Washington cover-up

by Clark R. Mollenhoff

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 (or TVA). 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 [of the Dixon-Yates contract] 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.