The question has been raised about whether the policy to ban corporate contributions and expenditures in federal elections dates back to 1947 or to 1907. It is clear from the history of the law that the policy to ban corporate expenditures originated in 1907. In 1907, Congress enacted legislation to prohibit corporations from "directly or indirectly" making contributions in federal elections.
In 1947, Congress amended the statute to make clear that the "directly or indirectly" language in the 1907 statute had covered expenditures as well contributions.
The history shows why this is true.
In 1943, Congress extended the 1907 contribution ban on a temporary basis to cover labor unions as well as corporations. But the 1943 law was deemed ineffectual when reports surfaced that unions were circumventing the contribution restrictions in the 1944 elections by making expenditures to support their favored candidates. Thus, in 1947, Congress acted to reaffirm that the 1907 contribution ban had covered expenditures as well, and also to extend the ban to cover unions on a permanent basis.
Senator Robert Taft, the principal sponsor of the 1947 law, explained: "The previous law prohibited any contribution, direct or indirect, in connection with any election." He said that his legislation "only make[s] it clear that an expenditure...is the same as an indirect contribution, which, in [his] opinion, has always been unlawful." 93 CONG. REC. 6594 (1947) (statement of Sen. Taft)
A House Committee report at the time (H.R. REP. NO. 79-2739, at 40 (1946) stated that House Special Committee was "firmly convinced" that the "act prohibiting any corporation or labor organization from making any contribution" "was intended to prohibit such expenditures."
The Supreme Court recognized this point in the CIO case in 1948, when it said that the intent of the Taft-Hartley Act was not to "extend greatly the coverage" of existing law, but rather to restore the law to its original intent. 335 U.S. at 122.
Thus when Congress in 1907 decided to prevent the corrupting influence of direct or indirect corporate contributions in federal election by banning such contributions, it adopted a policy at that time to keep corporate wealth out of our elections, whether in the form of contributions or expenditures.
It was only because the 1907 prohibition was circumvented through direct expenditures in federal campaigns that Congress acted in 1947 to reaffirm and make clear that expenditures were included in the scope of the original 1907 ban.
