Final answer:
Congress established the Second Bank of the United States in 1816 to stabilize the nation's finances by regulating the money supply and providing a steadier currency. However, its policies led to inflation and contributed to the Panic of 1819.
Step-by-step explanation:
In 1816, to address the financial chaos of the early nineteenth century, Congress chartered the Second Bank of the United States, which was a revival of Alexander Hamilton's national bank idea. This was seen as a significant move to stabilize the nation's banking system, particularly after economic difficulties following the expiration of the First Bank's charter in 1811. The creation of the Second Bank was intended to regulate the money supply, restrict rampant state bank note issuance, and ultimately provide a steadier currency.
However, the bank began making risky loans and its loose credit policies contributed to inflation and speculation, leading up to the Panic of 1819. Despite its establishment, the Second Bank faced challenges, including resistance from different sectors of the economy and variations in the success of its policies.