Secrecy Fix on Dixon and Yates
Not until the summer of 1955 did it become apparent that the May 17,
1954, Eisenhower letter would be used on matters unrelated to Senator
Joseph R. McCarthy. Throughout the fall and winter of 1954, I spoke
and wrote about the potential danger of “executive privilege” as it
had been applied in the Army-McCarthy hearings and in the McCarthy
censure hearings. A few persons saw it my way. But the general
tendency to believe that the letter was written solely to deal with
Senator McCarthy held fast, and a general faith prevailed that the
Eisenhower administration would not use it to cover up mistakes,
corruption, or improprieties.
Then suddenly, in June 1955, the White House reinvoked the letter
as justification for refusing to make records available to a Senate
committee investigating the Dixon-Yates contract.
First, Budget Director Rowland R. Hughes used “executive privilege”
to conceal testimony and documents requested by Senator Estes
Kefauver, the Tennessee Democrat in charge of the investigation.
Then J. Sinclair Armstrong, the chairman of the Securities and
Exchange Commission, used “executive privilege” to justify his
refusal to disclose conversations with Presidential Assistant Sherman
Adams relative to postponing a hearing on Dixon-Yates financing.
Also, Sherman Adams claimed the “privilege” not to be required to
testify about his talks with Armstrong or about other activity in the
Dixon-Yates contract development.
At last a few of the Democrats who had been only too glad to see
“executive privilege” invoked against Senator McCarthy opened their
eyes. The realization of the danger dawned too late, however, for it
would take more than a few weeks to upset a precedent that only a
year earlier had been generally viewed as praiseworthy.
While the Army-McCarthy hearings and the McCarthy censure affair
dominated the news, top-level officials in the Eisenhower
administration had been quietly at work arranging for the Mississippi
Valley Generating Company to furnish 600,000 kilowatts of electricity
to the Tennessee Valley Authority. The Mississippi Valley Generating
Company contract ultimately became known as the “Dixon-Yates”
contract because of the two men responsible for its creation. They
were Edgar H. Dixon, president of Middle South Utilities, Inc., and
Eugene A. Yates, chairman of the board of The Southern Company. Both
firms act as holding companies for utilities operating in Arkansas,
Georgia, Louisiana, Mississippi, and Alabama. Dixon and Yates joined
forces to create the Mississippi Valley Generating Company, an
operating subsidiary in West Memphis, Ark. The Dixon-Yates contract
was reported to be for the purpose of replacing power in the
Tennessee Valley Authority area that was used by the Atomic Energy
Commission.
Lewis L. Strauss, then chairman of the Atomic Energy Commission
(AEC), and Joseph Dodge, then Director of the Budget, were active in
pushing this contract. Chairman Strauss pushed it despite the fact
that a majority of the Atomic Energy Commissioners were opposed to
such a contract on grounds there was no Atomic Energy Commission
installation near West Memphis, Ark., and the power was to be used in
Memphis, Tenn.
The Eisenhower administration had opposed the Tennessee Valley
Authority proposal to build a steam plant at Fulton, Tenn., with
a capacity of 500,000 kilowatts to provide for the power needs of
Memphis, plus a surplus for industrial expansion. Budget Director
Dodge opposed the Fulton steam plant and axed the 90 million dollars
requested from the budget in 1953. Gordon Clapp, at that time
chairman of the TVA, then asked that to offset the loss of the Fulton
steam plant the AEC consumption of TVA power be cut sharply. It was
at this point that Budget Director Dodge turned to the AEC in an
effort to get that agency to find ways to obtain power from a private
company.
The Dixon-Yates contract idea developed over a period of months in
1953 and early 1954. Dozens of conferences were held in which one
of the important figures was Adolphe Wenzell, a vice president and
director of the First Boston Corporation. Wenzell was an engineer
and an expert in the cost of construction of public utility plants.
From May 20, 1953, to September 3, 1953, he made studies and issued
reports on TVA power plant costs. In January 1954, Rowland R.
Hughes, then Deputy Director of the Budget, asked Wenzell to assist
the Budget Bureau on the Dixon-Yates contract. Wenzell agreed and,
until April 10, 1954, continued to participate in the Dixon-Yates
negotiations.
Wenzell continued to draw his salary from First Boston Corporation,
and received travel costs and a per diem allowance from the
government for his services for the Budget Bureau. Since First Boston
Corporation was slated to be underwriter of the Mississippi Valley
Generating Company, a question was raised by his associates about
the propriety of Wenzell’s services to the Budget Bureau and to
First Boston—a firm that had a pecuniary interest in the Dixon-Yates
contract agreement.
As the Dixon-Yates contract moved toward completion, a lawyer for the
law firm of Sullivan & Cromwell told Wenzell that before First Boston
should take part in the financing for Dixon-Yates, Wenzell “should
make clear that he had severed his entire relations with the Bureau
of the Budget.”
In the summer of 1954, a few complaints were raised about the
Dixon-Yates contract. There was also opposition to the Dixon-Yates
contract within the Tennessee Valley Authority as well as by a
majority of the Atomic Energy Commissioners. But on June 16, 1954,
Rowland Hughes, by then promoted to Director of the Budget, wrote to
the Atomic Energy Commission:
“The President has asked me to instruct the Atomic Energy Commission
to proceed with negotiations with the sponsors of the proposal
made by Messrs. Dixon and Yates with a view of signing a definite
contract.”
The contract was signed, and in the following weeks the number of
Democratic complaints mounted. The complaints hit a number of points.
The Democrats contended that the Dixon-Yates contract could cost the
government from 107 million to 120 million dollars over a period of
twenty-five years, but that in the end the government wouldn’t own
the plant. This was compared to the 90 million cost for the Fulton
steam plant which the TVA wanted to construct.
The debate revolved largely around the question of private versus
public power (or TVA). Many Democrats held that the Eisenhower
administration was allowing the public treasury to be milked by Big
Business in the same fashion the Harding administration had permitted
the exploitation of Navy oil reserves in the Teapot Dome scandals.
Democratic National Chairman Stephen Mitchell hit a sensitive nerve
in early August 1954 when he implied that President Eisenhower had
direct responsibility for the Dixon-Yates contract. He charged that
one of President Eisenhower’s golfing associates was a director of
The Southern Company, one of the two holding companies that had
established the Mississippi Valley Generating Company. Mitchell’s
office identified the man as Bobby Jones, former amateur and
professional golfing champion. No evidence was ever produced to
support the insinuation that Jones influenced Dixon-Yates decisions.
President Eisenhower was furious that his associations would be
subject to such charges, and in his August 17, 1954, press conference
he offered to disclose all the events leading up to the Dixon-Yates
contract.
“Any one of you here present might singly or in an investigation
group go to the Bureau of the Budget, or to the Chief of the Atomic
Energy Commission, and get the complete record from the inception of
the idea [of the Dixon-Yates contract] to this very minute, and it is
all yours.”
Four days later, on August 21, 1954, the Atomic Energy Commission
released what was purported to be a full chronology of all events in
the development of the Dixon-Yates contract. The names of Wenzell and
Paul Miller, assistant vice president of First Boston Corporation,
had appeared in an original draft. However, the names of both of
these First Boston Corporation officials—Wenzell and Miller—were
eliminated from the chronology that was given to the press.
On the surface, it appeared that President Eisenhower had met charges
of improper activity with a frank and open report on the whole record
of the Dixon-Yates contract. Not until February 18, 1955, did anyone
charge that the chronology was not a full truthful report. On that
day, Senator Lister Hill, the Alabama Democrat, made a Senate speech
in which he charged Wenzell with a dual role in the Dixon-Yates
negotiations. He questioned the propriety of Wenzell’s being a
financial adviser to Dixon-Yates while at the same time serving as an
adviser to the United States Government on the Dixon-Yates contract.
Spokesmen for the Eisenhower administration such as Budget Director
Rowland R. Hughes denied there was any dual role by Wenzell in the
Dixon-Yates contract. As late as June 27, 1955, Budget Director
Hughes testified before a Senate committee that “I was told it was
not true.” He said he didn’t know that First Boston had anything to
do with the financing of Dixon-Yates.
The speech by Senator Hill caused understandable concern in the White
House and among the top officials of the First Boston Corporation.
Revelation of a “conflict of interest” could spoil the entire
107-million-dollar contract and its profits for First Boston. It
could undo what President Eisenhower and many top subordinates deemed
an important block to the spread of the Tennessee Valley Authority.
Of immediate importance was a 6.5-million-dollar appropriation
slated to go to the House of Representatives on June 13, 1955.
The appropriation was for a transmission line from the Tennessee
Valley Authority to the point where it would pick up power from
the Mississippi Valley Generating Company in the middle of the
Mississippi River.
On June 11, 1955, Sherman Adams telephoned to J. Sinclair Armstrong,
chairman of the Securities Exchange Commission. He requested that the
SEC hold up hearings on debt financing of the Dixon-Yates contract
until after the House had finished work on the 6.5-million-dollar
appropriation. Wenzell was among the witnesses scheduled to testify
before the SEC, and testimony on Wenzell’s full role in Dixon-Yates
could have had a devastating impact on the appropriation. The
hearings were postponed.
Finally, on June 28, 1955, Budget Director Hughes revealed that the
Eisenhower administration was going to try to pull down the secrecy
curtain on the investigation of Dixon-Yates. The claim of “executive
privilege” was to be the vehicle.
Hughes was being questioned by Senator Estes Kefauver, regarding a
request for the opportunity to examine all memoranda, documents, and
reports pertinent to the Dixon-Yates contract. By this time it was
abundantly clear to the Kefauver subcommittee that the chronology
released on August 21, 1954, was intentionally incomplete.
Indirectly Hughes moved to “executive privilege.”
“As pointed out to you,” he told Senator Kefauver, “we operate under
the President’s general instructions with regard to interoffice and
intraoffice staff material, that such material is not to be made
public.
“All documents which involve final decisions of public policy have
of course already been made public,” Hughes said in an effort to
give the impression that the administration had complied with the
President’s pledge of frankness. “You [Kefauver] pointed out that
you interpreted the President’s statement at a press conference last
fall to indicate that they [the “executive privilege” claims] did not
apply to this case. I have checked on this matter and I am authorized
by the President to state that his general instructions stand but
that we, of course, stand on the decision to make every pertinent
paper or document that can be made public under this ruling available
to you.”
Hughes was trying to give an impression of frankness, while at the
same time reserving to the administration the right to withhold any
Dixon-Yates information they wished to regard as “interoffice and
intraoffice staff material.” Hughes continued:
“A quick review of our files last night disclosed no other papers or
documents to be added to the somewhat voluminous releases already
made, but we shall make a full and careful search in the next few
days to confirm this or to pick out material, if any, which should be
added to that previously released.”
Hughes had left the Eisenhower administration an “out” on any
omissions of material. Next he sought to absolve Wenzell from any
connection with the Dixon-Yates contract.
“We have also reviewed the report which Mr. Wenzell made as an
adviser in September, 1953, and find that that had nothing to do
with the Dixon-Yates contract and, as a confidential document under
the general ruling [of “executive privilege”], therefore cannot be
made available to your committee.”
Although Hughes concluded with a promise to “co-operate where we can
do so properly,” he made it clear the Eisenhower administration was
still going to use the “executive privilege” claim to secrecy if it
wanted to refuse testimony or records.
Up to this time, high administration officials had deleted
information, twisted the record, engaged in half truths and full
deception to obscure the story of the Dixon-Yates contract. Now they
were seeking to use the name of President Eisenhower, and give the
impression that some constitutional principle was involved in hiding
the records.
Senator Kefauver took to the Senate floor to lash out at
the concealment of records and testimony in the Dixon-Yates
investigation. At the presidential press conference on June 30, 1955,
Frank Van De Linden, of the Nashville _Banner_, forced the issue with
President Eisenhower:
“Senator Kefauver charged on the Senate floor yesterday that the
Budget Bureau was trying to conceal what he called a scandal in the
Dixon-Yates contract negotiation regarding the employment of Mr.
Adolphe Wenzell, of the First Boston Corporation,” Van De Linden
said. “Senator Knowland says there is no corruption in it, and that
he thinks you were just trying to help the Tennessee Valley get some
power. I wonder if Mr. Hughes, of the Budget Bureau, had cleared with
you his refusal to give Mr. Kefauver the information he was asking
down there?”
President Eisenhower answered: “Mr. Hughes came to see me, went over
the situation, and I repeated the general instructions—I think that
I expressed some in front of this body—that every single pertinent
paper in the Yates-Dixon contract, from its inception until the final
writing of the contract, would be made available, I think I said, at
that time to the press, much less to any committee.”
After seeming to approve an open record, he then qualified it: “Now,
I do stand on this: Nobody has a right to go in and just ... wrecking
the processes of Government by taking every single file—and some of
you have seen our file rooms and know their size—and wrecking the
entire filing system and paralyzing the processes of Government while
they are going through them.”
The President rambled on: “There are—these files are filled with
every kind of personal note—I guess my own files are filled with
personal notes from my own staff all through; they are honeycombed
with them. Well, now, to drag those things out where a man says to
me, ‘I think so-and-so is a bad person to appoint, to so-and-so, and
you shouldn’t have him,’ all he had was his own opinion. You can’t
drag those things out and put them before the public with justice to
anybody, and we are not going to do it.”
President Eisenhower had engaged in a lot of conversation unrelated
to the information sought. Now he indicated that he personally
believed that officials of his administration had already put out all
pertinent documents:
“At the time that I gave those instructions, Mr. Hughes and Mr.
Strauss, whoever else was involved, got together every single
document that was pertinent to this thing and put it out.”
The President concluded with a complete approval of the Wenzell role:
“Now, as far as the Wenzell report, Mr. Wenzell was never called
in or asked a single thing about the Yates-Dixon contract. He was
brought into—as a technical adviser in the very early days when none
of us here knew about the bookkeeping methods of the TVA or anything
else. He was brought in as a technical adviser and nothing else and
before this contract was ever even proposed.”
President Eisenhower seemed to have no information about Wenzell’s
role after January 1954. His comments seemed completely contrary
to the testimony already taken before the Kefauver Subcommittee on
Antitrust and Monopoly. I followed up the Van De Linden question.
“Mr. President,” I said. “A little while ago you stated that Mr.
Wenzell was never called in about the Yates-Dixon contract, and there
seemed to be some testimony before the SEC and before a committee
that he served as a consultant. I wonder if you were—”
The President cut in to answer that “He [Wenzell] did serve as a
consultant at one time.”
“Of Dixon-Yates?” I asked it fast.
“No; I think—now, I will check this up,” the President started. “My
understanding is that quickly as the Dixon-Yates thing came up he
resigned, and we got as our consultant a man named Adams from the
Power Commission here itself to come over and be consultant so as
to have him because he [Wenzell] was connected with a great Boston
financial company.”
“Mr. President,” I asked. “Had you been informed that he had no
connection at all with the Dixon-Yates—?”
“My understanding of it, and it may have been—that part of it there
may have been—an overlap of a week or two, there I am not sure of,”
President Eisenhower answered. It was difficult to understand he had
so little information on the key issue at this late date.
“Would there be any change in your position on that if there was
material that he [Wenzell] had served as a consultant on that
[Dixon-Yates]?” I asked.
“If he had served as a consultant on that [Dixon-Yates] and brought
in a definite recommendation to us I would be very delighted to
make that public,” President Eisenhower answered. “But I just don’t
believe there is a thing in it about it. However, I will have it
checked again.”
Noting the press conference statement, Senator Kefauver fired off a
quick letter to President Eisenhower:
“My Dear Mr. President: I have just been informed that in answer to
questions of the press today you are recorded as saying that Mr.
Adolphe H. Wenzell was never called in or asked a single thing about
the Dixon-Yates contract, and that as quickly as the Dixon-Yates
matter came up Mr. Wenzell resigned. However, you say you will have
it checked again.”
Then Senator Kefauver followed up with a careful chronological study
of the testimony of Wenzell and other key officials in the Eisenhower
administration which showed that Wenzell had been a consultant
on the Dixon-Yates contract. It also showed that high Eisenhower
administration officials knew, or should have known, the precise role
that Wenzell had filled.
At his next press conference, on July 6, 1955, President Eisenhower
said Wenzell’s role was perfectly “proper” in Dixon-Yates, but
indicated there was a chance the contract might be canceled.
Senator Kefauver sought an explanation of the Sherman Adams calls to
the SEC that had postponed hearings on the financial arrangements
for Dixon-Yates at the crucial point before the House took up the
appropriation measure.
On July 21, Adams refused to testify before the Kefauver
investigating subcommittee. In a letter to Senator Kefauver he
stated that he could not give testimony because of his confidential
relationship to the President, and also because “every fact as to
which I might give testimony either has been or could be testified to
fully by other responsible government officials.”
The same day Kenneth Fields, general manager of the Atomic Energy
Commission, wrote to Kefauver declining to furnish documents on
ground they were “privileged communications within the executive
branch.” Earlier, SEC Chairman Armstrong had made his first refusal
to testify on his conversations with Sherman Adams.
Senator Kefauver replied to Adams that there had been consistent
claims of “executive privilege” that barred the investigators from
obtaining the truth.
“No official of the Government,” the Senator wrote, “no matter how
high his position can properly claim privilege when a committee of
Congress is seeking the facts in respect to corruption.”
Senator Kefauver stated: “In these circumstances a claim of privilege
is tantamount to suppression of evidence of possible crime and
corruption. Not even the privilege of attorney-client can be used for
such a nefarious purpose.”
Sherman Adams hid out behind the protective walls of the White
House, unavailable for questioning by Congress and unavailable
for questioning by the press. “Executive privilege,” as smoothly
practiced by the Eisenhower administration, made it appear that
Adams was invulnerable to attack, or even questioning, on any of his
activities. Perhaps he _was_ the cold and clean New Hampshire granite
of the legend of Sherman Adams. Perhaps he _was_ the dispassionate,
efficient barrier against the corrupting influences of personal and
political favoritism. But, even if Sherman Adams were the puritanic
guardian of good government as pictured, the idea of surrounding any
man’s activities with such arbitrary secrecy was a bad principle.
It was an open invitation to misuse of power and influence that few
could withstand.
At the July 27, 1955, press conference I questioned President
Eisenhower to determine what he knew of the activities of Sherman
Adams in the Dixon-Yates affair.
“Mr. President,” I said. “There has been testimony of the SEC
Chairman [J. Sinclair Armstrong] that Sherman Adams intervened before
the SEC, which was a quasi-judicial body. Testimony was given by the
chairman on that score.
“The Democrats are contending that there was something improper in
intervening with any quasi-judicial body. I wonder if you looked into
that and if you have any comment you would like to make about it.”
The President replied that he had “looked into it only to this
extent: I am sure that Mr.—head of the commission—has given the
entire story. I understand that he is back before the committee. And
certainly if he has omitted any details, he should give them now.”
The President continued: “And I believe that Governor Adams has
informed the Senate committee that he hasn’t a single detail to add;
that the story has been told and that is all there is to it.”
Garnett Horner, the White House reporter for the Washington _Star_,
came in with another question:
“In connection with the Dixon-Yates matter, and in view of the fact
that the Senate investigation subcommittee recently brought out the
first time the part played in initiating the Dixon-Yates contract by
Adolphe Wenzell, of the First Boston Corporation, which corporation
later became the financing agent for Dixon-Yates. In view of all
that, do you believe your directions last summer for disclosure of
the complete record in the case were carried out by the agencies [the
Bureau of the Budget and the Atomic Energy Commission] concerned?”
President Eisenhower replied: “Well, I didn’t know that anyone
had alleged that he [Wenzell] was the initiator, because no such
statement has ever been made to me.
“But what I have done is this: I have gotten back Mr. Dodge, who
was Director of the Budget when all this was done, when the 1954,
I believe, policy on this statement, on this whole proposition was
made, and he is going now before one of the committees.”
The President turned to Press Secretary James C. Hagerty to ask:
“Isn’t that correct?”
Hagerty answered, “Yes, sir.”
The President continued: “He [Dodge] is going down before one of the
committees with instruction to do this: to tell every possible item
that has anything whatsoever to bear on Dixon-Yates, and see whether
we can get the whole list of information properly coordinated and
placed before the people that are investigating it.”
President Eisenhower still had not answered the question relative to
whether he knew that his August 1954 order on complete disclosure on
Dixon-Yates had been violated. I followed up the question of Garnett
Horner:
“I hate to go back to Dixon-Yates again, but there was one thing I
don’t think was completely clear. There were some AEC officials,
Mr. Fields and Mr. Cook, who testified that Mr. Wenzell’s name was
knowingly eliminated from the Dixon-Yates chronology; and, of course,
they stated this was on the recommendations of the Bureau of the
Budget.
“I wonder if you knew anything of this, and if you did know of it, if
you would like to comment on whether you thought it was important.”
[On July 21, 1955, Kenneth E. Fields, general manager, Atomic
Energy Commission, and Richard W. Cook, deputy general manager,
Atomic Energy Commission, testified before the Senate Judiciary
subcommittee. Fields identified Cook as the man who prepared the
chronology.
“The Bureau of the Budget suggested that we leave them (the names
of Wenzell and Miller) out,” Cook said in answer to a question from
Senator Joseph O’Mahoney.
“I can assure you that we did not try to conceal anything,” Cook
continued. “They just called to our attention certain minor entries
that ... didn’t appear to be appropriate.”
“So they suggested no other names that you leave out except Wenzell
and Miller?” Senator Kefauver asked.
“No; not that I recall,” Cook answered.]
The President knew little about the Dixon-Yates contract even at this
late date, more than a year after it had first been criticized by
Democrats. His answer reflected his lack of knowledge, as well as his
desire to shut off further questions.
“I don’t intend to comment on it any more at all,” he said. “Now,
I think I have given to this conference time and again, the basic
elements of this whole development, and everything I could possibly
be expected to know about it.
“I said Mr. Dodge, who initiated this whole thing, is going down
before the committee to again begin the process of taking this thing
from its inception and following it through until he turned [it] over
to Mr. Hughes, and I believe that Mr. Hughes is to be there if they
want him again.
“Now, they [Dodge and Hughes] can tell the entire story, and I don’t
know exactly such details as that. How could I be expected to know? I
never heard of it.”
It would have been difficult to imagine a case that dramatized
more clearly the bad government that could fester under arbitrary
executive secrecy. President Eisenhower had issued an order for a
full chronology of events leading up to the Dixon-Yates contract,
but, instead, his subordinates had put out a record edited to
eliminate the names of persons involved in a “conflict of interest.”
The secrecy deceived the public, deceived the committee of Congress,
and even deceived President Eisenhower. His comments over the period
of months showed that his subordinates had misled or deliberately
deceived him on the key point in the controversy—the role of Adolphe
Wenzell. In this respect the secrecy possible under “executive
privilege” worked against the best interests of President Eisenhower.
Apparently his subordinates thought they could distort the record,
and keep it hidden from the public and the President. Only the
persistent work of Senator Kefauver’s investigators pulled loose
sufficient facts to document the deception.
President Eisenhower might have been able to sell the Dixon-Yates
contract to the public if it had been handled as a simple debate
of private power versus public power. But he could no longer see
it through once he had been forced to take note of a “conflict of
interest” that he had previously denied existed.
Cancellation of the Dixon-Yates contract did not end the Eisenhower
administration’s problem with that ill-fated venture. It was to be a
major factor in 1959 in blocking the nomination of Lewis L. Strauss
as Secretary of Commerce.
In November of 1955, William Mitchell, counsel for the Atomic Energy
Commission, made a report stating: “It appears that Wenzell, while
having a conflicting private interest, acted as one of the principal
advisers of the government” in the negotiating of the Dixon-Yates
contract. Mitchell called attention to the many meetings in which
Wenzell had taken part as a government official in the first four
months of 1954.
“The matters on which Wenzell was advising the contractor
[Dixon-Yates] were the same on which he had been employed to advise
the government,” Mitchell stated officially for the AEC.
When the government canceled the contract on grounds of a “conflict
of interest,” the Dixon-Yates group claimed that tremendous
expenditures had already been made on the contract. When Dixon and
Yates sued the government for $3,534,788, the Justice Department
was forced to go to court with legal briefs and facts to support
the government contention that Wenzell’s role was a “conflict of
interests.”
Thus Attorney General Brownell’s department was in court to give
evidence of an impropriety that President Eisenhower had said did not
exist.
Less than a year later, on August 11, 1956, Senator Estes Kefauver
and Senator Joseph O’Mahoney, the Wyoming Democrat, insisted on
action against those engaged in concealing the facts.
Senator Kefauver charged that Sherman Adams and other “high officials
of the Eisenhower administration” violated the criminal law in
their handling of the Dixon-Yates contract. He named the other
high officials as Lewis L. Strauss, chairman of the Atomic Energy
Commission and the President’s adviser on atomic energy matters;
Rowland R. Hughes, former Director of the Budget; and J. Sinclair
Armstrong, chairman of the SEC.
In asking Attorney General Herbert Brownell to present the matter to
a federal grand jury, Kefauver commented:
“Indictments and convictions have been obtained under Section 371
of Title 18 of the United States Code in cases involving similar
circumstances. The offense under this section of the Criminal Code
is that of conspiring to defraud the United States Government.
The essential ingredient of the offense under this section of the
Criminal Code is the failure of a government official to discharge
conscientiously the duties of his office and administer Federal law
in an unbiased manner.”
Kefauver continued: “In this case there exists substantial evidence
indicating that Mr. Adams, Mr. Hughes and Mr. Strauss deliberately
attempted to conceal the conflict of interest growing out of Mr.
Wenzell’s dual role in the Dixon-Yates deal—a conflict which the
President’s own Attorney General now labels so contrary to public
policy as to render the agreement null and void.”
Senator O’Mahoney characterized the Dixon-Yates matter as violating
“every concept of decent government and fair and impartial
administration of applicable law.”
The stentorian-toned Wyoming Senator gave a “partial listing of the
wreckage left strewn in the path” of Dixon-Yates!
1. “The independent character of the Atomic Energy Commission and the
Tennessee Valley Authority was brought into serious question.
2. “Officials of the Department of Justice and the Securities and
Exchange Commission were placed in the position of having been
persuaded to take legal positions which ran counter to precedent of
many years standing.
3. “The administration of the law by SEC was brought into disrepute
because of SEC’s flagrant departures from accepted interpretations
of the Public Utility Holding Company Act and its succumbing to
pressures from ‘higher authority’ emanating from the White House.
4. “AEC was forced to execute and sponsor a contract which the
Department of Justice has since asserted violated the Holding Company
Act, the Atomic Energy Act, and the conflict of interest statutes.”
O’Mahoney said that there “is no way that we can ascertain the full
facts” because “the Subcommittee has been completely blocked from
getting to the bottom of the Dixon-Yates contract by the very men in
the White House who were involved in these negotiations.”
After this debacle, it surprised me more than ever to discover that
few people saw the full evil of the broad principle of “executive
privilege” as set out in the May 17, 1954, letter.
There was still a general lack of awareness of the possible
dictatorial power lurking behind the secrecy curtain.
As I have said, I did not believe that President Eisenhower would
knowingly use secrecy to cover crimes, but I had doubts about some
people in his administration. Even if it could be assumed that
every member of his administration was totally honest, “executive
privilege” was still too potentially dangerous a doctrine to have in
force.
It was not until January 9, 1961, that the Supreme Court of the
United States stated the final words on the Dixon-Yates contract.
Chief Justice Warren delivered the opinion of the Court that Adolphe
H. Wenzell had been involved in a “conflict of interest” which was a
violation of the law (18 U.S.C. 434).
The law states: “Whoever, being an officer, agent or member of,
or directly or indirectly interested in the pecuniary profits or
contracts of any corporation ... is employed or acts as an officer or
agent of the United States for the transaction of business with such
business entity, shall be fined not more than $2,000 or imprisoned
not more than two years, or both.”
No criminal charge was brought against Wenzell, but the majority
opinion stated that the civil law suit by the Dixon-Yates group
involved “fundamental questions relating to the standards of conduct
which should govern those who represent the Government in its
business dealings.
“The question is whether the Government may disaffirm a contract
which is infected by an illegal contract,” the majority opinion
stated. “As we have indicated, the public policy embodied in Section
434 requires nonenforcement [of the Dixon-Yates contract] and this is
true even though the conflict of interest was caused or condoned by
high government officials.”
The Eisenhower administration, as I have already stated, could
probably have made a winning argument for the Dixon-Yates contract in
a debate involving simply public power versus private power. However,
the temptation to use the secrecy of “executive privilege” proved
too great, and ironically the secrecy kept President Eisenhower in
the dark about the details of the role of Adolphe H. Wenzell until
it was too late. Excessive secrecy blinded President Eisenhower and
some of his assistants until they were so victimized by deceit that
they could not recover their equilibrium and salvage the Dixon-Yates
contract.