As America's political system matured in the eighteenth and early nineteenth centuries, political parties developed a spoils system in which loyal party supporters were appointed to government jobs and were then required to give portions of their government salaries to the political party to support the party's political activities. These contributions from government employees were called assessments, and were the primary source of campaign funding in the mid-nineteenth century. Congress first took action against the assessment of government employees by banning solicitations of political contributions from naval yard employees as part of the 1868 Naval Appropriations Act. This legislation is generally considered to be the first federal law regulating the financing of campaigns, but it had little effect as parties continued to raise contributions from other political appointees and federal employees. [1]
In 1883, Congress took a broader step to end the spoils system and change the way campaigns were financed. The Pendleton Civil Service Act of 1883 created a class of federal employment available only through competitive exams. These jobs could not be given away through the spoils system. The law led to an overall reduction in party reliance on government employees for political contributions, which then shifted the fundraising burden to business interests with major stakes in federal policy-making.
During the 1880s and 1890s, business interests—banks, oil companies, steel firms, and railroad developers—became the primary source of party funding. As the U.S. government and economy grew, and congressional regulation and federal spending became more important, large corporate contributions to federal candidates and parties became a more dominant feature of presidential elections.
[1] Herbert Croly, Marcus Alonzo Hanna: His Life and Work (New York: Macmillan, 1912), p. 325.
