It was not until January 9, 1961, that the Supreme Court of the United States stated the final words on the Dixon-Yates contract. Chief Justice Warren delivered the opinion of the Court that Adolphe H. Wenzell had been involved in a “conflict of interest” which was a violation of the law (18 U.S.C. 434).
The law states: “Whoever, being an officer, agent or member of, or directly or indirectly interested in the pecuniary profits or contracts of any corporation ... is employed or acts as an officer or agent of the United States for the transaction of business with such business entity, shall be fined not more than $2,000 or imprisoned not more than two years, or both.”
No criminal charge was brought against Wenzell, but the majority opinion stated that the civil law suit by the Dixon-Yates group involved “fundamental questions relating to the standards of conduct which should govern those who represent the Government in its business dealings.
“The question is whether the Government may disaffirm a contract which is infected by an illegal contract,” the majority opinion stated. “As we have indicated, the public policy embodied in Section 434 requires nonenforcement [of the Dixon-Yates contract] and this is true even though the conflict of interest was caused or condoned by high government officials.”
The Eisenhower administration, as I have already stated, could probably have made a winning argument for the Dixon-Yates contract in a debate involving simply public power versus private power. However, the temptation to use the secrecy of “executive privilege” proved too great, and ironically the secrecy kept President Eisenhower in the dark about the details of the role of Adolphe H. Wenzell until it was too late. Excessive secrecy blinded President Eisenhower and some of his assistants until they were so victimized by deceit that they could not recover their equilibrium and salvage the Dixon-Yates contract.
CHAPTER VII
Congress Becomes Concerned
In late 1954 and early 1955, secrecy obscured the facts in a major controversy over administration of the government loyalty-security program. The Republicans had campaigned in 1952 on a charge that the Truman administration was “soft” on Communists and contended that an administration headed by Adlai Stevenson could be expected to be composed of many Communist “coddlers.” In the 1954 congressional election campaigns the Republicans used statistics compiled by the Eisenhower administration to continue to assert that Democrats were “soft” on Communists.
The Democrats contended that the Eisenhower administration was engaged in a vicious “numbers game” to pad the statistics and make it appear that Republicans were tougher about firing Communists or Communist sympathizers. The Democrats claimed that many loyal government officials were being arbitrarily forced to resign to build the numbers against the Democrats.
When the Democrats won the 1954 election—and thus captured control of the congressional committees, they were eager to investigate and document the Democratic contention that the communists-in-government issue was “phony.” Democratic committee members asked for records that they believed would prove their case, but they ran into a thick wall of secrecy.
The extreme campaign oratory and pledges had inflamed the issue, and it was difficult to get it into perspective. Here was no doubt of laxity in the administration of the security programs by some agencies, and the conviction of Alger Hiss on a perjury charge had made it appear to some Republicans that they were fully justified in charging that the Democrats as a whole were “soft” on Communists. Hiss had certainly held a key role in the State Department under the Democratic administrations, prior to exposure of his communist connections by the House Un-American Activities Committee in 1948.