Bonus Bill of 1817

The Bonus Bill of 1817 was legislation proposed by John C. Calhoun to earmark the revenue "bonus", as well as future dividends, from the recently established Second Bank of the United States for an internal improvements fund. Opposition to the bill came from sectional rivalries in the older eastern states, fearing that providing the means for settlers to travel west would drain their population and create competing states in less settled areas, including the Louisiana Purchase, and from questions of the bill's constitutionality. Proponents of the bill stressed the nearly universally accepted need for improvements and brushed off strict constructionists with their own arguments in favor of "implied powers." Although President James Madison approved of the need and stated goals of improvements, he vetoed the bill as unconstitutional under his strict constructionist ideals; his veto message represents an important explication by the "Father of the Constitution."

The bonus of $1.5 million and dividends, estimated at $650,000 annually, would be used as a fund "for constructing roads and canals and improving the navigation of watercourses". Calhoun, who had also introduced the proposition in the previous session, defended it on the broad ground that "whatever impedes the intercourse of the extremes with the center of the republic weakens the Union," and that it was the duty of congress to "bind the republic together with a perfect system of roads and canals." Henry Clay, however, had been the real father of the scheme. While the bill proposed no specific system or improvements, when pressed, Calhoun endorsed something along the lines of Albert Gallatin's 1808 Report, which had been printed in 1816. Initially proposed as an open-ended financing mechanism for improvements, by the time of its passage the bill required for each state to benefit equally from the new fund and approve all federal activities within its borders. The compromises weakened the bill and underscore how difficult it was to effect improvements broadly and singly. The bill narrowly (86-84) passed the US House of Representatives on February 8, 1817 and did slightly better (20–15) in the US Senate on February 27.

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