Why did universities start giving legacy children admissions preference?
Legacy preference for university admissions was devised in 1925 at Yale University, where the proportional number of Jews in the student body was growing at a rate that became alarming to the school's administrators. However, even prior to that year, Yale had begun to incorporate such amorphous criteria as 'character' and 'solidity', as well as 'physical characteristics', into its admissions process as an excuse for screening out Jewish students; but nothing was as effective as legacy preference, which allowed the admissions board to summarily pass over Jews in favor of 'Yale sons of good character and reasonably good record', as a 1929 memo phrased it. Other schools, including Harvard, soon began to pursue similar policies for similar reasons, and Jewish students in the Ivy League schools were maintained at a steady 10% through the 1950s.
In 1990, the US Office of Civil Rights concluded an investigation into whether Harvard discriminated against Asians. The commission concluded that most of the under representation could be explained by the fact that few Asians were recruited athletes or children of alumni. --Rohin Dhar, Priceonomics blog, on the legacy of legacy preference