Hughes has admitted, continued as his Dixon-Yates consultant down to April 10, 1954. Hughes must have known this when he wrote Senator Hill these two letters. Asked by Senator Kefauver if he had told the President that, "in working up the rates and negotiations with Ebasco and Dixon-Yates," that the Budget Bureau had Wenzell as one of its employees, Hughes answered: He knows, of course, that we had an expert working on this thing, and he knows his name and his connection and all about him. In fact, he approved him before we got him down here.34 [Emphasis supplied.] But at the same time Hughes himself did not recollect phoning Wenzell in January and asking him to come down and help on the Dixon-Yates matter;35 said Wenzell "never had anything to do" with the policy of Dixon-Yates; 36 professed not to know that First National City Bank of New York (of whose predecessor, National City, he was once comptroller) was to be corporate trustee under the Dixon-Yates mortgage; 37 and said that he didn't think that First Boston acted as fiscal agent in the Dixon-Yates contract.38 Nor did he recall meeting Paul Miller of First Boston in January 1954.39 On his second appearance before the subcommittee, Hughes recalled that in February 1954, Wenzell came to him and asked whether his "activity" would preclude the First Boston taking any part in any syndicate that might be worked out if a contract is worked out.40 Hughes answered: You will have to go back right away and talk to your own people and then come back and talk to Mr. Dodge 40 Dixon and his counsel, Daniel James, Esq., testified they too in February had raised with Hughes whether Wenzell was in such a conflict of interest position as to make it unwise for First Boston to do their financing. But Hughes, on December 5, 1955, after reading their testimony, could not recall any such conversation." The testimony that Hughes gave before the subcommittee defies understanding. When three people-Wenzell, Dixon and James— say that in February 1954, they all raised with him the question of Wenzell's conflict of interest, even though Hughes only recollects that Wenzell spoke to him, surely one would think that after Senator Lister Hill's speech, he would know whether First Boston was doing the Dixon-Yates financing. Hughes, himself, sent for Wenzell, and Hughes, in his testimony, has admitted that he worked closely with him. Moreover, documents Hughes himself has produced show the important role that Wenzell played as his adviser. When we add to this the fact than it was on orders from Hughes that Wenzell's name was dropped from the chronologies published by both Budget and AEC, but one conclusion is possible. Hughes deliberately attempted to conceal Wenzell's name and activity from public view. 34 53. 35 22. 36 18. 37 26. 38 40. 39 30. 40 1224. 41 1226. As suggested by Hughes (on March 1 or 2 as Wenzell said, or on March 9, according to Dodge) Wenzell spoke to Dodge. Weazell said Dodge told him it was "unnecessary" for Wenzell to do anything about it as what everybody was talking about then was a proposal on a At that same meeting Wenzell suggested to Dodge that Francis L. Adams of the Federal Power Commission be appointed in his place in spite of the fact that, unlike Wenzell, Adams was not familiar with power financing.42 Dodge, however, said he told Wenzell "if there was any likelihood" that First Boston "would be involved in the financing," he ought to "wind up his services with the Bureau.” 43 But Dodge also pointed out that on March 9 there was no assurance that the February 25 proposal would be revised to make it acceptable. Whatever the conversation, to the knowledge and with the approval of Hughes and perhaps also Dodge, Wenzell remained at the Budget Bureau until April 10, 1954. It would seem that Dodge, like Raben, Dean, and James, thought all that would be necessary for First Boston to do the financing would be for Wenzell to resign. But as Senator Kefauver pointed out in the hearings, and as the staff study in appendix III confirms, it would defeat the purposes of section 434 of title 18 if this were so. On his first appearance before the subcommittee, Hughes had testified that President Eisenhower knew not only that the Budget Bureau had an "expert" at work but that he knew also "Wenzell's name and his connection and all about him." 44 However, on his second appearance, Hughes refused to testify to anything said to or "by Sherman Adams or anyone in the White House" 45 and he said that he had made a mistake on July 27, 1955, in testifying about anything he said to the President.46 At the first hearing Hughes had been asked if counsel for the subcommittee might come to the Budget Bureau and examine "the detailed memorandums, interoffice memorandums, letters, and other documents which relate to the Dixon-Yates matter." Hughes said "the only question" was that "we are under certain instructions from the President with regard to interdpeartmental communications." 47 Reminded that the President in his press conference of August 18, 1954, had asserted "that there was nothing to be concealed," Hughes indicated he personally had no objection to producing the requested documents, but he said: "I shall be guided by the President's instructions, sir, to the very best of my ability." 47 On June 28, 1955 staff counsel went to the Bureau of the Budget and asked Hughes to permit them to see and study the requested documents. Hughes refused to produce any documents, even Wenzell's September 1953 report, although he did offer to give the staff copies of Wenzell's pay vouchers which had already been obtained from the Comptroller. 42 577. 43 972. 44 53. 45 1231. 46 1233. Following this oral refusal, Hughes wrote a letter to Senator Kefauver in which he stated that he had checked with the President and his general instructions stood that "interoffice and intraoffice staff material * ** is not to be made public." 48 The President, himself, at his press conference on June 30, 1955, amplified the refusal. He said the files are filled with personal notes and "nobody has a right to go in *** wrecking the processes of Government by taking every single file" and "paralyzing the the processes of Government while they are going through them." 49 As for "the Wenzell report," he said, "Mr. Wenzell was never called in or asked a single thing about the DixonYates contract." 50 This prompted Senator Kefauver on June 29, 1955, to write the President a letter detailing Wenzell's activity at Budget and AEC as we then knew it. This letter concluded: 51 66* ** Now, Mr. President, when our committee asked to see the Budget Bureau files, relying upon your statement at a press conference dated August 18, 1954, at which you stated that all material pertinent to this contract was available for inspection, I can assure you that the committee was only seeking information pertaining to the participation of these and other individuals in the Dixon-Yates deal in which we are interested-not unimportant memoranda concerning this or that matter which might incidentally be in the files. "Since the published statements put out by the Budget Bureau and the Atomic Energy Commission are devoid of any mention of these important individuals, and since your own staff people have not even now informed you of their participation, we believe we would be doing you, as well as the Nation, a service by bringing out all the facts. It is clear, Mr. President, that even at this late date you have not been fully and accurately informed with respect to the serious matter which our committee is now inquiring into. "Respectfully, "ESTES KEFAUVER, After it developed during the course of the hearings that Mr. George Woods, chairman of the board of directors of First Boston Corp., had been shown the Wenzell report,52 Senator John Marshall Butler obtained a copy from the White House for the subcommittee. But nothing was done about producing the other requested documents down to the hearing of December 5, 1955. At the conclusion of that December 5 hearing, the Bureau of the Budget at long last gave to the subcommittee certain of the documents that had been requested of Rowland R. Hughes, its Director, at the first hearing on June 27, 1955. Their importance cannot be overemphasized and the above background statement puts them in a perspective where their pertinency can be fully appreciated. 53 The first Dixon-Yates proposal, of February 25, 1954, relied upon assurances by Wenzell of 3%1⁄2 percent money. After it was presented to the Bureau of the Budget, this proposal had to be studied and approved on its merits by both the Budget Bureau and the Atomic 48.58-59. 49.59. $0.60. 51 61. 52 543. $3 (See pp. 6-7, 8, 19, 40, 43, and 54 of the hearings, vol. I, and for list of the documents see hearing of De-cember 5, appendix to vol. II, at pp. 1295-1297.) Energy Commission and thereafter discussed with TVA. What Senator Hill had charged on the floor of the Senate on February 18, 1954, was that both Tony Seal, the Ebasco vice president in charge of the Dixon-Yates plant construction, and Adolphe Wenzell, First Boston's vice president, had "briefed" the employees of the Budget Bureau on how to present this first Dixon-Yates proposal in a favorable light to TVA. Senator Hill also emphasized Wenzell's First Boston connection and that he was acting at Budget to review a proposal he had assisted Dixon-Yates to make. It was to verify this that the subcommittee on June 27, 1955, had requested the Budget Director Rowland L. Hughes to produce intraoffice memorandums and prior drafts of the Dixon-Yates contract. The Budget Bureau continued to refuse the documents until Hughes finally on December 5, 1955, when recalled to the stand, delivered to the subcommittee some 30 different original documents from the Bureau of the Budget files. They will be found analyzed, item by item, line by line, in appendix III.54 The analysis underlines the accuracy of Senator Lister Hill's statement when, on February 18, 1955, he said to the Senate of the United States that Seal of Ebasco and Wenzell of First Boston "briefed" the Bureau of the Budget on how to present the first Dixon-Yates proposal to TVA in a favorable light. However, these documents go far beyond that. Summarized, they establish: 1. Wenzell had complete information about TVA powerplant costs from working as a confidential consultant to the Director of the Bureau of the Budget in 1953. Working secretly, he could and did send Budget Bureau employees to TVA for information that the files lacked on TVA power costs.55 2. The staff memorandum prepared by the Resources and Civil Works Division of the Bureau of the Budget was revised by Wenzell who changed it to make chances for the acceptance of the Dixon-Yates proposal better.56 3. Seal of Ebasco played a great part in the criticism of the staff memo and succeeded in getting changes in it favorable to Dixon-Yates. But some of his arguments for the proposal, particularly that the costs of a plant producing 650,000 kilowatts would run $200 per kilowatt are weak.57 It seems Seal used these TVA costs in his first proposal, assuming they would be the same for a larger plant. It was after the TVA conferences that these costs were revised to about $149 per kilowatt and this was the only significant change between the first and second Dixon-Yates proposal that was made. Of course, from his 1953 study, we know Wenzell must have realized what these TVA Fulton steam plant costs were since he had been in many conferences with Dixon-Yates and Seal of Ebasco before their first proposal was made. 4. Objections much more fundamental than construction costs made. by career men at Budget never found their way into the final staff 4 Examination of appendix III will reveal that each different piece of evidence produced by Hughes was labeled an "item." Some of these items are many pages long. Some are but one. For clarity we use his labeling. See also appendix 1295-1297 at the end of pt. 2, Power Policy, Dixon-Yates contract: Hearings before the Subcommittee on Antitrust and Monopoly of the Committee on the Judiciary, United States Senate, 1955, where these 30 items are listed and briefly described. Items 3, 4, 5, 7, and 9. Items 10, 11, 12, and 13 in appendix III. $7 Item 16, appendix III. See p. 941 of the hearings before the Joint Atomic Energy Committee, 83d Cong., 2d sess., for kilowatt cost figures. memorandum.58 These were serious and well-founded objections, namely: (a) Six hundred and fifty thousand kilowatts of power at Memphis would be too much for TVA to use even in 1957 so that the Atomic Energy Commission would be paying for a demand charge on electricity that neither it nor TVA could use. Though asked, Seal would not agree to building a 500,000-kilowatt plant,59 and insisted their proposal related to the President's budget message which contemplated 500,000 60 to 600,000. (b) Fifty thousand kilowatts and any unused power under the proposal would go to Dixon-Yates at the energy rate. It might exceed 350,000 kilowatts.60 (c) The contractual arrangement was roundabout in that at a 98 percent load factor at Shawnee in northern Tennessee, AEC could use 600,000 kilowatts, whereas TVA at Memphis, Tenn., with a load factor of 68 percent, could use at most 450,000 kilowatts.61 (d) The final staff memo said that adequate information is not available to make a refined comparative cost analysis and that active participation by TVÁ would be required to come up with such an analysis. What it refrained from saying was that whereas Seal had estimated the excess in cost of the Dixon-Yates plant at about $1,700,000 over what AEC was paying TVA for power at the Shawnee plant, the career employees of the Bureau of the Budget and the Atomic Energy Commission estimated the excess cost between four and seven million. TVA estimated the excess at $8,300,000.63 (e) The career men at the Budget Bureau and the Atomic Energy Commission objected to the cancellation provision of the contract as based on a 25-year contract and a less flexible arrangement (f) Whereas if TVA built the plant and AEC did not need the current, TVA could use the excess in its system or sell it, DixonYates stated categorically that, in the event of cancellation by Dixon-Yates even― 65 agreed that it was quite possible that AEC would end up merely because TVA could not agree with Dixon-Yates on a rate.65 (g) The staff memo mentions the advantage to the Government in that the necessity for a Federal investment of $100 million for power 58 Item 12. 59 Item 16, appendix III. 60 Item 17, appendix III. 61 Item 15, appendix III. 62 Items 14 and 16, appendix III. 63 Item 18, appendix III. 64 Item 14, appendix III. 65 Item 17, appendix III. |