Buying the vote a history of campaign finance reform

Congress entered the debate by prohibiting corporations from making campaign contributions, requiring political committees to disclose who gave them how much money, and setting limits on

BUYING THE VOTE

A History of Campaign Finance Reform

Robert E. Mutch

Oxford University Press is a department of the University of

Oxford It furthers the University’s objective of excellence in research,

scholarship, and education by publishing worldwide.

Oxford New York

Auckland Cape Town Dar es Salaam Hong Kong Karachi

With offices in

Argentina Austria Brazil Chile Czech Republic France Greece

Guatemala Hungary Italy Japan Poland Portugal Singapore

Oxford is a registered trademark of Oxford University Press

in the UK and certain other countries.

Published in the United States of America by

Oxford University Press

198 Madison Avenue, New York, NY 10016

© Oxford University Press 2014

All rights reserved No part of this publication may be reproduced, stored in

a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law,

by license, or under terms agreed with the appropriate reproduction rights organization Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above.

You must not circulate this work in any other form

and you must impose this same condition on any acquirer.

Library of Congress Cataloging-in-Publication Data

2 Campaign funds—Law and legislation—United States—History I Title JK1991.M87 2014

Acknowledgments ix

Appendix: Theodore Roosevelt’s 1904 Campaign Contributors 201

This book has been several years in the making I began writing it only when

I realized that I had unintentionally been researching it off and on ever since ishing Campaigns, Congress, and Courts in 1988 Writing that book was only the beginning of my interest in the history of campaign finance practices and laws, and only the beginning of my research into that history Almost twenty years later, I saw that the journal articles, book chapters, and conference papers that came out of that research amounted to a rough outline for this book

fin-I discussed my research with many people over the years They did not all agree with me, and a few emphatically disagreed, but they all helped make this a better book than it otherwise would have been: Paula Baker, Ted Burrows, Rick Hasen, Allison Hayward, Ray La Raja, Dan Lowenstein, Dave Magleby, Maeva Marcus, Dick Pious, Adam Winkler, and two anonymous reviewers for Oxford University Press I also benefited from discussions at panels where I presented earlier ver-sions of some of the chapters in this book or was a discussant: annual meetings

of the Social Science History Association (1997), the American Political Science Association (2003), and the American Society of Legal Historians (2005), the Money in Politics conference at the University of California, Berkeley (2000), and the Columbia University Seminar on Law and Politics (October 2005) Any errors that remain are entirely my responsibility And many thanks to my editor

at Oxford, Nancy Toff, who was enthusiastic about the book from the start.This book required a fair amount of primary research, and here I must thank South Trimble, William Tyler Page, and their successors as Clerks of the U.S House of Representatives, for preserving disclosure reports rather than destroy-ing them, as the law permitted them to do Thanks to them, reports from 1912

to 1968 are on file in the National Archives in Washington, D.C Thanks also

to the Overacker-Heard Archive at Berkeley’s Institute of Governmental Studies Library, for providing access to Louise Overacker’s files on presidential campaign donors Dollar values increased by a couple of orders of magnitude over the years covered in this book, and I used MeasuringWorth.com to track the changes

AAPA Association Against the Prohibition Amendment

CIO-PAC CIO-Political Action Committee

Office)

NYH New York Herald

NYW New York World

Campaign finance reform was not always as controversial as it has been since the 1970s The modern reform movement began in the late nineteenth and early twentieth centuries as part of the response to the wrenching social and economic changes that accompanied the rise of corporate capitalism The appearance of the big corporation was deeply unsettling to Americans who had come of age in an era of small-scale proprietary capitalism Equally unsettling was the discovery that the country’s major political parties were being financed by those same corporations Congress and state legislatures responded to popular anger by regulating the way corporations conducted their business

The big corporations and the gaping inequality of wealth that came with the new industrial order also posed new problems for the idea of

a democratic community They opened a new phase of the old debate about how our democracy should work, turning it into a question about money as well as votes Like earlier differences about how far

to extend the suffrage, the debate over where campaign funds should come from is part of the larger constitutional issue of deciding who should govern It is about defining a political community, identifying its members, and deciding what rights they have

Congress entered the debate by prohibiting corporations from making campaign contributions, requiring political committees to disclose who gave them how much money, and setting limits on cam-paign expenditures These reforms were passed by majorities of both parties in both houses of Congress during the Theodore Roosevelt and William Howard Taft administrations Congress was not eager

to pass these laws, because its members were reluctant to regulate the very practices they had used to win office They had to be jolted into action by scandal, which came when business executives testified that they had been dipping into company treasuries to make campaign contributions Congress might have needed prodding by an alarmed public to pass these reforms, but there was a great deal of support for

them outside of Congress Within a few years state legislatures across the country, most of them under Republican control, passed similar laws.

These laws made up the first of the two scandal-reform cycles—the second being the one started by Watergate—into which this book divides the modern history of campaign finance reform As the term “scandal-reform” indicates, these cycles were about legislative responses to two political crises Crises often play a crucial legislative role by focusing public attention on previously ignored prob-lems and creating rare opportunities for nonelite actors to get their reform pro-posals made into law Once on the books, though, reforms enacted in response to external shocks were revised and supplemented in accord with normal legislative

By banning corporate money from elections Congress answered the tutional question by reaffirming the old idea that it is citizens who govern, that corporations are not citizens and do not have the same rights Requiring par-ties to publicly disclose their finances told voters for the first time who was foot-ing the bill for election campaigns Disclosure also had an egalitarian effect, as big donors made smaller contributions and the parties very publicly broadened their donor bases by looking beyond traditional sources on Wall Street to begin a more than century-long search for small donors The direct limit on expenditures added a third prong to a reform that was intended to discourage parties from relying on a few wealthy donors to pay for election campaigns Keeping corporate money out of elections and preventing the inequality of wealth from undermin-ing political equality among individual citizens have been the primary goals of campaign finance reform ever since No one objected to the political goals reform was intended to achieve; or at least no one then thought it was wise to do so in

More than sixty years after the first laws, the Watergate scandal jolted Congress into passing a much more ambitious set of reforms Once again the voters learned that corporations had given money to a presidential campaign, that rich donors had made very large contributions, and that these gifts had been kept secret Once again Congress passed laws to reduce the political advantages of wealth and encourage small donors, and this time it also created an agency to enforce them These reforms, too, were passed by bipartisan majorities in Congress But they also faced a new obstacle in the form of overt opposition from conservatives whose goals were shaped by a very different definition of democracy

We had long ago agreed to solve the old problem of who could vote by expanding the franchise, taking a right that once belonged only to property own-ers, then only to white males, and eventually granting it to all adult citizens The rich would always have a bigger political voice than the rest of us—that is sim-ply a fact of life, which expanding legal rights cannot change—but it became a

generally accepted matter of democratic principle that everyone should have a voice in elections The first federal campaign finance laws offered similar solu-tions to the newer problem of how to pay for election campaigns Those laws might have been more important for their symbolism than for concrete effect; but symbolism is important in politics and the reforms stood for an egalitarian definition of democracy.

That definition was not challenged until the enforcement provisions of the post-Watergate laws raised the possibility that the second round of reforms would

be more than symbolic Conservative opponents of the new laws raised a new argument—that restrictions on campaign money were effectively restrictions

on political speech and thus violated the First Amendment A Supreme Court that had itself become more conservative agreed In a series of decisions since the 1970s, the Court has held that the old egalitarian goals were unconstitutional and that corporations are members of our democratic community and have much the same rights as citizens The very problems that gave rise to the reform move-

I will develop the history of this movement by tracking changes in the sources

of presidential campaign funds; analyzing the origins and evolution of efforts to regulate those sources; and evaluating the debates over those regulations, whether they were conducted in Congress, the press, or the courts The movement begins

in the late nineteenth century, but wealth-based political inequality had been a feature of American society since colonial days

Unequally distributed wealth had always been easy to convert into political power The merchant and landed gentry who dominated politics and government

in the colonial and early Republican years were the big businessmen of their day

As the country industrialized and turned into a mass democracy with organized political parties, new kinds of businesses found new ways to be politically active They did not contribute much to campaign funds, as parties could get most of what they needed by levying political assessments on government workers, all

of whom were political appointees At a time when getting out the vote was a labor-intensive effort, a company’s most valuable political asset was not its trea-sury but its employees From the antebellum years through the 1880s, factory owners in the Northeastern states made in-kind contributions by coercing their

Although factory owners used their companies to benefit political parties, the problem was seen to be with the owners as individuals; the enterprises them-selves, most of which were individual proprietorships and partnerships, did not figure in definitions of democracy The new industrial economy of the late nine-teenth century, however, was dominated by corporations—large railroad, min-ing, oil, manufacturing, and other enterprises that became concentrations of

unprecedented private economic power They conducted their business activities

on a national scale that put them beyond the ability of state legislatures to trol The very size of these continent-wide enterprises was unsettling and they brought with them an even more markedly unequal distribution of wealth These developments raised the question of how a once relatively egalitarian democracy could accommodate the new corporate capitalism and still remain a democracy.The corporate system was taking shape as civil service reformers finally suc-ceeded in getting Congress to begin dismantling the spoils system One reason that Congress felt comfortable passing a reform it had been resisting for years was that the business money that had always been part of party campaign funds had been growing apace with the new industrial economy It soon became clear that contributions from corporations and business barons were more than an ade-quate replacement for kickbacks from lowly government clerks But this source

Political money had always come from inside the political system It came from the gentry politicians of the eighteenth century, who paid their election expenses

by digging into their own pockets, and from the party leaders of the nineteenth, who dug into the pockets of their political appointees From the colonial era through the spoils system, nearly all of the money in party coffers came from politicians—from people who could be voted out of office The business barons who filled those coffers in the new corporate system, however, were not politi-cians and did not have to answer to voters The corporation was troubling enough

as the powerful engine of a rapidly industrializing economy; that it should also

be a political engine without having any formal political role or any way to be held accountable to voters was even more troubling The movement to regulate political money began when that money started to come from outside the political system; legal regulation was an imperfect substitute for political accountability.People did not know who was contributing how much to whom at the time, of course, as that information was not publicly disclosed The public got its first glimpse of what had always been the private world of political fundrais-ing in 1905, when a New York State investigation into the business practices of life insurance firms inadvertently revealed corporate contributions to Theodore Roosevelt’s 1904 campaign Asked to clear up irregularities in company accounts, insurance company and Wall Street executives admitted they had been dipping into company treasuries to make campaign contributions to the Republican party since 1896 The scandal continued two years later, when private correspondence stolen from a railroad mogul revealed that he had agreed at a White House meet-ing to raise $250,000 for the 1904 campaign

That partial exposure created the first modern campaign finance scandal—modern in that it was about where money came from rather than how it was

spent—and set off the first scandal-reform cycle As the original goal of reform was to curb the ability of big business and the rich to turn their wealth into politi-cal influence, I will trace contributions to presidential campaigns made by the economic elite, defined here as executives and directors of the biggest corpora-tions and banks, and rich individuals In later elections, I will also look at labor money To make this task manageable, I  will look only at large contributions these elite donors made to presidential campaigns in the 1884, 1904, 1908, 1916,

1936, 1956, 1972, and 2000 elections

The 1905–07 scandals set off public debates about how we should pay for presidential election campaigns Those early debates were more likely to take place

in newspaper editorials and private correspondence than in formal settings such

as legislatures and courts That changed in later years, when initiatives to amend campaign finance law were more likely to come from Congress than from reform groups It turned around completely in the 1970s, when reform opponents chal-lenged the constitutionality of the laws passed in the second scandal-reform cycle The courts have dominated the debate ever since The Supreme Court began to issue rulings on campaign finance law as early as 1921, but it is five later cases that will get the most attention here: United States v. CIO (1948), Buckley v. Valeo

Chamber of Commerce (1990), and Citizens United v. FEC (2010).

I chose these eight elections and five Supreme Court cases for the way they shaped the reform debate The elections matter for the way they were financed

It was the sources of campaign funds or the way they were raised that motivated some group to propose regulatory legislation In some elections people were alarmed that campaign funds came from Wall Street or organized labor; in oth-ers the concern was that funds were raised in secret, in excessive amounts, or in novel forms such as independent expenditures, soft money, or through formally nonpolitical tax-exempt groups Different concerns produced different laws The Supreme Court cases matter for the way the justices resolved political arguments about those laws The arguments came before the Court when one side raised a constitutional challenge, so to decide legal disputes the Court had to take sides

in political arguments

The elections gave the reform debate something different to focus on in ferent eras, but the Supreme Court decisions changed the nature of the debate itself Reformers and their opponents have taken different sides in a political philosophy debate about how we define our democracy and how we want it to work The point of the debate was always whether to reduce or protect political inequalities based on wealth and whether corporations should be accorded the same rights as citizens These issues appear again and again over the 130 years covered in this book

dif-The debate had not yet begun when Grover Cleveland and James G. Blaine faced each other in 1884 Both political parties in that year’s election were very much a part of the corporate capitalist system that was still taking shape, so the system itself was not yet an issue Corrupt ties between business and government were a problem, however, and the Republicans’ nomination of James G. Blaine made a prominent campaign issue out of the crony capitalism that had devel-oped since the Civil War A partial list of contributors to Grover Cleveland’s cam-paign shows that the Democrats were a second business party, with a financial base much like the Republicans’ They retained the loyalty of these elite donors through the 1888 and 1892 elections—in 1892 they might even have raised a bigger campaign fund than the Republicans.

That changed in 1896 The rise of William Jennings Bryan and the Southern-Western populist alliance caused business donors to flee the Democratic party The Republicans’ elite donors remained loyal in 1896 and have stayed loyal ever since, leaving the GOP as the sole business party The Democrats still get most of their money from business because that is where the money is, but they never regained the broad business support they enjoyed in the Gilded Age The Democrats’ factional split brought about a permanent realignment of the two parties’ financial constituencies

We first see evidence of this new alignment in the 1904 election That election

is significant in this history for several reasons What appears to be a complete donor list for Roosevelt’s campaign—uncovered in a 1912 Senate investiga-tion—is the first such list we have for any presidential election That list and testimony from Democratic donors gives us our best look at the Gilded Age practice of financing presidential campaigns with very large contributions from very few individual and corporate donors It was also the last “unreformed” elec-tion Public reaction to the partial exposure of Gilded Age practices in 1905–07 had a powerful effect on the practical business of running campaigns by setting a negative example, by showing parties that the old ways were no longer politically tenable

In the wake of the 1905–07 scandals, 1908 presidential candidates William Howard Taft and William Jennings Bryan wanted to show the public that they did not depend on Wall Street to pay for their campaigns Congress had already twice rejected a disclosure law—members evidently thought they had appeased reformers enough by banning corporate contributions—but both candidates went around Congress by pledging to voluntarily make their campaign finances public They made good on those pledges Taft’s report had the biggest impact because he won the election and it was his party that had been linked to the scan-dals Wall Street and big business still gave to his campaign, albeit in fewer and smaller contributions; but his postelection report reveals that he broadened the

Republican donor base by seeking small contributions from larger numbers of people outside New York.

If 1904 was the last Gilded Age election, 1908 can be called the first ern one, as the fundraising changes the parties made that year were permanent Publication of Taft’s donor list—it appeared on the front pages of the major New York, Boston, Washington, and Chicago newspapers—was a public rela-tions coup for the GOP and for campaign finance reform Praise for the new practices reduced the Republican-controlled Congress’s resistance to disclosure, and it responded to Taft’s public call for a disclosure law by passing it in 1910 Reform had regained traction, and after Democrats won control of the House

mod-in 1910, Congress took it further, strengthenmod-ing disclosure and settmod-ing limits on expenditures for House campaigns

Roosevelt’s party-splitting run in 1912 and Bryan’s decision to stay on the sidelines both helped Woodrow Wilson win that year’s election But the GOP reunited behind Charles Evans Hughes in 1916 and very nearly dislodged Wilson from the White House This election marks another turning point, as it was the first one that was not dominated by the divisive figures of Bryan and Roosevelt The post-Bryan Democrats were able to attract more business money than at any time since 1892, but still much less than the post-Roosevelt Republicans The

1916 election solidified 1908 campaign practices into a pattern that persisted, with modifications, through the rest of the century

The 1936 election is generally considered to be one of the most crucial in our history and it is no less important for the narrower subject of campaign finance It was effectively a referendum on the New Deal and confirmed the 1932 realignment of the two parties’ electoral bases It also gave the 1896 realignment

of financial bases a more markedly class character than it had had before The Republicans broke their 1896 record by raising an even bigger campaign fund, getting large contributions from the Duponts, Pews, Mellons, Rockefellers, and other rich families, who opened their checkbooks as never before And organized labor made a historic break with the past by putting large amounts of money into

a presidential campaign, all of it behind the Democrats

Labor participation in the 1936 election was the first in a chain of events that brought about permanent changes in campaign finance law and practices The conservative coalition in Congress wanted to prohibit unions from making any more campaign contributions and managed to pass a wartime ban in 1943 The Congress of Industrial Organizations immediately responded with two innova-tions that have since become standard features of campaign finance practice and law: it created the first political action committee (PAC) and originated the legal distinction between contributions and expenditures (Corporations had been making independent expenditures for twenty years or so, mainly for what later

was called issue advocacy, but Congress paid little attention to them, so tions did not need to give them legal standing.) The conservative coalition of Republicans and Southern Democrats in Congress made the ban permanent in

corpora-1947 by using the Taft-Hartley Act to bring unions under the Tillman Act’s hibition against corporate contributions

pro-Conservatives justified the move by inventing a rationale for the Tillman Act that made unions look like corporations They said Congress passed the act to prevent “aggregations of wealth” from exerting a “disproportionate influence on federal elections” and to protect the interests of dissenting shareholders; and they said labor unions were like corporations because they too were aggregations of wealth and their members were analogous to shareholders Given this equiva-lence, conservatives concluded, unions posed the same kind of danger to elec-tions and so should be subject to similar regulation

The CIO immediately challenged the constitutionality of the Taft-Hartley Act It is likely that most of the justices who heard United States v. CIO thought the act violated the First Amendment, but a split Court struck down only the government’s application of it to political editorials in the labor organization’s internal publication What the Court left standing was the “aggregations of wealth” rationale and the conflation of corporations and labor unions

The 1956 election, by contrast, is important here more for what did not happen There were no changes in financial constituencies or campaign finance laws, but the Senate committee appointed to examine the financing of that year’s presidential election did an especially thorough job The committee took the unusual step of hiring a team of academic experts on campaign finance to do the research, and they compiled a much more detailed report of who gave how much

to whom than any previous committee had done The widely shared prosperity and comparatively harmonious politics of the 1950s were very different from the Depression and the divisive politics of the 1930s But the committee report showed that the class divide in campaign funds was as wide in 1956 as it had been in 1936, and it underscored the point by identifying economic-elite donors

by their positions in the country’s biggest corporations and banks The Senate decided that this was taking disclosure too far and by a bipartisan majority it denied funding for the final report

The politically disruptive potential of disclosure is also why the 1972 election

is included here Of course it was this election that produced Watergate and set off the second scandal-reform cycle But campaign finance might have been only a small part of the scandal had a new generation of reform groups not been aggres-sive in using the old disclosure law as well as the stronger one in the 1971 Federal Election Campaign Act Members of Congress had begun introducing bills to revise and strengthen the law in the 1950s As this sentiment gained momentum

in the 1960s, it expanded to include business, professional, and advocacy nizations outside Congress and eventually led to the creation of reform groups such as Common Cause During the 1972 campaign these groups used the law

orga-to give the public more disclosure than Congress expected or President Nixon’s campaign committee wanted It was their reports that exposed corporate contri-butions and the Gilded Age–size gifts from rich donors that were supposed to be

a thing of the past Congress might have amended the 1971 FECA even without the outrage these reports stirred up, but it is not likely it would have done so on a scale that amounted to a new beginning for campaign finance reform

The biggest difference between the first and the second scandal-reform cycles is that the second began with a collision between two opposing forces Reformers in the first cycle had to overcome Congress’s reluctance to act, but they encountered very little open opposition In the 1970s, though, the rejuve-nated reform movement met a resurgent conservative movement that for the first time offered an explicitly ideological opposition to reform The conservatives developed a First Amendment doctrine that so closely linked campaign speech with campaign money that it would have made any regulation of that money unconstitutional This was the argument they used to challenge the FECA before the Supreme Court in what became the landmark case in campaign finance law,

Buckley v. Valeo.

The challengers were fortunate in bringing the case before a Court that had itself become more conservative and that readily adopted their reading of the First Amendment The Court did not give them everything they wanted, but it did use their doctrine to find that the previously uncontroversial reform goal of equality was now unconstitutional The challengers won only a partial victory, but the Court gave them a precedent they have used ever since to chip away at the rest of the law

The reformers’ post-Watergate optimism eventually faded PACs raised the first concerns, as corporations, banks, and industry associations made business money more visible by forming such committees Worry about PACs was even-tually overtaken by concern about soft money, which was raised and spent under more permissive state laws and through loopholes in the FECA Most of this money came from corporations, and the amounts the parties raised shot up dra-matically in 1996 and 2000

The 2000 election is the last to be considered in detail here because it was the last one held before Congress prohibited party soft money by passing the 2002 Bipartisan Campaign Reform Act, also known as McCain-Feingold The 1896 alignment of the parties’ financial constituencies remained as stable as ever in

2000, albeit with some new details Elite donors still preferred the GOP, but they also proved to be very willing to give to both parties, and so to be on friendlier

terms with the Democratic party than in previous elections It was the nary amount of soft money in the 2000 election that marked what many political scientists saw as the final collapse of the FECA.

extraordi-Most of what scholars and journalists have written about the Supreme Court’s campaign finance cases begins with Buckley, as it was the narrow range of permis-sible regulation imposed by that decision that has shaped the law and the debate

in the second cycle Although that once controversial decision has become stream thinking on campaign finance law, criticism of the Court’s reasoning shows no sign of going away Little of what has been written about Buckley looks

main-at the First Amendment doctrine thmain-at informed thmain-at decision, but the doctrine and its political origins will be examined here

Bellotti is more important than the smaller amount of literature on it

sug-gests In that decision the Court went well beyond Buckley to grant limited First Amendment rights to corporations by permitting them to make expenditures in ballot-measure elections Bellotti is important in this history for two more rea-sons: thirty-two years later it became the core precedent for Citizens United; and unlike later corporation cases, the 5–4 decision did not run neatly along parti-san or ideological lines It was only when the much more conservative justices appointed by President Ronald Reagan took their seats on the bench that an ideological gulf opened up, a gulf that first appeared in Austin

By 2010 the new conservatives had the votes they needed to expand the First Amendment rights granted to corporations in Bellotti They had not had the votes to do that in Austin, and they created an opportunity to overturn that deci-sion In Citizens United the Court overturned a more than century-old definition

of democracy to find that corporations were part of our political community and had much the same speech rights as citizens The conservative justices laid down

as constitutional law the very threat to democracy that had ignited the reform movement in the first place

This book traces the reform movement from its roots in the first Gilded Age to what can fairly be called a second That this history is framed by two gilded ages is more than an accident of terminology Tracking changes in where campaign funds actually came from reveals that, after more than a cen-tury of reform, today’s system differs only in degree from the Gilded Age sys-tem that the first reformers tried to uproot It is true that reform has brought

in hundreds of thousand of small donors, many more than anyone would have thought possible in 1904; what it has not done is given them a political voice that is anywhere near as loud as that of the very small number of Wall Street, big business, and rich donors Those big donors no longer provide the major-ity of presidential campaign funds, as they did for Grover Cleveland, William McKinley, and Theodore Roosevelt But they continue to provide a highly

disproportionate share, which ensures them of access to the policymakers they helped elect Theirs are not the only voices that get heard, and they do not always get the policies they want; but they continue to dominate the environ-

The central issues of reform have also changed very little over all those years From the late nineteenth to the early twenty-first century, the debate has always been about whether we should regard corporations as fellow citi-zens or keep them out of the democratic community, and whether we should protect the political advantages of wealth or reduce them The actual topics

of discussion—corporations, disclosure, contribution and expenditure its, labor unions, public financing, PACs, 527s, super PACs, social welfare groups—have changed, but the debate is still between egalitarian and inegali-tarian visions of democracy

lim-It will be clear in succeeding chapters that this debate did not become an open exchange of views until the 1970s It is not likely that everyone in the early years fully agreed with the egalitarian case for reform, especially amid the great economic inequality of the first three decades of the twentieth century, but those who disagreed kept silent The idea of equality is enshrined in the Declaration of Independence, so it may be that few people were willing to oppose it openly The silence continued through the Depression and postwar years, when economic inequality plunged to historic lows and stayed there for more than four decades Perhaps the relative equality of those years came

to seem like the new normal It was in the 1970s, when economic inequality began to climb back up to Gilded Age levels, that politicians, pundits, and judges began to openly express philosophical objections to equality Since then the parties’ dependence on a small number of large donors has been ele-vated from an unfortunate fact of life to a political principle, and efforts to reduce that imbalance are treated not as one side in a political debate but as

James G. Blaine, the Republican candidate in 1884, was one of the party’s most controversial choices Called the “Plumed Knight” by his admirers, he was a charismatic figure with considerable oratori-cal and parliamentary skills But he was so closely identified with the crony capitalism of the time that he was best known for using public office to benefit the Union Pacific and other railroads His nomina-tion split the convention, causing a reformist faction to bolt the party The bolters, called Mugwumps, took with them a number of news-papers, including the New York Times, which never returned to the

of the state Democratic machine and Tammany Hall A reputation as

a reformer was an enviable one to have at a time when the civil service reform movement was at its strongest Cleveland won a narrow vic-tory, partly because Blaine was getting the kind of business support that had earned him such a bad reputation

That support was flaunted in the last week of the campaign by a fundraising dinner at Delmonico’s, the fashionable New York steak-house If that dinner is little known now, it is because it has been over-shadowed by what happened earlier the same day, when Blaine met informally with a delegation of Protestant ministers Unfortunately for the candidate, the minister who presided over the meeting unin-tentionally stole the show by calling Democrats the party of “rum, Romanism, and rebellion.” Blaine later gave different accounts of the meeting to different people, so it is possible he did not hear the remark

Formal invitations to the dinner went out over the names of respectable men such as John Jacob Astor, representing New York’s old mercantile elite; Wall Street banker and U.S. ambassador to France

1

Levi P. Morton; and Wall Street lawyer William M. Evarts, who had represented Rutherford B. Hayes before the electoral commission in the disputed 1876 elec-tion and later served as Hayes’s secretary of state Some of those attending, how-ever, were suspected of having grown rich through the kinds of corrupt deals

Most prominent among this group were Jay Gould and his business associates Russell Sage and Cyrus W. Field Gould was the archetypal robber baron, who set the tone for the Gilded Age with his political and financial machinations in the war for control of the Erie Railroad and by crashing the stock market in a failed attempt to corner the market for gold By 1884 he had seized control of the Union Pacific railroad, Western Union, and New York City’s transit lines Gould was also said to be Blaine’s biggest campaign contributor and Democrats made the most of this connection The Brooklyn Daily Eagle said that “Blaine might be elected but Jay Gould would be president.” In an election-day editorial the New York Times called Blaine “the tool of Jay Gould.” Even Harper’s Weekly, which had been an enthusiastic waver of the bloody shirt, published Thomas

A formal dinner with such a cast was irresistible to political cartoonists It made the biggest impact the next morning in the New York World—which Joseph Pulitzer had bought from Gould the year before—which splashed a cartoon over all seven columns on the front page above the fold It showed Blaine, Gould, Field, Sage, and other moguls, all wearing bright diamond stickpins, seated at

a long banquet table laden with dishes such as “Gould pie,” “lobby pudding,”

“monopoly soup,” and “patronage cake.” Thomas Nast’s cartoon showed Blaine,

The “4 judges” reference was to the charge that Gould was backing Blaine

so he could decide who would be appointed to the four Supreme Court seats that were expected to become vacant in the next presidential term The New York

Times said that one Supreme Court justice “already owes his place to the

cam-paign contributions of Jay Gould and his associates.” That justice was Stanley Matthews, whom President James Garfield had appointed to honor an 1880 cam-

The issue in 1880 was the Court’s ruling that Gould’s Union Pacific and Collis P.  Huntington’s Central Pacific had to repay the $65  million in loans and land grants the U.S. government had given them since 1862 to build the transcontinental railroad What this meant for Garfield, as New York Tribune publisher Whitelaw Reid explained, was that “[a] ll monied men, especially all corporations” would not give to his campaign “unless they are sure he disap-proves of what they call the [Court’s] revolutionary course.” RNC chair Marshall Jewell suggested that Garfield “write to me privately your general views on this

question of the rights of corporations so that I could show it to Gould and haps to Huntington, it would be of great benefit.” Garfield hoped he could pla-cate the barons by stressing his support for the “vested rights” of corporations, but that did not satisfy them Finally, after insisting that he could not “tolerate with self-respect” any agreement to delegate his authority to appoint Supreme Court justices, he agreed to do just that One week later, Reid told Garfield that the

per-“matters we have talked about are all right,” and Gould and Huntington

The Delmonico’s fundraiser looked even worse against this background

“Blaine’s political sagacity,” the New York Times said, “is impeached by his ingness to be seen in the company of these people and to take their money openly

will-at Delmonico’s.” These were the same people who had always made the large contributions that supplemented assessments on government clerks But making the connection between big business and politics did Blaine no good The din-ner also seems to have been a bust as a fundraiser The Times reported that what Blaine’s managers collected was mostly promises scratched on a pad of paper that was passed around the banquet room, and that they had some trouble convinc-ing the dinner guests to make good on those promises after Blaine’s defeat No presidential election turns on only one or two events, but vice-presidential candi-date Senator John Logan thought October 30 had been an especially bad day: “If Blaine had eaten a few more swell dinners and had a few more ministers call on

Cleveland probably could not have attracted as glittering an assemblage as the one that feted Blaine He did manage to get support from an impressive roster of prominent businessmen, though, as can be seen from a partial list of donors in his personal papers The list includes William E. Dodge Jr., and D. Willis James, partners in Phelps, Dodge & Co.; William R. Grace, founder of W. R Grace & Co.; James J. Hill, president of the St Paul, Minneapolis & Manitoba (later the Great Northern); Levi Z. Leiter, cofounder of what became Marshall Field; and Alexander Mitchell, president of the Chicago, Milwaukee & St Paul Railroad There was also plenty of money from the wealthy businessmen-politicians and politicians-businessmen who had long been prominent in the party: Democratic National Committee chair, former U.S.  senator, and iron and steel magnate William H. Barnum; former DNC chair Rep Abram S. Hewitt (D-N.Y.) and his Cooper & Hewitt ironworks: DNC member and multimillionaire railroad and real estate investor William L. Scott, who also got himself elected to the House

of Representatives that year; corporation lawyer and campaign manager William

Cleveland’s backers were drawn from much the same social and economic strata as Blaine’s Nearly two-thirds of his New York donors show up two years

later in the first edition of the Social Register; an equal percentage of all vidual donors who were still alive in 1892 also show up on that year’s New York

indi-Tribune list of millionaires Rounding out the roster of Gilded Age wealth were

four donors who had been in speculative ventures with the great villain of the

The last entry in the donor list was “popular subscriptions and general scriptions in sums less than $1,000,” which accounted for nearly one-fourth of the list total That the cutoff point for contributions too small to be worth list-ing individually was $1,000—nearly twice the average industrial worker’s annual

Cleveland’s campaign did, however, get some genuinely small contributions through a circular the DNC sent to party newspapers “The Democratic party must look to the people only for aid,” said the appeal; “Send what you feel you can afford to give.” This “popular campaign fund” probably did not amount to much in dollars But as part of the Democrats’ anticorruption message it was a brilliant public relations move, the like of which was not seen again until the early

The Democrats might have been a second business party, but the GOP did not see them that way In a bitter postelection editorial, the Tribune said the big-gest threat to prosperity was not that Democrats were hostile to business but that they were less an organized party than a loose alliance of opposition groups Or,

in the Tribune’s more colorful phrasing, they were a “fortuitous concatenation of miscellaneous odds and ends,” and a “heterogeneous conglomeration of political rubbish.” The Democrats won in 1884 because they succeeded in portraying the self-proclaimed party of prosperity as being instead the party of Jay Gould and his cronies in Washington What they did not do was portray the corporations those men controlled as worrisome centers of private power in their own right It was the 1888 campaign that first aroused worry about corporations as financiers

Republicans made the tariff their major issue in 1888 and raised more money than ever before from the manufacturing and mining industries that benefited most from tariff protection The iron, steel, and coal industries were most promi-nent in Pennsylvania, which is why that state played such a big role in filling the campaign chest New York banker and vice-presidential candidate Levi P. Morton resumed the role of Wall Street fundraiser he had played for Garfield in 1880 But

it is the Philadelphia finance committee headed by millionaire retail

Wanamaker raised $200,000 by his own account and Morton, working with Whitelaw Reid and New York State party chair Cornelius N. Bliss, raised as much

or more in New York The American Iron and Steel Association, a Pennsylvania

manufacturer’s group, raised about $80,000, and Mark Hanna raised $100,000 in Ohio All these men together might have raised as much as $3 million Despite getting large contributions from William C.  Whitney, William L.  Scott, and other reliable backers, the Democrats ended the campaign in the red DNC chair Calvin S. Brice, a rich Ohio lawyer, reportedly dug into his own pockets to cover

The 1888 Republican campaign also stands out for how all that business money was spent Indiana had been a battleground state since 1864 and once again it stood out for the corruption of the campaign waged there RNC trea-surer William W. Dudley gave state party officers explicit instructions on how to organize voter bribery: “Divide the floaters into blocks of five and put a trusted man with necessary funds in charge of these five and make him responsible that none get away and that all vote our ticket.” Dudley was careless enough to put these instructions on paper and Democrats made it public late in the campaign

It was too late to do them any good, though The Republicans lost the popular vote nationwide but they won Indiana and the electoral vote Public release of the “blocks of five” letter might not have won the election for the Democrats, but it created the first presidential campaign finance scandal and set off a wave of

The 1888 election presented Americans with an alarming merger of an old problem, vote-buying, and a new one, corporate contributions It was in response to this election that Puck published what is still one of the best-known American political cartoons: Joseph Keppler’s “The Bosses of the Senate,” which portrayed the U.S Senate chamber dominated by giant, top-hatted moneybags labeled “coal,” “iron,” “sugar trust,” “Standard Oil,” “steel beam trust,” etc Former Senator Carl Schurz (R-Mo.) had made a similar point just days before the car-toon appeared, in a speech before New York City’s Commonwealth Club: “Great industrial interests are called upon by the managers of a political party to con-tribute large sums of money for the purpose of carrying the election and then controlling the Government for their benefit.” For solutions to both problems,

From Australia they got the secret ballot, which had already been adopted

in Great Britain and Canada American political parties had always prepared, printed, and distributed their own ballots, which listed only their own can-didates Each party’s ballot had a distinctive size and color, which meant that everyone at the polls could tell at a glance who was voting for which party The absence of secrecy made it easy for party officers to make sure that floaters voted

as promised Under the Australian system, the state bore the expense of ing, printing, and distributing a single ballot that listed the candidates of all par-ties; the single ballot effectively made the vote secret Relieving the parties of this

prepar-expense gave reformers hope that ballot reform would be a kind of campaign finance reform Within three years, thirty-three states had adopted the Australian ballot, and all but six had done so by the end of the century The reform did not

Reformers also looked across the Atlantic Great Britain had been trying for decades to reduce campaign expenditures and curb “corrupt practices,” a term used on both sides of the Atlantic to mean voter bribery and other forms of elec-tion fraud E. L Godkin, the Mugwump editor of The Nation, praised the British Corrupt Practices Act of 1883 as “a model for all countries having representative institutions.” When New York added a “publicity,” or disclosure, requirement to its ballot reform in 1890, Godkin praised it as the first state law modeled after the British act Disclosure was “the vital point” of the new law, Godkin said, because

it meant that “the corrupt use of large sums of money” could be detected and

Several of the states that adopted the Australian ballot also added disclosure requirements as a secondary weapon against voter bribery By the end of the cen-tury, however, only eighteen states had enacted such laws and three of those states had already repealed them Unlike the Australian ballot, disclosure did not sweep the country The discovery that ballot secrecy by itself was an effective deterrent

to voter bribery probably was only part of the reason It is possible that ers who found the weak laws of the time to be ineffective put up little resistance against politicians who found them to be intrusive Disclosure for the purpose of preventing or punishing voter bribery was an idea whose time passed almost as

The Democrats redoubled their fundraising in 1892 Cleveland’s chief raiser that year was William C. Whitney, who had helped manage his 1884 cam-paign and had been secretary of the navy in his first term Whitney’s political and business connections made him the ideal man for the job His father was a Massachusetts state senator and president of a Boston–New York steamship line, his father-in-law was Senator Henry B. Payne (D-Ohio), and he had made his own reputation by working with reform Democrats to oust Boss Tweed in 1870

fund-He opened his own corporate law practice soon after arriving in New York City, fresh from Yale and Harvard Law School, with a letter of introduction from his father to corporate lawyer and state Democratic party leader Samuel Tilden His ability to attract clients was no doubt helped by the fact that his college friend and brother-in-law Oliver Payne was the treasurer of Standard Oil and one of its

made up the difference His luck changed when he joined Thomas Fortune Ryan and Elihu Root to create the syndicate that dominated New York City’s transit system into the twentieth century Whitney and Ryan’s political connections—Whitney was a leader of the anti-Tammany County Democracy and Ryan was a Tammany insider—plus Ryan’s genius for stock manipulation and Root’s ability

to keep their activities within the letter of the law proved to be an unbeatable combination, albeit not one that won praise for its ethical practices

After leaving cabinet office in 1889, Whitney devoted most of his time to business But he threw himself into Cleveland’s reelection campaign, telling friends that he was “giving up every pleasure and all [his] time and strength” to winning the election He set a fundraising goal of $1 million and drew up a list

of possible contributors that looked like a who’s who of the corporate world The list included some of the country’s biggest railroad moguls—James J. Hill of the Great Northern Railway, Henry Villard of the Northern Pacific, A. J Cassatt of the Pennsylvania Railroad, Melville Ingalls of the Chesapeake & Ohio, and the Vanderbilts of the New  York Central among them—which threatened to put Cleveland in the same kind of trouble that had doomed Blaine in 1884 Villard was so optimistic about his industry’s response to fundraising appeals that he announced he was forming “a special committee of leading railroad men friendly

to Mr Cleveland.” Ingalls immediately warned Whitney against such a tee: “It would be worse than the millionaire dinner that was given to Blaine.” The

There were also rumors that Whitney was promising favorable treatment for corporations that made generous contributions They might have been no more than rumors, but DNC treasurer Robert B.  Roosevelt—Theodore’s uncle—thought there was something to them “It is plain that the large contributions will be paid to you,” he wrote Whitney “This is natural as you are the seat of patronage and people are not going to give their money unless they know they are going to get something for it I will get the small contributions and will attend

Whitney evidently brought in many large contributions According to figures provided years later by Rep William Sulzer (D-N.Y.), the Democrats raised $2,350,000 in 1892, the Republicans only $1,850,000 Accuracy was never a strong point of nineteenth-century fundraising estimates, but in this case, the figure for the amount the Republicans took in can be checked with another source: the records of RNC treasurer Cornelius N. Bliss, which show the party raised $1,600,000 If these figures come close to what the two par-ties actually raised, it means the Democrats raised more money than the Republicans The election also produced another postbellum first by giving the Democrats majorities in the Senate and the House of Representatives “The

election of Tuesday is the greatest surprise in recent political history,” said the

Tribune, whose editor, Whitelaw Reid, had been the GOP’s vice-presidential

candidate “No man foresaw that a tide was rising which would sweep away so

Distrust of the corporations that had backed both parties was also rising In his study of middle-class attitudes toward big business, historian Louis Galambos found that the 1890s “witnessed a major crisis in American life” that was marked

by “the high level of hostility directed toward the large firm.” This hostility peaked during the crushing 1893-94 depression When a new tariff bill came up for debate in 1894, some of that hostility turned toward the Cleveland admin-istration The Republicans, completely out of office in Washington for the first time in almost forty years, enthusiastically took on the role of voicing popular

At the center of the tariff debate was the American Sugar Refining Company,

or Sugar Trust, one of the country’s least popular corporations The World had been publishing almost daily attacks on the company’s attempts to buy favor-able schedules with large contributions to senators Republican papers gave more space to a supposed $500,000 contribution to Cleveland’s 1892 campaign and continued to make allegations of an “enormous bribe” in the fall congressional campaign It was in this atmosphere that New York State held a convention to revise its constitution and that Elihu Root proposed an amendment to prohibit

If the importance of a speech is measured by the span of years over which

it has been quoted, then Root’s remarks at the New York State Constitutional Convention in 1894 are a classic of modern campaign finance reform These words, spoken on behalf of an amendment to prohibit corporate campaign con-tributions, have been especially popular:

The idea of this section is to prevent the great moneyed corporations

of the country from furnishing the money with which to elect members

of the Legislature of this State in order that these members of the ture may vote to protect the corporations It strikes, Mr Chairman, at a constantly growing evil in our political affairs, which has, in my judgment, done more to shake the confidence of the plain people of small means of this country in our political institutions than any other practice which has

Those who quote this passage, including the Supreme Court in 2003, usually see Root’s speech as evidence that today’s campaign finance laws are the products

of a reform movement that began in 1894 This seriously misrepresents what

happened in the New York convention and how it relates to later reform efforts

Root was known to later generations as a trusted adviser to Presidents McKinley, Roosevelt, and Wilson; U.S. senator from New York; world-renowned diplomat; and winner of the Nobel Peace Prize This is the Elihu Root whom the Supreme Court described as “soberminded.” In 1894, however, Root’s days as an elder statesman were still ahead of him He and the amendment’s equally vocal supporter, Joseph H. Choate, were Republican party regulars and prominent cor-poration lawyers It is highly improbable that they introduced their amendment

Partisan stunts can be effective only if they have popular appeal, and a ban against corporate contributions appears to have had such appeal: Republican del-egate Benjamin S. Dean voted against the amendment because he was “not will-ing to prostitute my judgment to popular clamor.” Democratic delegates regarded the amendment as a partisan charade, saying “the whole business was buncombe, pure and simple, and reported only for the sake of allowing Republicans to deliver patriotic speeches for the record and their constituents.” The fate of the amendment bears out that assessment, as Allison Hayward has shown in her close examination of convention proceedings The committee of the whole passed it by

a large margin in a roll-call vote, but it was quietly tabled the next day, never came

As partisan stunts go, however, this one was very instructive Root and Choate might not have intended their amendment to pass, but delegates took it seriously enough to raise some of the constitutional issues that would come up in connec-tion with corporate contributions in the next century One of these issues was, of course, corruption

What kinds of corruption the delegates thought the proposed amendment would prevent was not always clear Root directed his remarks both at illegal acts such as bribery of voters and legislators and at the more general problem

of “undue influence.” Noting that laws against bribery had not been effective,

“we deem it advisable to provide limitations short of the actual commission of the crime.” Choate also argued that it would prevent what he called a “system

of protection.” Bribing legislators to vote a certain way, what eighty years later would be called “quid pro quo corruption,” played no role in this system Rather, corporations gave money to party leaders, who used the money to elect reliable candidates to the legislature, who would then protect the corporations’ interests Root called this kind of contribution an “investment,” which corporations made

It was others who brought up what are now called First Amendment issues Early in the debate, delegates suggested revising Root’s amendment to exempt

“any corporation organized expressly for political purposes.” Root accepted the amendment, adding that it would also be necessary to protect “such corporations

as those which publish newspapers.” Another Republican delegate raised a tical problem of enforcement: “any member of the corporation” could make a contribution and have the money “returned to him in the way of increased sal-ary or special dividends.” Root and Choate might not have been serious about their amendment, but the serious issues raised during floor debate showed that convention delegates were already well-informed about the problem of corporate

Annoying as Democrats probably found this Republican criticism to be, it was of negligible importance compared to the damage the depression inflicted on the party The party lost big in the 1894 midterms and the depression widened the split between the party’s Eastern business and Western-Southern populist wings That split had already appeared in 1892, as Whitney explained to Cleveland: “In the South the impression of you got by the people is that you do not appreci-ate their suffering and poverty and have your ideas formed by Eastern money power, etc., etc., the usual twaddle.” At the party’s 1896 convention, Western and Southern delegates wrote “the usual twaddle” into the platform and nominated William Jennings Bryan as their candidate The rise of the Bryanite wing alarmed the big business types who had been so generous to Cleveland in 1892, and drove

Marcus Alonzo Hanna stands alone among presidential fundraisers and national party chairs for being almost as well-known as the president whose cam-paign he financed, William McKinley Reformers and reform opponents alike see him as the chief architect of the modern campaign finance system, the man who still symbolizes the Republican party’s identification with the national capitalist class that emerged from the Gilded Age Yet the millionaire Ohio industrialist was only a regional business and political figure, not part of the national corpo-rate elite whose support for McKinley made the 1896 election a turning point in the evolution of campaign finance

After a few aimless months at Western Reserve College, Hanna joined his father’s wholesale grocery business in Cleveland He suffered serious reverses, however, and later joined his father-in-law’s coal and iron business The company prospered under Hanna’s direction and in 1885 he renamed it M. A Hanna &

Co Hanna was also a generous donor to Republican campaign funds, a trait that won him a place on the state party’s finance committee By 1888, he had attracted enough attention for the RNC to select him as a fundraiser for the presidential

McKinley had been regarded as a possible presidential candidate since the

1888 convention, and Hanna made that happen for his old friend in 1896 He

paid nearly all the expenses of McKinley’s campaign for the nomination, giving

$100,000 out of his own pocket and raising only small sums from other donors

He was also elected RNC chair, which gave him the task of raising a national campaign fund, something he could not do from Cleveland

New York City was the headquarters of the new industrial order, but Hanna’s trip there did not begin well His Cleveland business ventures had involved him

in the fringes of the national economy, not the center where the big money was

He knew almost no one on Wall Street and almost no one there knew him As his historian brother-in-law James Ford Rhodes described the situation years later,

Then he ran into another Midwestern businessman, James J. Hill of the Great Northern Railway, with whom he had done business for more than twenty years Hill was one of the country’s biggest railroad moguls and a business partner with J.  P Morgan, with whom he had reorganized the Northern Pacific He lived in St Paul, Minnesota, but the size of his business required him to have

an office in New York and he made frequent trips there Hill had joined most other Democratic money men in bolting the party after it nominated Bryan, and

he was eager to help elect McKinley He also had the kinds of contacts Hanna needed He spent five days taking Hanna around Wall Street, introducing him

to the men who financed the national economy and would finance McKinley’s

Hanna introduced business method into political fundraising, turning it into

“a matter of systematic assessment according to the means of the individual and institution.” Probably the best-known example of his method was that he used

an objective standard—0.25 percent of capital—to determine how much a bank should contribute to the campaign Such a method was not needed in the days when Wall Street insiders raised money from one another for either of two busi-ness parties But it was well-suited to fundraising by an outsider at a time when

Hanna’s new approach worked According to RNC treasurer Cornelius

N. Bliss, all but one of the banks and trust companies in New York City, and most

of the insurance companies, gave to the campaign Standard Oil made the largest contribution, $250,000 That is the only contribution for which there is a reliable secondary source, but “[o] ther corporations and many individual capitalists and bankers made substantial but smaller donations.” Hanna’s biographer estimated the party raised $3,500,000, all but $500,000 of it from New York This was the largest amount any presidential campaign had ever raised, and it set a record that stood for

Corporations gave in-kind contributions as well as money Railroad nies had been handing out free passes to politicians for years, but if James J. Hill’s

compa-and Melville Ingalls’s cases are typical, they did much more Ingalls not only bolted the Democratic party but he and a C&O vice president were so active in the campaign that they functioned almost as members of the RNC.

Ingalls was primarily interested in Virginia and often conferred with Hanna

on the campaign there The RNC member assigned to that state wired him to

“[t]elegraph me fully I will be guided largely by what you say.” Ingalls and other executives also made speeches to railroad employees as part of the industry’s attempt to bring the Republican campaign to men they feared would vote for Bryan “I am quietly getting our own people interested,” Ingalls wrote on August

12, “and the Southern Railway and Atlantic Coast line are doing the same.” These efforts did not always go smoothly: “I have exhausted my powers on the Norfolk

& Western,” Ingalls complained, “and I do not believe anything further can be done In regard to our own employees, I do not believe there are many of them who are lying to us.” Hill was not so sure He told Hanna that labor organizations

in the Northwest “are talking McKinley on the outside, and are prepared to vote

Judging by his letters to Hanna, Hill took on the job of managing McKinley’s campaign in the Northwestern states through which his Great Northern Railway lines ran He was explicit both about dollar amounts and that he would dip into the Great Northern’s treasury for some of the money:

In the two Dakotas and Minnesota, I have already paid out over $60,000, and will have to pay twenty-five to thirty thousand more, in addition to

my own subscription of $15,000 to the [Minnesota] State fund They say now that with what help I can give them, it will be possible to carry Montana for McKinley If anything is done there, it will at least require $10,000 You can place our Company’s subscription at whatever figure you desire My present intention is that the Company shall bear about one-third of the expense, and I will bear the balance

A. McCall McCall approved a corporate contribution to McKinley’s campaign

as well as an innovative in-kind contribution dreamed up by a young vice dent, George W. Perkins Looking for something that would give the Republicans

presi-political intelligence as well as help his agents sell more insurance, Perkins hit on the idea of conducting a kind of public opinion poll.

He had the company send out pamphlets that listed the candidates for whom each state had cast electoral votes in 1892 and left blanks for people to fill in their guess as to who would win those votes in 1896; people who responded got

a souvenir book of portraits of all U.S. presidents “[W] e have taken special pains

to reach the working people with this poll,” Perkins explained; “the man sending back this leaflet hasn’t the slightest idea that his prediction is going to be used for any political purpose He sends it back to get the souvenir album.” When people sent the completed pamphlets back to New York Life, the company’s agents got

a list of sales prospects and Perkins sent the RNC what he was sure was “the best

Perkins was right about that The returns did accurately predict the vote, and the RNC had the company repeat the poll in 1900 The New York Life staff that ran the program in 1900 performed additional services for the RNC Every night they selected the returns from people in swing states who predicted a Democratic vote, so that Hanna could have them sent “to the local workers in each state and district so that the men can be seen and, if possible, converted.” They also mailed party literature, “in plain wrappers, of course.” There were as yet no laws against corporations making cash or in-kind contributions, but executives still thought it

Wall Street was not as worried about a Bryan victory in 1900, so tions came in more slowly than they had in 1896 But they did come in and Standard Oil made another $250,000 donation The RNC raised almost as much as in 1896 and ended the campaign with a surplus—Hanna even returned

contribu-$50,000 of Standard Oil’s money, saying the company had done more than its share Bliss’s records for the 1900 campaign list receipts of “a trifle below

We have only scraps of information about Democratic finances in 1896 and

1900 The Democrats collected smaller campaign chests, probably a good deal smaller, than the Republicans in both years, and they appear to have relied even more heavily on a few very large donations According to millionaire Pittsburgh oilman and Pennsylvania party boss James M.  Guffey, he, Anaconda Copper owner Marcus Daly, and newspaper magnate William Randolph Hearst pro-vided most of the money for the two campaigns: “we gave secretly thousands and thousands of dollars.” Guffey’s recollections have since been partially cor-roborated by other sources Daly’s son-in-law, James W. Gerard, said the copper king had given $300,000 to the 1896 campaign and one of Hearst’s biographers said that the publisher gave $150,000 to at least one of the two campaigns There

is also a second- or perhaps third-hand report that Thomas Fortune Ryan gave an

astonishing $500,000 to the 1900 campaign These men were almost the party’s only business backers, and they gave money in such extraordinary amounts that

The Democrats also solicited small donations from readers of party papers, as they had done in 1864 and 1884 Bryan said that Hearst’s New York

news-Journal raised nearly $41,000 In 1900, the party came up with a new plan called

the “endless chain” system, under which Democrats in rural areas contributed one dollar a month Recent research has cast serious doubt on earlier claims that the 1896 election brought about a long-term realignment of the parties’ electoral constituencies, but it did establish a permanent realignment of their financial constituencies Big business and the rich had been the core financial constituency for both parties through 1892, but while the Republicans held on to those groups

The 1896 election is a convenient place to draw another dividing line, between the period when political money came from inside the political system and when

it came from outside The first of those periods stretches from the colonial era to the beginning of civil service reform The gentleman candidates of the eighteenth century were the big businessmen of their day and when they stood for office, they reached into their own pockets to make what few cash outlays were needed As the aristocratic pay-your-own-way rule adapted to an expanding electorate and the rise of political parties, it evolved into the spoils system, under which the rule applied to everyone who had worked on an election campaign and was rewarded with a government job Even most of the business contributions during the spoils system came from a typical figure of the era, the businessman-politician—a suc-cessful banker, lawyer, shipbuilder, or retail magnate who was politically active and often held party or public office Like the assessments levied on government employees and candidates, business money originated inside the political system and was controlled by politicians The political elite lost that control when they had to raise money outside the political system by going hat in hand to the new corporate elite

The irony here is that the man who still symbolizes this transition, who came

to be called “Dollar Mark,” was himself an old-fashioned, nineteenth-century businessman-politician There were still plenty of them around as the nineteenth century came to a close and it would be another decade or so before they ceased

to be an important presence in national politics The job of facilitating the tion to the corporate system was thrust upon Hanna by events, and the criticism

transi-he earned says as much as ttransi-he confidence transi-he gained on Wall Street about how well

he did that job

Another transitional figure was J. P Morgan, who to this day symbolizes the era of finance capitalism Unlike older, hyphenated financier-politicians like Levi