, Monroe argued that it's effect was not without injury since the "uniformity in the demand and price of an article is highly desirable to the domestic manufacturer." And it was for this reason, that President Monroe urged Congress in his 1819 State of the Union address to consider additional remedies "to give encouragement to our domestic manufacturers"
"An additional cause for the depression of these establishments may probably be found in the pecuniary embarrassments which have recently affected those countries with which our commerce has been principally prosecuted. Their manufactures, for the want of a ready or profitable market at home, have been shipped by the manufacturers to the United States, and in many instances sold at a price below their current value at the place of manufacture. Although this practice may from its nature be considered temporary or contingent, it is not on that account less injurious in its effects. Uniformity in the demand and price of an article is highly desirable to the domestic manufacturer.In response, Congress introduced resolutions for the general increase of duties, shortening credits on imports, and for increasing the tax on sales of imports by auction. The resolutions did not pass.
It is deemed of great importance to give encouragement to our domestic manufacturers. In what manner the evils which have been adverted to may be remedied, and how far it may be practicable in other respects to afford to them further encouragement, paying due regard to the other great interests of the nation, is submitted to the wisdom of Congress."
http://www.presidency.ucsb.edu/ws/index.php?pid=29461
Virginia and the Panic of 1819: The First Great Depression and the Commonwealth (2015) by Clyde A Haulman, pgs 10-13
http://teachingamericanhistory.org/library/document/the-tariff-history-of-the-united-states-part-i/
Harper's Encyclopedia of United States History from 458 A.D. to 1915, Volume 9
https://upload.wikimedia.org/wikipedia/commons/4/4b/1824_Klinkowstrom_View_of_New_York_City_from_Brooklyn_-_Geographicus_-_NewYorksHamnochRedd-muller-1824.jpg
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