This clause accomplishes two things: it establishes that the president is to receive a “compensation” that is unalterable during the period “for which he shall have been elected,” and it prohibits him within that period from receiving “any other emolument” from either the federal government or the states.

The proposition that the president was to receive a fixed compensation for his service in office seems to have been derived from the Massachusetts constitution of 1780, which served as a model for the Framers in other respects as well. The Constitutional Convention hardly debated the issue, except to reject, politely but decisively, the elderly Benjamin Franklin’s proposal that the president should receive no monetary compensation. Perhaps the Framers feared that if Franklin’s proposal were accepted, only persons of great wealth would accept presidential office.

As Alexander Hamilton explained in The Federalist No. 73, the primary purpose of requiring that the president’s compensation be fixed in advance of his service was to fortify the independence of the presidency, and thus to reinforce the larger constitutional design of separation of powers. “The legislature, with a discretionary power over the salary and emoluments of the Chief Magistrate, could render him as obsequious to their will as they might think proper to make him. They might in most cases either reduce him by famine, or tempt him by largesses, to surrender at discretion his judgment to their inclinations.” For similar separation of powers reasons, Article III, Section 1, provides that federal judges “shall, at stated Times, receive for their Services, a Compensation,” although that provision only forbids Congress from diminishing the judges’ compensation, not from increasing it. The distinction, as Hamilton noted in The Federalist No. 79, “probably arose from the difference in the duration of the respective offices.”

The prohibition on presidential “emoluments” is one of several constitutional provisions addressed to potential conflicts of interest. Further, the Compensation Clause eliminated one possible means of circumventing the requirement that the president’s compensation be fixed: without this provision Congress might seek to augment the president’s “compensation” by providing him with (what would purportedly differ) additional “emoluments.” Significantly, the prohibition on presidential emoluments also extends to the states. That requirement helps to ensure presidential impartiality among particular members or regions of the Union.

A modern problem arose when President Ronald Reagan continued to receive retirement benefits as a retired governor of California while he was in the White House. He had been receiving benefits since the expiration of his second term in 1975. In a 1981 opinion, the Justice Department’s Office of Legal Counsel focused on the purpose of the Compensation Clause, which was in its view “to prevent Congress or any of the states from attempting to influence the President through financial rewards or penalties.” Given that President Reagan’s retirement benefits were a vested right under California law rather than a gratuity that the state could withhold, the purpose of the clause would not be furthered by preventing him from receiving them.

The meaning of the Compensation Clause also arose in the context of President Richard M. Nixon’s papers. As authorized by the Presidential Recordings and Materials Preservation Act of 1974, the government had taken or seized President Nixon’s papers after he had left office. President Nixon (succeeded by his estate) sued for compensation for the taking of what he alleged to be his property under the Takings Clause of the Fifth Amendment. The government argued that the Compensation Clause precluded payment of compensation on the theory that the presidential materials were the product of President Nixon’s exercise of powers conferred on him by the United States, and that therefore he could not sell them for his personal profit, even after his presidency, without impermissibly receiving an “Emolument” over and above the fixed compensation to which he was entitled. The district court rejected the government’s argument, relying in part on a prior appellate determination that President Nixon was the owner of the materials in question. It found that President Nixon’s entitlement to just compensation had vested when the government took his property (i.e., after he had left office), and therefore that “the plain language of the Emoluments Clause would not be violated because Mr. Nixon would receive compensation subsequent to the expiration of his term of office.” The government argued that such a finding necessarily implied that a sitting president could sell his papers for profit during his tenure of office—to which the court demurred that “those are not the facts in this case.” The court also found, however, that the papers “were not transferred to [President Nixon] by the government as compensation for his service in office,” perhaps implying that a president could indeed sell his papers during his term. Griffin v. United States (1995). Under the Presidential Records Act of 1978, however, presidents no longer have title to their papers, 44 U.S.C. § 2202, and so cannot sell them, thus obviating the issue of whether such sales would be emoluments.