CHAPTER VISecrecy 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 berequired 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 TennesseeValley 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 financingfor 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, formeramateur 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 aSenate 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 Kefauversubcommittee 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 thathad 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 NashvilleBanner, 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 informationabout 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, SECChairman 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 hewasthe cold and clean New Hampshire granite of the legend of Sherman Adams. Perhaps hewasthe 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 somethingimproper 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 WashingtonStar, 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 beencriticized 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 hecould 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 thecriminal 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 positionof 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 pecuniaryprofits 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.