174 Linsley.171 He further testified that all his dealings with First Boston during this early period were "either directly or indirectly with Mr. Linsley," and that he had had conversations with Linsley with respect to the financing basis of the first Dixon-Yates proposal during February.172 Throughout the SEC equity hearings (December 1954) Dixon talked only of Linsley in regard to First Boston dealings and never mentioned Wenzell's name. During the later SEC debt hearings (June 1955, after Wenzell's name had been brought to the attention of the Senate) Dixon again volunteered only Linsley's name, but under vigorous cross-examination admitted, "Wenzell was in one or two of the earlier meetings" and "I didn't seek his views on financing. * * I never discussed a financing plan with him." 173 He also stated that he did not know the nature of Wenzell's work for the BOB; and at another point testified "I don't know what I talked to Mr. Wenzell about. They were casual conversations." 175 In contrast to Dixon's narrative, Linsley testified that he was on vacation from his First Boston offices during the entire month of February; 176 he never even heard of "Dixon-Yates" until late March or early April 1954; furthermore, that the first meeting with Dixon that he could remember was on April 14. Wenzell corroborated Linsley when he testified that during this period (February through April) he was the "mouthpiece for First Boston" in the Dixon-Yates matter.177 Confronted by the subcommittee with Dixon's sworn statement that he was ignorant of Wenzell's work for the Budget Bureau, Wenzell, nevertheless, testified under oath that he specifically informed Dixon as to his work.178 Dixon attempted to dismiss the apparent contradictions and to minimize the ostensible prominence of Wenzell both as a participant in the many Dixon-Yates-Government meetings and as a financial adviser by maintaining that he (Dixon) was under the impression that Wenzell was doing nothing more than conveying Dixon's request to Linsley and the First Boston staff and bringing back the answers-that is, merely acting as a "courier" and a "messenger boy.' As far as Wenzell's role in the various discussions was concerned, Dixon explained that Wenzell was merely an "observer.” 180 " 179 After Wenzell relinquished his official ties with the BOB, he continued to meet with the Dixon-Yates people, now exclusively as a representative of First Boston.181 Concerning his activities following April 10, he testified that he "assumed" that First Boston would do the Dixon-Yates financing.182 Shortly before May 7, 1954, the investment underwriting firm of Lehman Bros., according to Dixon's testimony, approached Dixon with an offer to become financial agents for the Mississippi Valley Generating Co.183 (the company to be created by Dixon-Yates to carry out their contract with the Government), i. e., to participate in the placing of MVGC's debt securities. Dixon further stated that Lehman's services were offered on a "nominal or no fee" basis, as a "public service," 184 but admitted that this was the first time in his experience that any investment banking firm had ever offered to negotiate a stock or bond issue without taking a fee.185 On May 11, after a May 7 meeting in First Boston offices arranged by Woods and Dixon to discuss a program for placing MVGC's debt securities,186 Woods, Coggeshall, and Dixon met to make the final arrangements for First Boston to take on the financing of MVGC in association with Lehman Bros.187 Woods testified that he was quite reluctant to join with Lehman Bros. in this venture, but agreed to do so only on the insistence of Dixon. 188 The most significant and revealing aspect of this agreement was the inclusion of the terms that any fee be divided 60/40 between First Boston and Lehman Bros., with the former receiving the larger share. 189 Woods and the other First Boston officers, and Dixon, have consistently maintained throughout that First Boston from the beginning had never intended to take a fee for its services to the Dixon-Yates group. Woods testified that even as early as the date of the agreement with Dixon, May 11, in spite of the 60/40 fee provision contained in it, he was seriously considering forgoing the fee,190 but that he did not bring the subject up at that time because he first wanted to discuss the matter with his associates at First Boston, some of whom resisted giving up a fee.191 He gave as his reason for his concern over the fee the fact that it was he who had first initiated the discussion with Dodge on May 11, 1953, in which he had offered to help the administration in its pursuance of its private power policy and had agreed to make available the services of Wenzell to the BOB 192 It was testified that Woods and Linsley had first discussed the fee question on May 25.193 Linsley had related during the SEC proceedings that there were three reasons for First Boston's concern over the fee, one of which was Wenzell's dual role of consultant to the Bureau while at the same time holding the position of vice president and director of First Boston.194 Notwithstanding the testimony as to the concern at this early date, the minutes of the First Boston executive committee do not disclose any discussion of the matter until September 22.195 The minutes fail to record any decision on the declining of a fee until October 21.196 It is established that Dixon was not notified of their decision until November 17, 1954,197 and not in writing until May 6, 1955.198 This first written and formal notification to Dixon, according to the testimony, was prepared for Dixon at his request, in preparation for his appearance during the SEC debt financing proceedings, which were to begin in June of 1955.199 Sullivan and Cromwell, First Boston counsel, were consulted in the preparation of this May 6 letter because "there was considerable spotlight on this matter, and we thought that this letter should be drafted carefully and considered carefully. "" 200 In spite of First Boston's letter of May 6 declining the fee, and Dixon's testimony that Hallingby had received from Miller or Linsley of First Boston the November 17 "no fee" communication (a conversation that Canaday himself could not recall "at all"),201 Middle South Utilities Vice President Canaday, on May 11, 1955, in an appearance in conjunction with MVGC's application before the Arkansas Public Service Commission, stated that Middle South had "used the services" of First Boston and Lehman and "we may pay them a fee." 202 Confronted with Canaday's recorded testimony, Dixon, before this subcommittee, explained that the entire fee question had not at that time been settled because there had been no definitive word yet from Lehman Bros. concerning their willingness to decline a fee,203 even though he had earlier testified that Lehman had offered, from the first, to act as financial agents on a "nominal or no fee" basis. Canaday's explanation of his testimony on May 11 before the Arkansas Commission was that he had not seen First Boston's May 6 letter and therefore was not aware that they had definitely declined the fee.204 Dixon, subsequently (on August 3, 1955), on recollection, corroborated Canaday's explanation while still maintaining that the matter also had not been settled with Lehman Bros. by May 11.205 After the second Dixon-Yates proposal was submitted to the AEC, on April 10, 1954, studies were carried on by BOB, AEC, and TVA, the latter again objecting to the cost figures proposed.206 Thereafter, on April 24, Hughes sent a memorandum to the President advising him of the new proposal and recommending its approval.207 At a meeting at the White House on June 14, Strauss and Hughes summarized the April 10 proposal for the President and congressional leaders; whereupon the President stated that the AEC would be instructed to proceed with negotiations toward a definitive contract with Dixon-Yates.208 The official chronologies record for the following day, June 15, that Hughes presented to the President for his approval proposed letters to the AEC and the TVA advising these agencies of the President's decision. This subcommittee learned, however, through the testimony of Richard W. Cook (Deputy General Manager, AEC) that there also was a large unrecorded meeting held at the White House the day previous, June 14, 1954, which included, among others, Strauss and Sherman Adams (assistant to the President).209 Cook found it very difficult to remember, before this subcommittee, the nature of the discussion at this meeting, as well as the dates and details of subsequent White House meetings which he testified had occurred.210 None of these White House meetings was revealed in the official chronologies. Finally on June 16, the AEC was ordered by the President to negotiate a contract with Dixon-Yates on the basis of their April 10 proposal." 211 Even before the final order to negotiate was given by the President, it had become evident that there was consternation among the Atomic Energy Commissioners themselves over the prospect of AEC contracting for power that was to be supplied to TVA. In a letter to Hughes dated April 16, a week before Hughes' memorandum to the President advising approval of the Dixon-Yates offer, AEC Commissioners Henry D. Smyth and Eugene M. Zuckert, vigorously objecting to AEC's role in the matter, wrote: 212 ** * the proposed action involves the AEC in a matter remote from its responsibilities. In an awkward and unbusinesslike way, an additional Federal agency would be concerned in the power business. ***The present proposal would create a situation whereby the AEC would be contracting for power, not one kilowatt of which would be used in connection with Commission production activities * * * such a contractual relationship was on matters irrelevant to the mission of the Commission. It was shortly thereafter, in July, that congressional hearings brought out that a third Commissioner had likewise objected to AEC's participation. Testifying at a later date (November 6, 1954) before the Joint Committee on Atomic Energy, AEC Commissioner Thomas E. Murray stated: * * * no one will ever be able to estimate the degree to which top level Commission attention has been diverted from its grave primary responsibilities by an issue only distantly related. And equally unfortunate is the fact that the AEC has been needlessly involved in an issue political in nature with the result that the nonpolitical character and position that the AEC has previously enjoyed has been seriously impaired. 213 Murray also commented on Chairman Strauss' conduct in the preliminary stages of the negotiations. Turning to him during the Joint Committee hearings, Murray bitterly said: ** * I am a member of the Atomic Energy Commission with full authority. You, as Chairman of this Commission, took it upon yourself to start even considering changing the power contracts ** * with TVA without consulting your associates. 214 At another point in the hearings: ** * it was over a month after the Atomic Energy Commission became involved in the contract under discussion before I became aware of this fact *** 215 The opposition of a majority of the Commission was not mentioned in the Hughes memorandum to the President recommending approval of the contract.216 On July 22, 1954, upon the revelation 211 BOB Chron: 819, 832-834. 212 BOB Chron: 826. 213 JCAE: 283. 214 JCAE: 292. 215 JCAE: 280. 216 BOB Chron: 827. that a third Commissioner objected to the arrangement, the President, at his press conference, was asked to comment concerning the President's power to order an independent agency to take action which a majority of its administrators opposed. Replying that he did not know of the opposition, he went on to say, however: I suppose lots of people would like to get out of exercising responsibility, but you had to do it when the chips were down*** the Atomic Energy Commission, I do not believe was in the sense that the ICC or FCC was. It was something that he was "compelled to take action on and over which to exercise supervision." 217 In regard to the AEC Commissioner's discretion in the Dixon-Yates matter, Murray stated in his testimony: This Commission was faced * ** back in April with a proposal that was sent to the Bureau of the Budget from the Dixon-Yates group. We were instructed to follow that proposal. We didn't have any alternative.218 As a result of the President's June 16 directive to the AEC, the Atomic Energy Commission on June 30 notified Dixon-Yates that their April 10 proposal was satisfactory and that they were prepared to open negotiations leading to a definitive contract.219 Informed of the President's decision, TVA Vice Chairman Harry A. Curtis, in a letter of July 2 to Hughes, 220 objecting to the directive, and pleading for reconsideration by the Administration, stated: * * * As you know, TVA had no opportunity to comment in * and operation. ** We fail to see how this Board can carry The Mississippi Valley Generating Co. was incorporated by Messrs. Dixon and Yates on July 19, 1954, under the laws of Arkansas.222 Dixon, while still president of Middle South Utilities, became president |