after his first refusal to testify that Senator Kefauver dispatched a letter in which he said, in part: Your letter this morning is the fifth instance of a claim of privilege by officials of the executive department with respect to testimony this subcommittee is seeking in carrying out its responsibilities. These claims of privilege pose a serious issue for the Congress of the United States and the American people. It is our view that where there is evidence of curruption, no official of the Government, no matter how high his position, can properly claim privilege when a committee. of the Congress is seeking the facts with respect to such corruption. Moreover, the record of our hearings to date indicates substantial and persuasive evidence that the chronologies of the Bureau of the Budget and the Atomic Energy Commission which were released in August 1954, are false documents. It is pertinent that one of the documents this subcommittee was first denied and eventually obtained was. found to have been made available to the First Boston Corp., a private investment-banking firm, months ago. 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. Certainly officials of the Government itself cannot and should not assert privilege where the result would be the suppression of evidence which would show corruption and deception in a matter involving millions of dollars of public funds. The position which you, Mr. Armstrong, Mr. Hughes, and Admiral Strauss have taken is a repudiation of the President's promise to the American people, that all the facts surrounding the Dixon-Yatesmatter would be made public. We hope you will reconsider the position you have taken. We sincerely hope that you will see fit to appear before our subcommittee in response to this renewed invitation.85 This raises an issue which has never been settled in the courts; namely, the extent to which subordinates in the executive branch of Government can exercise the Presidential claim to deny information to Congress on the ground that the public interest might be violated. This is not a negotiation in the domain of foreign negotiation. It does not involve in any way the right of any individual to be freefrom pressure by any branch of the Government. It involves solely the issue of the negotiation of a contract between a Government agency and the subsidiary of two holding companies which eventually requires appropriations by Congress. The subcommittee has been completely blocked from getting to thebottom of this Dixon-Yates contract by the very men in the White House who were involved in the negotiations. And until we can explore the seven matters above listed, there is no way that we can ascertain the full facts. Having pointed out the acknowledged evidence that Wenzell did participate in some of the negotiations about the Dixon-Yates contract while he was a consultant of the Bureau of the Budget and, 85 728-729. at the same time, an officer of First Boston Corp., Senator O'Mahoney said to Admiral Strauss that the official witnesses who had acknowledged the activities of Wenzell could not possibly have correctly advised the President prior to his press conference of June 30, 1955, because if they had, the President could not have said that Wenzell was never called in or asked a single thing about the Dixon-Yates contract. Senator O'Mahoney also made the point that the AEC was not part of the executive but a legislative agency, the head of which cannot throw about himself "the cloak of this old protective doctrine." 86 87 Senator Langer was so provoked by the claims of privilege that he proposed to the subcommittee that Sherman Adams be subpenaed $7 and inquiry be made of him as to what funds were contributed by Dixon-Yates and any private utilities to him when he was a candidate for Governor of New Hampshire.88 Senator Langer also asked that inquiry be made as to how a registered lobbyist named Purcell Smith spent money in the fight for the Dixon-Yates contract,87 and of Arthur Summerfield, the Postmaster General, formerly chairman of the Republican National Committee, as to what campaign funds Dixon-Yates or their associates contributed.87 The Senator also requested that all officers of First Boston be subpenaed, that Stephen Mitchell, former chairman of the Democratic National Committee, be asked what funds Dixon-Yates or their associates contributed to the 1952 campaign and that the Senate Committee on Privileges and Elections be asked to give the subcommittee such information as it has of contributions by Dixon-Yates or their associates.88 To the above statements of Senators O'Mahoney and Langer, Senator Kefauver added: It would seem to me, Admiral Strauss, that there was a declaration and, as a matter of fact, an order from the White House itself to make every conversation, all negotiations, everything to do with this matter to be put into a chronology and given to the public.89 The evidence presented in these hearings, as Senator Kefauver pointed out, seems to be that the privilege of the President to refuse to supply information or documents was asserted by subordinates of the President, in this case-a privilege that he himself waived. The Dixon-Yates contract provides a dramatic case study of the waste, disorder, and confusion which inevitably surround governmental action which is calculated to serve big business interests rather than the public generally. From its very inception, Dixon-Yates was destined to end in public disgrace and disrepute. Its purpose was unwholesome; the methods used devious, and in carrying out the scheme every concept of decent government and fair and impartial administration of applicable law was ignored. Even a partial listing of the wreckage left strewn in the path of Dixon-Yates will demonstrate the damage that has been done: 1161. : 1237. * 1258. # 1162. (a) The independent character of the Atomic Energy Commission and the Tennessee Valley Authority was brought into serious question. (b) Officials of the Department of Justice and the Securities and Exchange Commission were placed in the position of having been persuaded to take legal positions which ran counter to precedent of many years standing. (c) The administration of 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. (d) 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. POWER POLICY: DIXON-YATES CONTRACT STAFF REPORT [Pursuant to S. Res. 61, as extended, 84th Cong., 1st sess.] This report covers hearings before this subcommittee held from June 27 to December 5, 1955, to investigate possible improprieties in the inception, negotiation, and execution of the Dixon-Yates contract. This subcommittee and the Joint Committee on Atomic Energy held hearings on this subject in the 83d Congress, 2d session. Those hearings developed that at the direction cf the President, over the objections of both the Tennessee Valley Authority and the Atomic Energy Commission, the Atomic Energy Commission made an agreement with the Southern Co., of which Eugene A. Yates is president and with Middle South Utilities, Inc., of which Edgar H. Dixon is president, for the construction of an electrical plant at West Memphis, Ark. The contract was formally executed on November 11, 1954, between the Atomic Energy Commission and the Mississippi Valley Generating Co. Under the contract terms, the plant was to produce 650,000 kilowatts of electricity and to be erected by Mississippi Valley Generating Co., an Arkansas corporation, 80 percent of its stock owned by Middle South and 20 percent by Southern.1 The Atomic Energy Commission has works at Oak Ridge and Paducah, Ky., many miles from West Memphis, Ark. Electricity produced by the Dixon-Yates plant at West Memphis, Ark., could KEY TO FOOTNOTES: 14: Page of printed testimony before this subcommittee, June 27 through December 5, 1955. AEC chronologies: 596; BOB chronologies: 596: Chronologies officially released on August 21, 1954, by the AEC and BOB, relating the events and documents involved in the Dixon-Yates negotiationspage number, as reprinted in full in the November 1954 JCAE hearings. JCAE: 783: Hearings of Joint Committee on Atomic Energy, 83d Cong., 2d sess., November 5-13, 1954. SEC debt: 43; SEC equity: 43: Hearings before the SEC on application of MVGC-equity financing hearings, December 7-21, 1954, debt-financing hearings, June 6-17, 1955. Exhibit: One of the numbered exhibits introduced in hearings of this subcommittee. 1JCAE: 841; 449 and exhibit No. 1. 1 not be economically transported north to Oak Ridge or Paducah, Ky., and never was intended to be. Rather, the thought was the power produced would be delivered to TVA at Memphis to replace power the AEC used in the north at Oak Ridge and Paducah, Ky. Attempting to transport the electricity north might involve an expense running into millions for transmission lines and would result in an energy loss. Not only was the city of Memphis opposed to buying any power from Dixon-Yates due to high rates in the South, but at maximum capacity it would only use 450,000 of the 650,000 kilowatts the DixonYates plant was to produce. Moreover, the private utilities that operated E. E. I. at Paducah, Ky., said they did not wish to increase power capacity in that area. Were AEC to discover a means of operating with less electricity than presently used and cancel, there would be no market for the canceled power in the Paducah area whereas at Memphis there was a market for more power.2 Dixon had long desired additional plant capacity in Arkansas, and the contract with AEC allowed him to buy any electricity not wanted by TVA at the so-called energy rate. On February 18, 1955, Senator Lister Hill charged on the floor of the Senate, that: *** a vice president and director of the First Boston Corp., one of the country's largest and most influential banking institutions in the utility field, was acting as a consultant to Mr. Dodge, Director of the Budget, during the very period when the Dixon-Yates deal was being put together. There exists persuasive evidence that this man participated in conferences and meetings on the Dixon-Yates matter, which were held in the Budget Bureau, at the very time when the First Boston Co. was making arrangements for financing the Dixon-Yates plant.3 This speech was delivered after Senator Hill had inquired of Director of Bureau of the Budget Rowland R. Hughes concerning the role of a Mr. Adolphe H. Wenzell in the Dixon-Yates matter. Wenzell's connection with Dixon-Yates had been revealed for the first time in a memorandum drawn up by T. G. Seal (of the private utilities group) listing those attending a meeting at the Budget Bureau during the Dixon-Yates negotiations in March of 1954. The memorandum, however, did not become public until shortly before Senator Hill had made his inquiry of Hughes. In reply to Senator Hill, Hughes, in a letter of February 11, 1955, stated that Wenzell had served as a consultant to the Bureau of Budget (BOB) from May 1953 through March 2, 1954, but that his role was limited to that of a technical expert to advise the Director of the Budget regard- * * * 5 Following Senator Hill's speech and a March 9 telephone call by James Coggeshall, Jr., president of Wenzell's firm, the First Boston 21220. 3 Congressional Record, p. 1450. Exhibit No. 95. $13. • 278-280. |