Final answer:
Hamilton proposed the Bank of the United States to support economic development, issue paper money, and regulate state banks. Despite opposition from Jefferson and Madison over constitutionality, Hamilton convinced Washington, who signed the bill, helping to unify the country's financial system.
Step-by-step explanation:
Alexander Hamilton proposed the creation of the Bank of the United States because he believed it would foster economic development, print and circulate paper money, provide loans to the government, and help regulate and provide discipline to state banks that issued paper money irresponsibly. This public chartered bank would also serve as a depository for government revenue and as a creditor to the government. The bank proposal, detailed in his "Report on a National Bank" in December 1790, was influenced by the British model of public credit and aimed to solidify the nation's financial system by establishing a unified currency and financial structure.
The proposal generated considerable opposition: Secretary of State Thomas Jefferson and James Madison questioned the constitutionality of creating a national bank and promoted strict construction of the Constitution, while Hamilton advocated for broad construction to include implied powers that allow for such a bank. Despite this, Hamilton's detailed case for the bank's vital economic role and constitutional validity convinced President George Washington, who subsequently signed the bill. This move was seen as a step to instill public confidence in the government and stabilize the economy.