Keeping the Professor in the Dark
The Justice Department, Commerce Department, Agriculture Department,
Defense Department, and State Department had all used the arbitrary
secrecy of “executive privilege” without causing a public uproar. Not
only had they succeeded in avoiding major press criticism, but they
had secured statements from President Eisenhower to give a noble and
patriotic coloring to their deceptions.
With such encouragement at the top it was inevitable that the policy
of secrecy would spread. In August 1957, the newly created House
Legislative Oversight Subcommittee hired Bernard Schwartz, the young
law professor from New York (see Chapter VIII), as counsel for an
investigation of the various regulatory agencies. The committee,
headed by Representative Morgan Moulder, Missouri Democrat, had been
established “to go into the administration of the laws [creating the
regulatory agencies] and see whether or not the laws ... were being
carried out or whether they were being repealed or revamped by those
who administer them.”
The young professor had barely started his work in September 1957,
when he began bumping into secrecy trouble. In all, there were six
of the so-called “independent regulatory agencies” in the scope of
the House Legislative Oversight Subcommittee. The “big six” to be
probed were the Federal Communications Commission (FCC), the Civil
Aeronautics Board (CAB), the Interstate Commerce Commission (ICC),
the Federal Power Commission (FPC), the Federal Trade Commission
(FTC), and the Securities and Exchange Commission (SEC).
The Congress had created these regulatory agencies to perform a
wide range of functions including control of radio and television
licenses, control of gas and electric power lines, control of
commercial land transportation by train, truck, or bus, the
investment market, and air transportation. Rights worth billions of
dollars were involved in the decisions of these agencies, and it had
been the stated intention of Congress to remove these decisions from
the direct pressure of politics. To do this, the regulatory agencies
were headed by bipartisan commissions or boards, the members of which
were nominated by the President, subject to approval by the Senate
and limited to a fixed term of office.
In theory, at least, these boards or commissions were specialized
courts in their fields. They had rule-making and administrative
functions, but they also rendered judicial decisions on the basis of
public records and public hearings. Once appointed, these members
of the regulatory agencies were to be insulated from the pressure
politics of the White House and the Congress. Prior to Dr. Schwartz’s
arrival in Washington, there had been widespread reports, and some
evidence, that members of some of the regulatory commissions were
engaging in conversations with political personnel at the White House
and elsewhere on cases under study. To Dr. Schwartz, an outstanding
authority in the field of administrative law, it was elementary that
such conversations were improper while a case was being decided.
“It is as bad as having one of the parties in a law suit sneak into
the chambers of the judge to try to influence his decision in the
middle of a trial,” Dr. Schwartz told me.
I discussed some incidents with him which I felt merited
investigation, and he told me he was having trouble getting access to
material he requested. The CAB appeared ready to try to pull down a
secrecy curtain as broad as “executive privilege” because it could
have no legal substance for an independent regulatory agency.
On September 19, Dr. Schwartz requested that the CAB allow members
of the House subcommittee staff “to receive and examine any records,
documents, or information directly, or indirectly, pertaining to
your agency, function or business within the jurisdiction of this
subcommittee.”
A few days later, on September 23, he pressed CAB Chairman James
R. Durfee for full access to CAB records. Durfee insisted the CAB
would screen all files containing documents or communications from
other agencies or departments of government. It was now apparent
that Durfee was going to refuse access to internal governmental
communications on grounds of “executive privilege.” Dr. Schwartz was
irate. He termed Chairman Durfee’s position “completely ridiculous”
and suggested that Durfee obtain competent legal counsel.
By this time the pressure of the investigation was being felt by a
number of the regulatory agencies. The chairmen of the six regulatory
agencies met at a luncheon at the University Club in Washington the
next week to determine how to handle the inquisitive Dr. Schwartz.
Because of the success some government departments had been having
with “executive privilege” some of the chairmen decided that this
was to be the answer for their agencies, but there was no general
agreement.
Dr. Schwartz was not discouraged by the lack of information; he
only pressed harder. Subcommittee Chairman Morgan Moulder took the
suggestion of Dr. Schwartz and set October 17 as a public hearing
date for CAB. In the meantime, on October 5, he followed another
Schwartz suggestion and asked that the CAB prepare and submit a
report on “all gifts, honorariums, loans, fees, or other payments”
of things of value received by CAB employees from any “person,
firms, corporation, association, organization, or group having any
interest, direct or indirect,” in any matter before the board.
Dr. Schwartz was allowed to examine the public files, but his efforts
to obtain files of correspondence with the White House and with other
agencies ran into the claim of “executive privilege.” In the first
months, he nevertheless became aware that Sherman Adams and others on
the White House staff had been extremely active in reaching various
regulatory agencies.
In an exhaustive eighty-two-page “Memorandum of Law,” filed on
October 17, Dr. Schwartz exposed the true nature of the “executive
privilege” arguments. They all sprang from the idea that “the King
can do no wrong.”
“In the pretension of those who espouse ‘executive privilege,’” he
said, “the infallibility recognized in the King in the days when
he was personally sovereign of England has been attributed to the
President in our system. The reasoning which supports the doctrine
should shock the intelligence, as well as the sense of justice,
of those who truly believe in the essentials of representative
democracy.”
He reported that the CAB claimed “the authority to screen files
and records before they are made available to the subcommittee,
with a right to the Board in its discretion to remove any and all
documents” that could be considered personal files of Board members
or communications within CAB or with the White House.
“The Civil Aeronautics Board cannot claim privilege with regard to
communication between the Board, on the one hand, and the President
or other departments and agencies, on the other. Such an assertion of
privilege cannot defeat the right of this subcommittee to investigate
the relationship between the independent regulatory agencies and the
executive branch.”
Schwartz continued: “‘Executive privilege’ is not available to an
independent agency like the Civil Aeronautics Board as a possible
basis for the withholding of information from the Congress. The
Civil Aeronautics Board, as the Supreme Court has recognized, is
an independent agency whose members are not subject to the removal
power of the President. Such a body cannot in any proper sense be
characterized as an arm or an eye of the Executive. It is instead an
arm of the Congress, wholly responsible to that body.
“The doctrine of absolute ‘executive privilege’ itself is not
supported in law. The cases cited by its proponents are not truly
relevant on the power of the Executive to withhold information from
the Congress. On the other hand, there are many decisions squarely
rejecting the doctrine, even in courtroom cases. In addition, Dean
Wigmore (the leading authority on the subject in this country) flatly
repudiates the doctrine.”
Although Dr. Schwartz did succeed in eliciting half-promises of
co-operation from some officials of the regulatory agencies, most
of them dragged their feet. Richard A. Mack, a member of the FCC,
wouldn’t show investigators many of his records, including the office
diary that provided links for his indictment later on charges of
having conspired to violate the federal law. The lack of co-operation
by Commissioner Mack was matched by the resistance at CAB, where
Schwartz was trying to pin down evidence of contacts by Sherman Adams.
In January 1958—after five months of frustration—Schwartz insisted
that the members of the Legislative Oversight Subcommittee get tough
and demand full co-operation. Some members of the investigating
committee did not want to force the issue. Several of the Republicans
came out flatly in support of the Eisenhower administration’s
obstructionist tactics.
The lack of support from committee members so irritated Schwartz that
it took only a little urging from some newsmen to get him to leak a
staff memorandum to The New York _Times_. It was a lengthy document
setting out the well-settled legal principle that it is improper for
members of regulatory agencies to have private talks with litigants
when a case is in hearing or in the process of being decided. The
Schwartz memorandum also questioned the propriety of the members’
accepting lavish entertainment from executives of the industries they
were supposed to regulate.
Tempers flared in the days following the leak of the Schwartz
memorandum, and finally on February 10, 1958, the House subcommittee
voted to fire Dr. Schwartz. I called Dr. Schwartz in the early
evening of February 10 to inform him of the subcommittee’s decision
and also to tell him that a subpoena was to be issued for him to
testify the next morning.
He told me he had copies of every important document from the
committee files in a trunk and two cardboard boxes. “Someone should
have knowledge of what is in these records,” he said, “so it will
be possible to force the subcommittee to continue hearings.” If
something dramatic wasn’t done, he was convinced the investigation
would never get off the ground.
Dr. Schwartz asked if I wanted the copies of documents to take to
members of Congress who had shown an interest in the problems of the
regulatory agencies. I said I should not take possession of documents
which might be considered the property of the House subcommittee. But
since the documents were legally in his custody, I suggested that he
could take them to the apartment of Senator John J. Williams, the
Delaware Republican, and I would be happy to accompany him.
I had talked with Senator Williams of improper pressure on the
regulatory agencies and thought he would take the records. He had
fought against tax scandals in the Truman administration, but I
regarded him as an objective crusader who would call the strikes
the same way if the Eisenhower administration were involved in
wrongdoing. I had hoped that Senator Williams might be able to give
the investigation of regulatory agencies the same prodding that he
had given to the House tax scandals investigations in 1951 and 1952.
Dr. Schwartz said he would be willing to turn the papers over to
Senator Williams and explain them to him in detail.
I headed at once for his apartment. When I arrived, Dr. Schwartz had
the trunk and two boxes of documents ready to go. Mrs. Schwartz was
nervous about her husband’s going, however. I assured her that for
practical political reasons it was unlikely that the House would take
action against Dr. Schwartz for delivering the documents to a United
States Senator. As quickly as possible we carried the heavy trunk and
boxes to my car. At the Mayflower Hotel, we hired a porter to wheel
them on a baggage cart to the apartment of Senator Williams. While
we were at the Williams apartment, Dr. Schwartz received an urgent
telephone call from his wife. He took it in private in another room.
Mrs. Schwartz said she had been called by a reporter who told her
that since Senator Williams was a Republican, he would probably turn
the documents over to Sherman Adams at the White House. The fear
was groundless, but Mrs. Schwartz was frantic and made her husband
promise to leave the Williams apartment and take the documents with
him.
Dr. Schwartz returned to the room and told the Senator it had been
suggested that the documents might be taken to Senator Wayne Morse,
the Oregon Democrat. We excused ourselves to go telephone Senator
Morse and left Senator Williams alone with the documents. I made the
call. As I was certain he would—for I had previously talked with
him about the regulatory agency scandals—Morse assured me he was
interested in reviewing any documents Schwartz had available.
When we arrived at his apartment, Senator Morse greeted us calmly
and assured us that he wanted the documents because of his official
interest in the regulatory agencies, and we left them with him.
Now we felt certain we had created a situation in which it would
be virtually impossible for the House to avoid going forward with
the investigation. The word would move fast that the files had been
examined by a leading Democratic Senator and a leading Republican
Senator. It would create a good many complex problems for any House
members inclined to ignore or hide the evidence and leads that
Schwartz had accumulated.
Before the Schwartz files were returned to the House subcommittee,
Senator Morse read them. It was reported to me that most, if not
all, of the documents were photographed before they were sent on to
Representative Oren Harris, the Arkansas Democrat who was chairman of
the House Committee on Interstate and Foreign Commerce.
Until now it appeared Sherman Adams had erected a total shield from
investigations by Congress. He had used “executive privilege” to
avoid testimony in the Dixon-Yates case. He had been able to make his
contacts at the Securities and Exchange Commission without undergoing
questioning by the investigating subcommittee which was examining why
the SEC had postponed a hearing on Dixon-Yates at a crucial point.
It was Sherman Adams who scribbled his initials on papers to indicate
he had approved them for President Eisenhower’s signature. Sherman
Adams was on the telephone daily to United States senators and
congressmen on knotty legislative and patronage matters. Sherman
Adams ironed out the problems between cabinet officers, and he dipped
his hand into virtually every department from the first months of
the Eisenhower administration. Always it was understood that Sherman
Adams was speaking for President Eisenhower, or was acting for
President Eisenhower. Even when he didn’t say, “This is what the
President wants,” it was understood he was speaking for President
Eisenhower.
The legend grew that Sherman Adams was cold and clean as New
Hampshire granite—a barrier against the corrupting influence of
personal and political favoritism. Coming on the heels of the Truman
administration, such a reputation was much admired even when it was
known that Adams was not well liked. There were countless stories
of his undiplomatic, even rude, treatment of Republican political
figures who were interested in a return to some good plain political
patronage. It all added to the legend that Sherman Adams was one of
the finest influences the Eisenhower administration had brought to
Washington.
But there were also those stories of the calls that Sherman Adams
made on members of the so-called “independent regulatory agencies.”
One might commend the White House for keeping a firm hand on agencies
directly under the control of the White House, but the regulatory
agencies were another matter. Politics were supposed to be kept out.
Shortly after the midnight ride with Dr. Schwartz, I came into the
possession of copies of two letters from “Sherm” Adams to “Murray”
Chotiner, an attorney for North American Airlines. In the letters,
“Sherm” had informed “Murray” that he had discussed the North
American Airlines case with the acting head of the CAB. It appeared
to be a one-party contact with an official of the CAB during the
period when a case was being decided. It appeared to be a direct
violation of the rules of the CAB if Adams had done what he stated
in the letter he had done for Chotiner, a politically influential
California lawyer. I wrote my story on the facts available in the
secret files of the House subcommittee.
I caught President Eisenhower’s eye early in the February 26, 1958,
press conference and he recognized me with a trace of reluctance.
“Mr. President,” I started. “Sherman Adams has written a letter in
which he states that he went over the details of a pending Civil
Aeronautics Board matter with an acting chairman of the CAB.
“It is contended up on Capitol Hill, that this was a violation of a
CAB rule which states—it is improper that there be any communication,
private communication that is, by any private or public person with
a member of the CAB, with the examiners of the CAB, with the staff
while the case is pending, except in those matters prescribed by law.
“I wonder if you could tell us whether you felt Mr. Adams was acting
within the proper scope of his authority in this particular matter.”
President Eisenhower pleaded ignorance of news stories that had been
on page one for days:
“Well, again you are bringing up a thing I have not heard of; but I
will say this: There is a number of cases that come under the CAB
that the White House must act on. Any time that they refer or have
anything to do with the foreign routes that CAB has authorized, or
refused to authorize, then the President himself is required to make
the final judgment.”
The President was confused. He was assuming that the case was a
foreign airline route case to which normal rules do not apply. The
case about which Adams had written the letter, however, involved a
domestic airline, North American Airlines.
“And, very naturally,” President Eisenhower continued, “my staff
would want to get any additional information that I need. So, I would
assume it is so on that case.”
“Mr. President,” I broke in to explain that the North American case
was not a foreign line, but was a domestic airline. “On that line—”
I was cut off by the President’s cold stare, and abrupt comment: “I
don’t want anything more about that.”
There was no opportunity to ask another question, but the record was
much clearer to the nation’s editorial writers and cartoonists than
it was to President Eisenhower.
“Whether the President wants it or not, there ought to be ‘more
about that’ at the very next news conference,” commented the St.
Louis _Post Dispatch_ in a hard-hitting editorial. The editorial
pointed out that in the face of rules that would make Adams’ contacts
“improper,” President Eisenhower had “not only evaded a direct
question about whether Mr. Adams’ intercession was improper but
having evaded it, told Reporter Mollenhoff: ‘I don’t want anything
more about that.’”
The Washington _Post_ commented that President Eisenhower’s answer
“gave a damning indictment of his own unfamiliarity with important
national affairs yesterday in his fuzzy comments on the relationship
of Sherman Adams to the Civil Aeronautics Board.
“For days there have been stories about the accusation by Dr. Bernard
Schwartz that Mr. Adams in 1953 discussed the status of North
American Airlines with the acting chairman of the CAB on behalf of
the airlines counsel, Murray Chotiner. Yet Mr. Eisenhower said,
almost incredibly, that he had never heard of the matter.”
The _Post_ editorial concluded:
“Is it that Mr. Eisenhower just isn’t interested, or is it that Mr.
Adams, who attempts to ease the Chief Executive’s burdens, filters
what the President reads?”
Reports were already circulating in Washington that Sherman Adams
had made some contacts at two other regulatory agencies on behalf of
Bernard Goldfine, a wealthy New England industrialist. However, the
claim of “executive privilege” still spread its protective covering
over Sherman Adams and others at the White House. The officials of
the regulatory agencies continued to refuse to give testimony on
contacts with the White House. And, of course, at that stage Sherman
Adams had no intention of giving public testimony.
Then, suddenly, the House investigation became a hot issue. Evidence
was developed that Richard A. Mack, a member of the FCC, had been
involved in some rather complicated financial dealings with a Miami
attorney, Thurman A. Whiteside. Whiteside had loaned him money, and
there was also an arrangement through an insurance firm which was
putting a little extra money in Mack’s pocket. Whiteside checks
totaling $2650 were received by Mack while he was on the FCC, and
Whiteside also gave him a one-sixth interest in an insurance company
that sold $20,000 worth of insurance to one of the applicants in the
FCC case involving Miami Channel 10.
This case was to lead to the indictment of Mack and Whiteside for
alleged conspiracy to fix the award by FCC on Miami Channel 10. Mack
was forced to resign from the FCC after a pathetic appearance before
the House Legislative Oversight Subcommittee.
In the criminal trial, Mack admitted receiving financial help and
“loans” from Whiteside, but contended that it had nothing to do with
the award of Channel 10 in Miami to Public Service Television, Inc.
Mack contended it was merely an extension of the favors Whiteside had
given him since they were boyhood friends. The first trial ended in a
hung jury.
The former FCC member never went to trial again. In court he was
described as ill and alcoholic, and unable to stand the ordeal of a
trial.
Whiteside was tried a second time, and was acquitted on the criminal
charge. A short time later, in May 1961, Whiteside was found dead in
his Miami office. Death was caused by a self-inflicted bullet wound.
The FCC in a later ruling ordered Public Service Television to stop
using Channel 10. The FCC had concluded that the activities of Mack,
Whiteside, and others constituted improper conduct in connection with
the application of Public Service Television.
The United States Court of Appeals upheld the FCC ruling that Public
Service and two other applicants had disqualified themselves by
improper practices. The Supreme Court refused to hear an appeal.
Dr. Schwartz and his investigators had pinned down the essential
details on the Mack case before Schwartz was fired, and the hearings
demonstrated fully the type of activity that at least one of the
regulatory agencies had concealed with the claim of “executive
privilege.” By this time, it was clear to everyone that there were
a good many things wrong with the operations of the “big six”
regulatory agencies. There was no proof that they were filled with
corruption, but there was adequate evidence of a widespread laxity
that needed to be examined and exposed.
There had been only the rumors of the Adams-Goldfine relationship
while Dr. Schwartz was with the House subcommittee, but once the
hearings on Mack were moving, the whole subject of one-party contacts
with regulatory agencies came in for closer scrutiny.
Reports that Adams had received a vicuña coat and a $2400 oriental
rug from Goldfine evoked interest in Goldfine. These reports were
followed by the revelation that Goldfine had lavishly entertained
Adams at hotels in New York and Boston, and during the same period of
time Adams had made inquiries for Goldfine at the SEC and FTC.
Sherman Adams whipped out a letter which he believed would still the
outcry against him. It was a vague letter that simply admitted he
had contacted the Federal Trade Commission and the Securities and
Exchange Commission on some of Goldfine’s problems. However, Adams
said he had requested no favors for his friend Goldfine, but ignored
the fact that any call from Sherman Adams would flag a case for
special attention. The benefits known to have been received by Adams
were small, but his relationship with the notorious Goldfine was to
become a source of continued embarrassment to the White House. The
embarrassment finally forced Adams out of the White House into the
open arena of congressional questioners.
Adams went before the House Legislative Oversight Subcommittee in the
crowded House Caucus Room. It was his first time to give testimony,
and he hoped that it would stop the criticism. President Eisenhower
admitted that Adams had been “imprudent” in his relationship with
Goldfine. But, the President said, “I need him.”
Now nothing could stop the criticism, public and private. It seemed
that every week brought more and more revelations of the questionable
activities of Bernard Goldfine. There were charges of mislabeling
of woolen goods filed by the FTC, and records showed Goldfine firms
involved in a long series of mislabeling incidents. Goldfine had not
filed proper reports with the SEC for several years. Also, Goldfine
had refused to testify on a mysterious $700,000 in cashier’s and
treasurer’s checks he had taken out of his businesses.
Hailed before the committee, Goldfine took the Fifth Amendment,
claiming that to answer the questions might tend to incriminate him.
Every day that Bernard Goldfine was on the witness stand or otherwise
in the public eye was pure misery for the Republican political party.
It was apparent that the Republicans would be saddled with Goldfine
as long as Sherman Adams remained the number one assistant to
President Eisenhower.
And so, on September 22, 1958, Sherman Adams resigned. In a
nationwide television broadcast, he said he had “done no wrong” but
was the victim of “a campaign of vilification.”
Only five days later, a federal grand jury in the District of
Columbia returned the indictment charging Richard Mack, the former
FCC commissioner, with conspiracy to defraud the government. The
indictment charged that Thurman A. Whiteside, a Miami lawyer, had
bought Mack’s vote in connection with the award of Miami television
Channel 10.
Some people paid a heavy price for what had once seemed to them to be
clever secretive manipulations to influence governmental decisions.
Whiteside crumpled under the strain and died by his own hand. Mack
cringed before the court with a plea that he was too ill and too
alcoholic to stand trial.
Even a million-dollar fortune couldn’t save Bernard Goldfine from
the disgrace of a federal prison term. He hired the most expensive
lawyers and engaged in every conceivable maneuver to stay out of
prison, but in the end lost his freedom and his “friends.” He went
to prison on a criminal charge of evading more than $800,000 in
federal taxes. Although he had boasted bravely that he would not
co-operate with the Justice Department in explaining what he did
with the missing $800,000, his health broke while in prison and
left him a shattered shell of his former self. Later the Internal
Revenue Service filed liens against his property totaling more than
$7,000,000. The Goldfine magic had turned to mud.
These cases had dramatized the full evil of secret government. The
problems of Adams rose directly from the failure of the White House
to recognize the dangers involved. It was not necessary to read evil
intent into the origin of the blanket secrecy. It was bad enough that
the Administration had so self-satisfiedly assumed that things were
being handled efficiently and properly and that the press and the
Congress were better off kept in the dark where they couldn’t stir up
trouble.