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The Long, Stormy Marriage Of Money And Politics
… or why in America campaign-finance reform never succeeds
November 1998 | Volume 49, Issue 7
It soon became apparent that the Tillman Act did not keep business money out of federal elections. Instead of corporations, wealthy individuals—the end run chosen by Roosevelt—were paying now. The Democrats, who had rallied around Tillman and the NPBO, gratefully took whacking contributions from the likes of Thomas Fortune Ryan and August Belmont, ignoring William Jennings Bryan’s declaration that he would not accept more than $10,000 from any individual for his third White House run in 1908.
When Woodrow Wilson ran for President in 1912, he publicly refused to accept a cent from Belmont or Ryan and declared he would raise his funds from contributions of $100 or less. Theodore Roosevelt was quickly proved right; the idea was unworkable, and the small givers ran dry at a total of $318,910. Soon Wilson was taking six-figure donations. In 1916, up against a revived Republican party, he looked the other way while Ryan and Belmont joined the big givers who raised more than $800,000 to finance his narrow victory over Charles Evans Hughes.
Enter the Supreme Court. In 1918 Truman H. Newberry beat Henry Ford in the Republican primary for the U.S. Senate in Michigan and went on to win the general election. Ford’s backers demanded Newberry be prosecuted for exceeding the state’s meager campaign-funding limitation of $1,875. Newberry was convicted and sentenced to two years in Leavenworth. The senator hired Charles Evans Hughes to represent him on appeal; Hughes argued before the Supreme Court that Newberry had not personally exceeded the spending limit. Rather, his campaign committee had spent $180,000. Hughes also argued that Congress had no jurisdiction over primaries.
The Court accepted the latter argument and overturned Newberry’s conviction. But politicians paid more attention to Hughes’s ingenious distinction between candidate and committee. Here was a man identified with campaign-finance reform saying it was perfectly all right to pile on the boodle as long as the candidate was not directly involved with its collection and disbursement.
Before the politicians could apply this nice new principle, they were chastened by the Teapot Dome scandal. Certain contributors who had given heavily to the Republican party in an off year when there was no requirement to report anything had been rewarded with access to oil deposits owned by the U.S. government. The resulting public outrage prompted Congress to overhaul the existing finance law in the Federal Corrupt Practices Act of 1925, which required committees and candidates to file quarterly reports every year. Still, they left a law through which campaign managers could, in the words of one newsman, “drive a four horse team.”
In the 1930s the leaps-and-bounds growth of the federal bureaucracy under Franklin D. Roosevelt alarmed Republicans and antiRoosevelt Democrats enough to make them allies in passing the 1939 Hatch Act, also called the Clean Politics Act, which forbade political activities, including fundraising, by all government employees. The Pendleton Act in 1883 had covered only bureaucrats classified by Congress as deserving protection—excluding most federal employees, about 70 percent, who thus could continue to give money and time to their favorite politicians.
In spite of fierce Democratic resistance, Hatch’s law was extended the following year to include the many state government employees whose salaries came from federal funds. This was a body blow aimed at Democratic big-city political machines. In an attempt to derail this proposal, angry Democrats tacked on a rider limiting individual contributions to $5,000 and party committee expenditures to $3 million in each presidential election.
Debate on the bill offered a dispiriting glimpse into the hypocrisies of campaign finance as purveyed by both parties. Ignoring their history of running rich men, the Democrats portrayed themselves as the party of the poor, who financed their campaigns from contributions by high-minded public employees. The Republicans expatiated on the danger of cash from publicly financed bureaucrats—as if they had never milked government servants in states like Pennsylvania that they controlled.
In the end Congress amazed itself and everyone else by approving limits on both individual donations and total campaign expenditures. The general counsel to the Republican National Committee reacted promptly: He expanded the Charles Evans Hughes option. There would be nothing wrong, he said, with someone paying $5,000 apiece to several state and local Republican committees; indeed it would also be legal to form several national committees, each of which could spend $3 million. In the 1940 election the Republicans spent $15 million, the Democrats $6 million, breaking all previous records.
In the same Depression decade a new force emerged on the campaign-finance scene: labor unions. Through their dues they could put millions behind chosen candidates. The specter of concentrated worker power alarmed conservatives at least as much as did the potential tyranny of politically active union chiefs, and in 1943 a congressional coalition of Southern Democrats and Republicans prohibited unions from contributing to national political organizations, a ban that was reaffirmed by the Taft-Hartley Act of 1947. The Congress of Industrial Organizations (CIO) responded by forming the first political-action committee, CIO-PAC, a group nominally independent of the sponsoring union. It was an invention labor would learn to regret.