Spokesmen for the Eisenhower administration such as Budget Director Rowland R. Hughes denied there was any dual role by Wenzell in the Dixon-Yates contract. As late as June 27, 1955, Budget Director Hughes testified before a Senate committee that “I was told it was not true.” He said he didn’t know that First Boston had anything to do with the financing of Dixon-Yates.
The speech by Senator Hill caused understandable concern in the White House and among the top officials of the First Boston Corporation. Revelation of a “conflict of interest” could spoil the entire 107-million-dollar contract and its profits for First Boston. It could undo what President Eisenhower and many top subordinates deemed an important block to the spread of the Tennessee Valley Authority.
Of immediate importance was a 6.5-million-dollar appropriation slated to go to the House of Representatives on June 13, 1955. The appropriation was for a transmission line from the Tennessee Valley Authority to the point where it would pick up power from the Mississippi Valley Generating Company in the middle of the Mississippi River.
On June 11, 1955, Sherman Adams telephoned to J. Sinclair Armstrong, chairman of the Securities Exchange Commission. He requested that the SEC hold up hearings on debt financing of the Dixon-Yates contract until after the House had finished work on the 6.5-million-dollar appropriation. Wenzell was among the witnesses scheduled to testify before the SEC, and testimony on Wenzell’s full role in Dixon-Yates could have had a devastating impact on the appropriation. The hearings were postponed.
Finally, on June 28, 1955, Budget Director Hughes revealed that the Eisenhower administration was going to try to pull down the secrecy curtain on the investigation of Dixon-Yates. The claim of “executive privilege” was to be the vehicle.
Hughes was being questioned by Senator Estes Kefauver, regarding a request for the opportunity to examine all memoranda, documents, and reports pertinent to the Dixon-Yates contract. By this time it was abundantly clear to the Kefauver subcommittee that the chronology released on August 21, 1954, was intentionally incomplete.
Indirectly Hughes moved to “executive privilege.”
“As pointed out to you,” he told Senator Kefauver, “we operate under the President’s general instructions with regard to interoffice and intraoffice staff material, that such material is not to be made public.
“All documents which involve final decisions of public policy have of course already been made public,” Hughes said in an effort to give the impression that the administration had complied with the President’s pledge of frankness. “You [Kefauver] pointed out that you interpreted the President’s statement at a press conference last fall to indicate that they [the “executive privilege” claims] did not apply to this case. I have checked on this matter and I am authorized by the President to state that his general instructions stand but that we, of course, stand on the decision to make every pertinent paper or document that can be made public under this ruling available to you.”
Hughes was trying to give an impression of frankness, while at the same time reserving to the administration the right to withhold any Dixon-Yates information they wished to regard as “interoffice and intraoffice staff material.” Hughes continued: