Washington cover-up

by Clark R. Mollenhoff

Perlman stated that the Justice Department would not give Congress access to open cases, but that closed files would be made available. He also said that FBI reports and similar confidential information would not be made available. The closed files and the testimony of high officials were nevertheless sufficient to enable Congress to document the record of the mishandling of federal tax investigations and prosecution. Congress extracted testimony from two cabinet officials—Attorney General J. Howard McGrath and Secretary of Treasury John Snyder. They revealed their conversations and communications with their highest subordinates. Records were produced showing the advice, recommendations, and conclusions of investigators in the Internal Revenue Service and the staff lawyers in the Justice Department. It was clear that some of the cases had not been handled in the normal manner, and that recommendations from subordinate officials were disregarded at some key points.

Only through this full examination was it possible to prove that some cases were being “fixed” for money or for political considerations. Without the full record on the recommendations from lower officials it would have been impossible to prove that the mismanagement was due to anything more than “poor judgment” or negligence.

Neither Attorney General McGrath nor Treasury Secretary Snyder was shown to be involved in illegal tampering with any tax cases. However, they had contended that the initial allegations of fraud and mismanagement were untrue.

The investigations by Congress proved that several high officials were involved in outright fraud, and a good many more were involved in gross negligence. The Commissioner of Internal Revenue, the Assistant Commissioner, and the chief counsel for the Bureau of Internal Revenue all resigned under fire.

A former Commissioner of Internal Revenue, Joseph Nunan, was subsequently indicted and convicted on charges of failing to report large amounts of unexplained income. Assistant Commissioner Daniel Bolich was indicted and convicted on charges of failing to report more than $200,000 in income, though the conviction was later upset by the United States Supreme Court on technical grounds. T. Lamar Caudle, former Assistant Attorney General, in charge of the Tax Division, was indicted, convicted, and sent to prison on a criminal charge arising out of his mishandling of a federal income tax case. Convicted with Caudle was Matthew Connelly, appointment secretary for President Truman.

In total, dozens of tax officials were ousted from office for questionable handling of tax cases, and dozens were indicted and convicted on charges of cheating on their own tax returns. The mismanagement and fraud, which the Truman administration had sought to deny existed, was more widespread and sordid than most of the critics of the Bureau of Internal Revenue had imagined. The damage to the integrity of the nation’s tax system was incalculable.

If ever a scandal were needed to prove the necessity of a congressional review to keep our big federal agencies open and clean, the Truman tax scandal was it. The success of their investigations only goaded the Republicans to further probing and policing. In their party platform of 1952, the Republicans pledged “to put an end to corruption, to oust the crooks and grafters, to administer tax laws fairly and impartially, and to restore honest government to the people.”

When he accepted the party’s nomination in Chicago on July 11, 1952, General Dwight D. Eisenhower said:

“Our aims—the aim of this Republican crusade—are clear: to sweep from office an Administration which has fastened on every one of us the wastefulness, the arrogance and corruption in high places, the heavy burdens and the anxieties which are the bitter fruit of a party too long in power.”

“What the Washington mess must have is the full treatment,” Candidate Eisenhower declared at Atlanta, Ga., on September 2, 1952. “The only clean-up that will do the job is the wholesale cleanout of the political bosses in Washington. I pledge you that ... I shall not rest until the peddlers of privilege and the destroyers of decency are banished from the nation’s house.”