Buying Influence in '04

This week, America's presidential candidates released their latest fundraising figures, which show that each has nearly $100 million to spend (including what their respective parties have raised). That got us thinking about campaign financing and the long history of attempts to reform it. When did it all begin? And how?

Complaints about buying political influence have been around as long as democracy. But organized efforts at U.S. campaign finance reform began only in the aftermath of the 1904 presidential election, which pitted Democratic judge Alton B. Parker against Republican president Theodore Roosevelt.

Copping Corporate Cash

Roosevelt became president in 1901, after a deranged anarchist assassinated President William McKinley. And though he's famous today as a "trustbuster," he was elected vice president on a McKinley ticket run by Republican Party boss Mark Hanna, the original king of corporate fundraising.

For most of the 19th century, political parties raised much of their money through patronage systems, in which government employees kicked back portions of their salaries to the bosses who got them their jobs. But in 1883, the Pendleton Civil Service Act (enacted in part because President James Garfield had been assassinated by a deranged federal jobseeker) basically outlawed that.

By the time McKinley first ran for president in 1896, Hanna had come up with a better way to raise cash--by systematically soliciting from corporations, especially in the Northeast. (Then, Republicans dominated in the North and West, while Democrats held the South.) Hanna's efforts let McKinley spend more than $3 million in each of his campaigns, more than twice what previous winners had spent.

Records in the Trash

During the '04 campaign, Judge Parker claimed that corporations were using big, Hanna-style contributions to buy President Roosevelt. To make the sword cut both ways, he also suggested that Roosevelt--the supposed champion of the common man--was raising campaign funds by "blackmailing monopolies."

Roosevelt denied the charges and won the election by a huge margin. Subsequent inquiries, however, revealed that several corporations really had made large contributions to the Republican campaign. The scandal reached its height when authorities discovered that the New York Life Insurance Company had made a $48,000 contribution to the Republican National Committee from a "non-ledger" account. In today's terms, that's like slipping $1 million under the table.

Tracking All That Stash

None of this was illegal, just ugly. There were no laws regulating corporate, union, or individual contributions to federal campaigns. To reformers, of course, that was precisely the problem. Soon, citizen-powered organizations concerned with keeping watch over campaign financing began to crop up, including the National Publicity Law Organization, which lobbied for regulation and disclosure of campaign funds.

Even Roosevelt himself began calling for a ban on corporate contributions to political committees. In 1907, Congress responded by passing the Tillman Act, which didn't go quite that far, but did ban corporations from directly contributing in connection with federal elections. Critics attacked it for not going far enough, but the Tillman Act became the cornerstone for all subsequent campaign finance reform.