Financial History Issue 121 (Spring 2017) | Page 19

In the early 1970s, Congress overhauled the laws governing campaign finance con- tributions. The federal government had regulated campaign giving to various degrees since the Tillman Act of 1907, which barred corporations and unions from donating to political campaigns on the rather explicit grounds that they were not humans. Yet both businesses and unions had found end-runs around the law, the latter by creating political action committees (PACs) as early as the 1940s. Early PACs existed on the margins of legality, and while organized labor relied on political clout to avoid trouble, cor- porations generally did not form them. Instead, with minor exceptions, business- people preferred other, less official ways to skirt the campaign finance laws. Execu- tives, for example, routinely arranged for special bonuses to top managers, with the clear expectation that those managers would donate their windfall to the candi- date of the corporation’s choice. In the 1970s, a coalition of lawmakers worked to reform the campaign finance system following the Watergate scandal. Congress created the Federal Election Commission (FEC) and a system for public campaign financing, instituted reporting requirements and limited expenditures. In 1975, the FEC clarified that political action committees were legally legitimate, and an explosion in corporate-backed polit- ical action committees followed. Between 1974 and 1979, the number of business PACs increased ten-fold, from 89 to 950. By 2016, the FEC counted 1,621 political action committe