Tillman Act of 1907
This article needs additional citations for verification. (October 2011) (Learn how and when to remove this template message)
|Long title||An Act to prohibit corporations from making money contributions in connection with political elections.|
|Nicknames||Corporate Donations Abolition Act of 1907|
|Enacted by||the 59th United States Congress|
|Effective||January 26, 1907|
|Statutes at Large||34 Stat. 864b|
The Tillman Act of 1907 (34 Stat. 864) was the first campaign finance law in the United States. The Act prohibited monetary contributions to federal candidates by corporations and nationally chartered (interstate) banks.
In 1905, a New York State investigation into ties between the major insurance companies and Wall Street banks accidentally discovered evidence that the New York Life Insurance Company had made a $48,700 contribution to Theodore Roosevelt's 1904 presidential campaign. This discovery was followed by daily revelations about other corporate contributions. The presidents of all the big insurance firms, and many of the smaller ones, testified that they had made corporate contributions to the Republican presidential campaigns of 1896, 1900, and 1904. "[I]t is obvious," the New York Times said, "that a deterrent, an actual prohibition, is needed to shut off the corrupting stream that flows from corporation treasuries."
The Times and the New York Daily Tribune both called on Congress to reintroduce a bill to prohibit corporate contributions that former New Hampshire Republican Senator William E. Chandler had drafted in 1901. With the investigation and the media focusing attention on his 1901 bill, Chandler tried to get one of his fellow Republicans to reintroduce it in the upcoming Fifty-Ninth Congress. When none of them agreed to do so, he turned to his old friend Tillman. who introduced the bill in the Senate. President Roosevelt joined the growing support for such a prohibition in his December 1905 message to Congress: ""All contributions by corporations to any political committee or for any political purpose should be forbidden by law." Tillman got the Senate to pass the bill, without debate, in 1906, and the House passed it, also without debate, in 1907.
Chandler’s original bill had two provisions; the first would have prohibited any corporatlon engaged in interstate commerce from contributing to election campaigns at any level, national, state, or local; the second would have prohibited any corporation from contributing to presidential and congressional elections. (At the time that would have covered only elections to the House of Representatives; U.S. senators were not popularly elected until the adoption of the Seventeenth Amendment in 1913.) The bill that Congress passed in 1907 was more narrow in scope.
The Senate struck out the first provision, which rested on Congress’s broad authority to regulate interstate commerce. The Senate instead prohibited corporate contributions based on Congress’s authority to regulate elections to the House of Representatives. The final bill prohibited national banks and federally chartered corporations from contributing to election campaigns at any level, national, state, or local, and prohibited “any corporation whatever” from making contributions in elections for president and the House of Representatives.
The Tillman Act was, and is, nearly impossible to enforce. Government agencies can enforce laws only if they can detect violations, and it is likely that most violations of the Tillman Act go undetected. Corporations can hide illegal contributions by recording them as legal expenses and by reimbursing executives who contribute from their private bank accounts. The insurance companies under investigation in 1905 used both methods, even though such contributions were not illegal then. There was no Federal Election Commission in 1905, but enforcement is as difficult today as it was then.
Most states soon passed their own laws banning corporate campaign contributions. The state laws were first tested with the rise of the Prohibition movement, when state governments sued breweries that had used corporate funds against ballot measures to ban the sale of alcoholic beverages. The first case brought under the Tillman Act, United States v. United States Brewers’ Association, 239 F. 163 (1916) , was also a Prohibition case, but it was about contributions to candidates for the U.S. Senate and House of Representatives. The breweries raised First Amendment objections to the state and federal laws, but the courts rejected them and upheld the laws.
- "The Campaign Fund Scandal," New York Times, Sept. 17, 1905, 8. On the 1905 investigation into the insurance companies, see Morton Keller, The Life Insurance Enterprise, 1885-1910: A Study in the Limits of Corporate Power (Cambridge, Mass.: Harvard University Press, 1963), 245-64.
- “Campaigns with Corrupt Money,” New York Times, Sept. 22, 8; W. E. Chandler, “Campaign and Insurance Funds,” New York Daily Tribune, Sept. 22, 1905, 3
- "December 5, 1905: Fifth Annual Message". Miller Center. University of Virginia.
- On passage of the Tillman Act, see Robert E. Mutch, Campaigns, Congress, and Courts: The Making of Federal Campaign Finance Law (New York: Praeger Publishers, 1988), 1-8, and Buying the Vote: A History of Campaign Finance Reform (New York: Oxford University Press, 2014), 45-57.
- 34 Stat. 864, Chap. 420 
- Missouri, Nebraska, Tennessee, and Florida had already passed such laws, after the 1896 election: Missouri Laws, p. 108 (March 20, 1897); General Laws of Nebraska, ch. 19 (April 3, 1897); Acts of Tennessee, ch. 18 (April 29, 1897); Laws of Florida, ch. 4538 (June 2, 1897).
- On these early cases, see Robert E. Mutch, “Before and After Bellotti: The Corporate Political Contributions Cases,” Election Law Journal, vol. 5 (2006), 295-301.
- Winkler, Adam, “Other People’s Money: Corporations, Agency Costs, and Campaign Finance Law,” Georgetown Law Journal, 92 (2004), 871-940
- Sitkoff, Robert H., “Corporate Political Speech, Political Extortion, and the Competition for Corporate Charters,” The University of Chicago Law Review, 69 (2002), 1103-66