A Brief History on Campaign Finance Laws: 1787 to the Rise of Corporations

This month’s sharply split decision of McCutcheon v. Federal Election Commission has once again renewed interest in the history of campaign finance reform in our republic.

The history of campaign finance in national politics in the United States can be divided into five distinct eras: the legacy of the Founding Fathers, cronyism, the rise of the corporations, the progressives, and post-Watergate.

Arranged as a two-part feature, this first article will cover from the Founding Fathers to the rise of the corporations. The second article will cover the progressives to the current dismantling of post-Watergate protections to the election system.

 

The first 6 U.S. presidents were either Founding Fathers or their sons. Dozens of others became state and national assemblymen and congressmen. Others served as U.S. ambassadors or cabinet members. The vast majority of the Founding Fathers continued in the political process that they helped create.

Modern history has elevated the Founders to an almost demi-god status; revered, worshiped, and quoted as a political religion unto itself. A mythos has been created where the Founders always agreed, they never did anything offensive, and they always had the best interest of the country at heart.

Even the 'man who could not tell a lie' was known to buy a vote or two.

The truth is, they were just men who came up with a plan and successfully implemented it. At heart, they were men just like everyone else, with human problems and needs.

Remembering that the Founders were just men, there are several examples that the Founders were not without blame in campaign finance shenanigans — even the “man who could not tell a lie” was known to buy a vote or two. During the election of the Virginia House of Burgesses of 1757, Washington would spend 39 pounds, six shillings on a lavish buffet of food and drink (including 35 gallons of wine and 43 gallons of hard cider).

While this might not seem like a huge amount of money, today’s value would be somewhere in the neighborhood of $7,000 when adjusting for inflation. Even more amazing is that this was almost the exact amount of the annual salary of the members of the House of Burgesses (perhaps Washington had this in mind when he designed the smorgasbord).

The House did not tolerate this behavior for long, passing (during the same session) a law forbidding almost every conceivable format of vote buying possible.

 

The last of the Founders, James Madison, died in 1836. But, even by that time, a system of cronyism had set in that would last until the rise of the corporations and their large wallets.

The concept of the “coattails” of a political winner in modern times is understood to be the effect of an election for a higher political office helping those of the same party become elected in lower offices. During the 1800s, this was also understood as a reward system where civil jobs and contracts were awarded based on loyalty and support.

The first federal campaign finance law was created in 1867.

Lower-level civil servants were required to donate a portion of their paychecks (usually 4%) to the political party to ensure their position — which was not wholly secure come election time. Paying for jobs was more or less tolerated with little to no legislation stopping the practice — it was expected that victors should have prizes to distribute.

What wasn’t tolerated, however, was bribery and kickbacks to win federal contracts. The first federal campaign finance law was created in 1867 and forbade federal officials from directly soliciting funds of any type from Naval Yard workers.

In 1867, the entire federal budget was only $376.8 million with 40 percent tied to military contracts and support. The importance of a government military contract would tempt even the most honest of officials.

It would be another 40 years before more legislation was entered on campaign finance, with the presidential election of 1896 being the catalyst.

 

The Election of 1896 brought a new practice into fundraising for elections to public office. For the first time, publicly-traded corporations were specifically targeted by Republican strategist Mark Hanna.

The 1896 election marked the first time a party strategist specifically targeted corporations.

Hanna ran McKinley’s campaign with creativity, fervor, and a whole lot of promises in return for donations. Eastern banks donated many thousands of dollars with the promise that McKinley would oppose any threat to the gold standard. Southerners were promised patronage, and Westerners, while pro-silver in nature, were “worked” into a winning coalition that appeased the vast majority of their concerns — even though at odds with the Eastern banks.

Even more devious, while McKinley’s opponent roamed the entire United States campaigning, McKinley would campaign from his front porch — with thousands of voters trained in to hear the candidate (at Republican expense, of course).

In the end, McKinley’s campaign would overwhelm the Bryan campaign and outspend them by a 5-1 margin–with an incredible war chest of $3.5 million (close to $100 million in modern currency).

The legacy of this was that all political campaigns would operate this way until a series of legislation was passed by lawmakers in the progressive movement. From 1905 to 1971, there would be a flood of laws and lawsuits over campaign finance — many laws and rulings being summarily ignored by candidates.

In the next article, the work of the Progressives through the current dismantling of the FEC will be covered in depth.

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