The Long, Stormy Marriage Of Money And Politics

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In the summer of 1787 a sweaty group of politicians was debating the clauses of a proposed constitution in humid Philadelphia. Endless problems reared their ugly heads: the distribution of power between large states and small states; slavery; the size of a standing army; the powers of the Presidency. The framers solved—or postponed—most of these dilemmas with their famous genius for compromise. But one quandary was solved differently.

A rich young South Carolinian named Charles Pinckney proposed that the Presidency should be limited to people worth $100,000—well over a million dollars in today’s money—and the federal judiciary and Congress to those worth half that sum. Pinckney did not get this idea out of thin air. In South Carolina a man had to have $10,000 to be elected to the state senate.

Other Southerners were eager to support the proposal. Even James Madison, the father of the Constitution, was ready to admit that the chief danger in a republic was the likelihood that a majority of poor men would pass laws that penalized the rich and undermined the nation’s stability. It was vital to give men of wealth a large, if not controlling, voice in the new nation.

Benjamin Franklin took the floor. He said he was opposed to anything “that tended to debase the spirit of the common people,” and he reminded the delegates that the Bible said rulers should be men “hating covetousness.” Pinckney watched his proposal drown in a cascade of nays.

Thus did Americans deal with the first argument over the place of money in a republic. Liberal idealism—and Franklin was probably the most liberal member of the constitutional convention—met conservative realism and routed it. It was a totally misleading moment.

Today it may well seem that Pinckney has posthumously vanquished Franklin in this long-running debate. Money lies at the heart of election politics. In the presidential and congressional campaigns of 1996, the two major parties spent $990.6 million, more than twice what they spent in 1992. For much of the past year, we have been treated to accounts of how the biggest winner, President Clinton, raised a lot of this cash.

A night in the Lincoln bedroom went for $250,000, while a clubby fifty-guest dinner with the President cost $100,000, and a cocktail party, just $50,000. Unknowns like John Huang and Charlie Trie reportedly funneled hundreds of thousands of dollars from overseas donors. The Democratic National Committee (DNC) squirmed in public while returning at least $3.5 million in tainted dollars.

We have heard less about Republican fundraising practices partly because they do not seem to have been quite so blatant but also, of course, because the GOP controls Congress and is chairing the investigations. In the course of the campaign, the Republican National Committee put heavy pressure on its biggest donors to up their usual $100,000 contributions to a quarter million. In return they were guaranteed invitations to all the GOP’s balls and dinners, plus a chance to take home photographs of themselves smiling beside Speaker of the House Newt Gingrich or Majority Leader Trent Lott. At least two dozen executives from major corporations bought this package.

Gifts to candidates are theoretically limited to $5,000 under the 1974 law that set up the Federal Election Commission. But this toothless watchdog, a creature created by Congress with three members from each party to guarantee gridlock, is only the latest mutation in a process that has engaged the best minds in the Republic for generations. If they haven’t solved the problem, it is nonetheless worth seeing why they haven’t.

In the beginning there were no campaign-finance laws. Franklin notwithstanding, money wasn’t regarded as a menace to American politics. That realistic—and rich- man President George Washington firmly backed Secretary of the Treasury Alexander Hamilton’s plan to create financial stability in the new nation by reassuring the wealthy. The federal Bank of the United States gave merchants and manufacturers badly needed capital. The assumption of the Revolution’s debts at face value established the nation’s credit, even though it enormously favored prosperous speculators in government paper. There were a lot of rich men around in 1790; the distribution of wealth was roughly what it is today. The top 10 percent of the population controlled well over half the land and cash.

Thomas Jefferson took up Franklin’s cause and organized a political party to oppose Hamilton’s Federalists. His ally in New York Aaron Burr soon realized that Hamilton and his friends controlled both the state’s only bank and the local branch of the Bank of the United States, and they refused to lend money to anyone who did not back their party. The very canny Burr wangled through the state legislature a banking charter concealed in the Trojan horse of a municipal water company and, thus establishing himself, swung New York’s crucial electoral votes behind the triumphant Jefferson-Burr ticket in the year 1800. The contest created a rivalry between two different political orientations that persists to this day (as does the bank Burr created, now known as the Chase Manhattan).