In 1907, after being criticized for contributions he received from business interests in his 1904 presidential campaign, President Theodore Roosevelt responded by urging Congress to ban corporate contributions in federal elections and provide for funding from the U.S. Treasury for political parties. Congress then passed the Tillman Act, which banned corporate contributions and gifts to federal candidates. Although this act was a significant change, many reformers felt that the wealthy still had disproportionate influence on the political process. In 1910, additional reform legislation made its way through Congress. The Federal Corrupt Practices Act (and amendments) created campaign spending limits for parties in congressional races. It also required national party committees to file reports of their contributions and expenditures, thus establishing the first public disclosure rules at the federal level.
A major scandal arose in the early 1920s when oil developers were caught giving federal officials gifts in return for oil leases on public lands. Congress reacted to these revelations, which came to be known as the Teapot Dome scandal, by implementing the Federal Corrupt Practices Act of 1925. This law served as the basis for federal campaign finance law from the 1920s until the 1970s.
The Corrupt Practices Act tightened the disclosure rules imposed on federal candidate and national party campaign committees (defined as party committees operating in more than one state) by requiring these committees to file quarterly contribution reports. The Act also reaffirmed the contribution and spending limits established under previous federal law, while it increased the spending limit for senatorial campaigns. Even though the law laid down clear disclosure requirements, an effective regulatory system never took hold. There was no independent enforcement agency, and penalties for noncompliance were not defined. Additionally, the public had difficulty seeing the reports, which were in the custody of House and Senate officials and never published. Although many candidates and party committees failed to file reports regularly, no one was ever prosecuted for failure to comply with the law.
