Read Ebook: Washington cover-up by Mollenhoff Clark R Clark Raymond

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The Army-McCarthy hearings that had given rise to the famous letter ended on June 17, 1954. However, it was not necessary to wait for the official reports made public on October 30, 1954, to know that Senator McCarthy was finished as a political power--and that the administration would use the "executive privilege" precedent again.

As an aftermath of the Army-McCarthy hearings, a charge was filed that Senator McCarthy had conducted himself in a manner "unbecoming a member of the United States Senate." And on August 2, 1954, the U. S. Senate decided by the overwhelming vote of 75 to 12 to investigate Senator McCarthy's conduct.

The subject of inquiry was Senator McCarthy's severe tongue lashing of Brigadier General Ralph Zwicker, of Camp Kilmer, N. J. Major General Kirke B. Lawton, a former commanding general of Fort Monmouth, N. J., refused to testify about conversations with General Zwicker. He claimed "executive privilege" under the May 17, 1954, letter from President Eisenhower.

Edward Bennett Williams, who was serving as counsel for Senator McCarthy, questioned the applicability of the May 17 letter: "Don't you know, General, that order of May 17, 1954, referred only to the Government Operations Committee and the hearing then in session which was commonly known as the Army-McCarthy hearing?"

General Lawton replied that he had been advised that the May 17 letter "not only applied to the so-called Mundt committee but it applies to this or any other."

Chairman Watkins excused General Lawton and wrote Defense Secretary Charles E. Wilson asking clarification. Defense Secretary Wilson replied that Generals Lawton and Zwicker would be allowed to testify and produce documents unless their action would be "in violation of national security regulations or a violation of the President's order of May 17, 1954."

There could be little doubt now that the Defense Department intended to make the May 17, 1954, letter a part of its basic doctrine with all of the great blanket of secrecy that this would provide. I was now more concerned than ever, for I had hoped that the May 17 letter was the one-shot secrecy claim that so many of my colleagues thought it was. But again the name of Joe McCarthy was mixed up in the investigation, and in 1954 it would have been difficult to get any cool thinking on a subject that remotely touched on the controversial Wisconsin Republican.

Still, I couldn't help worrying that the new and expanded doctrine of "executive privilege" was just too convenient a cover for those who wished to hide their activities from Congress, the press, or the public. It could be used by the incompetent as well as the corrupt.

It seemed strange to me that this doctrine would be set forth in the administration of a President who would be regarded as one of the mildest Chief Executives, and certainly one of the least inclined toward dictatorial action. I was not worried that President Eisenhower would try to use it as a tool for totalitarianism. But with this doctrine in force a man who was inclined toward totalitarian methods might readily administer the laws as he pleased.

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 , 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 . 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 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.

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 pointed out that you interpreted the President's statement at a press conference last fall to indicate that they 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 , 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 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."

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