Corrupt Practices Act Limits Political Contributions Summary

  • Last updated on November 10, 2022

The Federal Corrupt Practices Act of 1925 served a symbolic purpose but proved to be inadequate in regulating political financing in the United States.

Summary of Event

Political parties are generally credited with making the U.S. democracy work. Democracy entails parties’ competition for an ever-increasing number of offices by selecting candidates and then aiding their campaigns. At no time in the American past, however, has the general electorate been prepared to pay for the privilege of nominally belonging to or voting for a political party. The competition for political offices, however, almost year by year has become more expensive for parties and their candidates. Consequently, combinations of ingenuity and loosely defined corruption persistently marked attempts by parties and politicians to pay for the very party mechanisms that made democracy a viable form of governance. One price paid for this has been widespread public cynicism and periodic public condemnations of party and campaign financing. [kw]Corrupt Practices Act Limits Political Contributions (Feb. 28, 1925) [kw]Act Limits Political Contributions, Corrupt Practices (Feb. 28, 1925) [kw]Political Contributions, Corrupt Practices Act Limits (Feb. 28, 1925) [kw]Contributions, Corrupt Practices Act Limits Political (Feb. 28, 1925) Federal Corrupt Practices Act (1925) Campaign financing legislation Political campaign financing [g]United States;Feb. 28, 1925: Corrupt Practices Act Limits Political Contributions[06370] [c]Business and labor;Feb. 28, 1925: Corrupt Practices Act Limits Political Contributions[06370] [c]Laws, acts, and legal history;Feb. 28, 1925: Corrupt Practices Act Limits Political Contributions[06370] [c]Government and politics;Feb. 28, 1925: Corrupt Practices Act Limits Political Contributions[06370] Roosevelt, Theodore Hanna, Marcus A. Penrose, Boies Ford, Henry Newberry, Truman Handy Hatch, Carl A.

Until after the Civil War, political candidates usually were men of sufficient means to contribute in one fashion or another to their own and to their party’s struggles at the polls. By the 1930’s, as the “spoils system” began to characterize office seeking, officeholders, whether elected or appointed, were expected to have their salaries “taxed” by party leaders to finance party operations.

America’s spectacular leap to world preeminence in industry in the half century after 1865 was marked by the rise of the corporation. Corporate influence quickly penetrated the realm of politics, where it served its interests by funding candidates and parties. On the local level, men such as New York City politician William Marcy “Boss” Tweed not only looted the treasuries with an entrepreneurial panache entirely their own but also allied themselves with business interests. Political bosses, U.S. The phenomenon was national. Pennsylvania’s Boies Penrose, the state’s political boss for years, was famed for encouraging business and corporate leaders to pay the toll for his party’s candidates and elections. Businessmen who did not cooperate faced “sandbag” legislation that would cost them heavily. Inevitably, the crude couplings of politics and business emerged as a factor in congressional and presidential elections. Ohio’s Marcus A. Hanna, a wealthy industrialist in his own right, converted much of the corporate world into a money machine for an always money-hungry Republican Party. His fund-raising in William McKinley’s presidential campaign against William Jennings Bryan was a landmark in American political financing.

A few years later, although it ran contrary to his principles, President Theodore Roosevelt was accurately accused of receiving secret corporate funds to aid his election. By way of mitigation, Roosevelt called for the public funding of elections. In 1907, Congress passed the Tillman Act, Tillman Act (1907) which had been under consideration since 1902. The act made it unlawful for corporations or national banks to make political contributions to candidates for any federal office.

With Progressive reformism in full flood, Congress enacted the Federal Corrupt Practices Act of 1910, Federal Corrupt Practices Act (1910) requiring every political committee that in two or more states attempted to influence or influenced the results of elections to the House of Representatives to file names of contributors and recipients with the clerk of the House. In 1911, similar legislation was extended to Senate elections, and candidates for all congressional seats were obliged to file financial reports. In addition, limitations were placed on candidates’ spending for House and Senate seats.

The scandals tainting the administration of President Warren G. Harding, Teapot Dome prominent among them, encouraged Congress to enact the Federal Corrupt Practices Act of 1925 (FCPA). Until passage of the Federal Election Campaign Act Federal Election Campaign Act (1971) (FECA) of 1971, the FCPA operated as the country’s basic statute on political financing.

Seeking to regulate campaign spending and calling for disclosures of receipts and expenditures by congressional candidates, the FCPA also revised existing ceilings on expenditures. Bans on political contributions by national banks and by corporations, a major feature of the 1907 Tillman Act, were also embodied in the new legislation. So, too, were prohibitions against candidates or parties soliciting campaign funds from federal employees. Barring states prescribing lower ceilings, Senate candidates were allowed to spend $10,000 and House candidates $5,000 on their campaigns. Reports on campaign financing were required in addition, and giving or taking money for anyone’s vote was made illegal. Such restrictions were limited to general election campaigns, as congressional power to regulate the fairly new practice of primary elections had not yet been tested in the courts. Few historians, even of the 1920’s, mentioned the 1925 act, for good reason. As campaign costs were rising rapidly at all levels and just as the new medium of radio presented candidates with novel opportunities for campaigning, the costs of running parties and political campaigns had begun to soar. Law and political reality were thus starkly juxtaposed.

Significance

Experts commenting on the FCPA have consistently drawn attention to its numerous deficiencies. On its face, the FCPA was a sop to public opinion rather than a serious attempt to reform party and campaign election spending. It was riddled with loopholes and contained no enforcement provisions. It also left reportage of spending by candidates and by parties incomplete and indicative only. Finance reports did not have to be presented publicly, and the act included no mandates for reviewing them for accuracy. Contributions or expenditures in the critical instances of presidential and congressional primary campaigns, as well as spending intended to fuel presidential nominations, did not fall within the act.

Excluded by the act as well was money contributed to or spent by political committees whose activities were confined solely to one state and committees that were not literal affiliates of parties. Thus political committees were free to solicit and spend campaign contributions at will. These committees were relatively innocuous during the 1920’s and 1930’s, but after the 1940’s, in the form of political action committees Political action committees (PACs), they became extremely important, even integral, parts of election financing. The activities of PACs allowed candidates to disavow “knowledge and consent” of committees’ fund-raising machinations in their behalf. Candidates evaded spending limitations imposed by the FCPA by having PACs spend for them.

Because of the importance of primary elections, Primary elections;campaign financing particularly after passage of the Seventeenth Amendment Seventeenth Amendment (U.S. Constitution) (1913), which called for popular election of U.S. senators, the exclusion of primaries from the FCPA proved to be a major deficiency. In this regard, the defect was attributable not to Congress but to the U.S. Supreme Court. The matter had come to issue in 1921 as the result of an election contest between one of America’s folk heroes and leading industrialists, Henry Ford, and Truman Handy Newberry. Ford lost to Republican Newberry in the general election for U.S. senator in 1918. Newberry proceeded to take his Senate seat. Ford, however, charged Newberry with having exceeded the $10,000 spending limit set by 1911 amendments to the Tillman Act. Initially, Newberry was convicted, but in 1921, on appeal, a divided Supreme Court ruled the primaries were not “elections” as construed by the Tillman Act. The decision obscured Congress’s right to regulate primary nominations and in fact was one of the factors that motivated Congress to enact the FCPA in 1925.

Nevertheless, with the Court ruling in mind, Congress shied away from the regulation of primary financing by not requiring accounts either of receipts or of expenditures. In many states, however, a candidate’s victory in the primary was tantamount to election. Not surprisingly, no House or Senate candidate was ever prosecuted for violations of the FCPA, despite, as experts have noted, general knowledge that campaign contributions and expenditures wildly exceeded legal limits.

After a special Senate Committee on Privileges and Elections reviewed the campaign finances of two senators-elect in 1927, the men were refused their Senate seats. In one instance, the Senate Committee discovered that proponents of Philadelphia’s Republican political boss, William Vare, in seeking to win a Republican factional fight for nomination to a Senate seat, had spent $785,000, or $760,000 over the legal limit. In the other case, Republican William B. McKinley had expended $500,000 in a primary renomination effort, while his ultimately successful challenger, Republican Frank L. Smith, had spent $450,000 to win. Smith’s democratic opponent, on the other hand, had not exceeded the $25,000 limit. Smith was not prosecuted, but his Democratic opponent was not declared a victor.

The Vare and Smith cases were distinguished only in that they revealed the commonplace. Politicians faced rising campaign costs in all quadrants, and their hunger for funds was endless. Veteran political reporters such as Frank R. Kent of the Baltimore Sun recorded that no law effectively regulating campaign fund-raising or expenditures “has been enacted through which politicians cannot drive a four-horse team.” Implicit was the belief that such a law never would be enacted. Wealthy contributors along with Prohibition-enriched gangsters such as Al Capone ignored the FCPA. So, too, did special interests such as the Anti-Saloon League and the Methodist-backed Southern Anti-Smith Democrats, in company with hundreds of other cause-oriented groups.

Several changes, some observers believed for the better, occurred during the 1930’s and 1940’s. The Supreme Court ruled in January, 1934, in Burroughs and Cannon v. United States, Burroughs and Cannon v. United States (1934) that the FCPA did apply to elections of presidential electors, thereby implicitly acknowledging that federal regulation of the financing of congressional elections was also permissible. To that degree, the Court had overruled its 1927 decision in Newberry v. United States. Newberry v. United States (1927) Furthermore, in 1939, the Clean Politics Act Clean Politics Act (1939) sponsored by New Mexico’s Senator Carl A. Hatch (frequently known as the Hatch Act) amended campaign finance laws with several new restrictions. The Hatch Act Hatch Act (1939) barred federal employees from participation in national politics and further prohibited the collection of political contributions from anyone receiving federal (Depression-related) relief funds.

Amendments to the Hatch Act in 1940 further barred federal contractors, whether individuals or companies, from contributing to any political committees, including PACs, or to any candidates. In addition, the amended act asserted Congress’s authority over regulation of primary elections of candidates for federal office, limiting financial contributions to federal candidates or political committees to $5,000 per year. A ceiling of $3 million, moreover, was placed over the annual expenditures of political committees operating in two or more states.

Well-intentioned law, however, effected little positive change. In 1967, President Lyndon B. Johnson, his own political career revealing countless examples of dubious and unlawful campaign financing, described the FCPA, the Hatch Act, and similar legislation as inadequate in scope, obsolete from the outset, and more loophole than law. Only in 1971, with congressional passage of the Federal Election Campaign Act, were serious attempts renewed to rectify the endemic and epidemic illegalities associated with political financing. As experts noted, although money did not invariably win elections, the costs of democracy were high and the morality involved was low. New legislation, however, breeds new means of controverting the spirit of the law, and the growth of soft-money contributions by political groups led to the passage of the Bipartisan Campaign Reform Act of 2002 (also known as the McCain-Feingold Act). This act actually did little to stop the resurgence of soft money, given the loophole created for 527 organizations, such as unions, which could continue to raise large sums for issue-oriented advertising by groups technically unconnected to any party or to any candidate’s official campaign. Another reform measure bowed before the logic of expensive and often bitter political contests. Federal Corrupt Practices Act (1925) Campaign financing legislation Political campaign financing

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Alexander, Herbert E. Money in Politics. Washington, D.C.: Public Affairs Press, 1972. Clear, authoritative account by a former director of the Citizens’ Research Foundation and executive director of President John F. Kennedy’s committee on campaign costs. Chapter 12 deals with reform efforts.
  • citation-type="booksimple"

    xlink:type="simple">Drew, Elizabeth. Politics and Money. New York: Macmillan, 1983. Briefly and incisively traces the road to corruption paved by political financing. Drawn from the author’s pithy columns on the Washington scene in The New Yorker. Keen, accurate, impressionistic reporting.
  • citation-type="booksimple"

    xlink:type="simple">Gierzynski, Anthony. Money Rules: Financing Elections in America. Boulder, Colo.: Westview Press, 2000. Provides a brief history of attempts to regulate campaign financing in the United States and discusses the long-term impacts of the failure of lawmakers to establish any real limits on campaign spending. Includes glossary, references, and index.
  • citation-type="booksimple"

    xlink:type="simple">Heard, Alexander. The Costs of Democracy. Chapel Hill: University of North Carolina Press, 1960. Classic work provides a reminder of the price Americans pay for political spectacle.
  • citation-type="booksimple"

    xlink:type="simple">Malbin, Michael J., ed. Parties, Interest Groups, and Campaign Finance Laws. Washington, D.C.: American Enterprise Institute for Public Policy Research, 1980. Collection of symposium essays and discussion by many experts in the field of political financing. Updates materials on the FCPA. Valuable source of information on PACs since the 1940’s.
  • citation-type="booksimple"

    xlink:type="simple">Mutch, Robert E. Campaigns, Congress, and Courts. New York: Praeger, 1988. One of the best works in the field; informed and clearly presented. Provides fresh perspectives and reflections not only on the FCPA but also on American experiences with political financing.
  • citation-type="booksimple"

    xlink:type="simple">Smith, Bradley. Unfree Speech: The Folly of Campaign Finance Reform. Princeton, N.J.: Princeton University Press, 2001. Argues for repeal of all campaign finance regulations, asserting that they violate free-speech rights and are in any case doomed to failure. Chapter 2 presents a brief discussion of the history of attempts to regulate campaign financing. Includes bibliography and index.
  • citation-type="booksimple"

    xlink:type="simple">Sorauf, Frank J. Money in American Elections. Glenview, Ill.: Scott, Foresman/Little, Brown College Division, 1988. Excellent, clearly written work by a political scientist. The approach is historical, with emphasis on the period after the 1960’s. Covers state as well as federal law.
  • citation-type="booksimple"

    xlink:type="simple">Thayer, George. Who Shakes the Money Tree? New York: Simon & Schuster, 1973. A breezy, enjoyable review of American campaign financing practices from 1789 to the early 1970’s. Provides colorful details while maintaining a high standard of accuracy.

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