Final answer:
The Second Bank of the United States was set up in 1791 to issue paper money and provide loans, fostering economic development post the War of 1812. It served to regulate the currency and the state banks while supporting federal operations. The bank faced initial constitutional debates but became a cornerstone of the national financial system.
Step-by-step explanation:
After much discussion about whether the constitution allowed it, the Second Bank of the United States (often abbreviated as BUS), was set up in 1791 to issue paper money and make loans to farmers and businesses. This followed a challenge to the recharter of the first national bank, which spurred debate largely centered on its constitutionality. Post the War of 1812, having realized the significance of a robust economic framework, this kind of institution became more widely accepted, leading to the charter of the Second Bank in 1816.
The bank served multiple purposes, including holding government funds, facilitating payments, regulating state banks, and issuing paper money which bolstered the economy. It was an attempt to unify a rather fragmented banking system, which had seen various state banks operate without centralized regulation.
The premise behind the national bank, as envisioned by figures like Alexander Hamilton, was to stabilize and develop the American financial system. The Second Bank's operations expanded extensively, offering loans and having a substantial impact on national fiscal policy.
The national bank played a vital role in regulating currency and state banks and supporting federal government operations. Despite the debate over its constitutionality, it became an essential component of the U.S. financial system until its charter ended in 1836.