LETTER OF TRANSMITTAL Hon. JAMES O. EASTLAND, Chairman, Committee on the Judiciary, United States Senate, Washington, D. C. AUGUST 10, 1956. DEAR SENATOR EASTLAND: The subcommittee herewith transmits a staff report of hearings which it held from June 27 to December 5, 1955, relating to the Dixon-Yates contract. By designation of the late Senator Harley M. Kilgore, a panel of the subcommittee composed of Senators Estes Kefauver, as chairman, William Langer and Joseph C. O'Mahoney conducted the hearings. Arthur John Keeffe acted as the panel's counsel assisted by George Clifford. This report was prepared by Mr. Keeffe with the assistance of Martin Oppenheimer, Richard Schwartz, John Osswald, Duncan McKee, Gary Stein, Stanley Cohen, and John Shea, Research Assistants, under the direction of Joseph W. Burns and his successor, Donald P. McHugh, Chief Counsel and Staff Director. CONTENTS 4. Joint resolution of Senator Estes Kefauver (with Senators V PRELIMINARY STATEMENT This is the story of the collapse of the Dixon-Yates program. It is the story revealed by a special panel of the Subcommittee on Antitrust and Monopoly of the Senate Judiciary Committee of the effort of the Atomic Energy Commission and the Bureau of the Budget to make a contract between the Atomic Energy Commission and the Mississippi Valley Generating Co., a newly incorporated organization created as a subsidiary of two private utility holding companies, headed by Mr. Edgar H. Dixon and Mr. Eugene A. Yates. It was a contract to furnish electric energy, not primarily for the use of the Atomic Energy Commission, but rather to prevent the TVA from increasing its capacity to meet normal growth in the Tennessee Valley, and to accomplish this objective by special concessions on the part of the Government without notice to Congress. This report is a summary of the evidence produced by the committee as the result of which the project was abandoned by order of the President, and the Dixon-Yates group brought suit for damages against the Government which the Department of Justice is now resisting upon the ground that the contract was illegal, a conclusion which was presented to the committee by its staff early in the proceedings. The special panel which conducted the hearings and forced the disclosure of the facts upon which the project was abandoned consisted of Senator Estes Kefauver, of Tennessee, as chairman, and Senators Joseph C. O'Mahoney, of Wyoming, and William Langer, of North Dakota. These hearings began on June 27, 1955, and ended on December 5, 1955. Arthur John Keeffe, Esq., of the subcommittee staff, acted as their counsel. In narrative form the main body of this report states the most significant testimony taken at these hearings and attached to it are three appendixes. Appendix I is a chronology of all the events throughout the development of the Dixon-Yates contract. It indicates how incomplete and inaccurate were the releases to the press by the Bureau of the Budget and the Atomic Energy Commission following the President's press conference of August 18, 1954, at which he described what he believed to be the project. Appendix I also gives the first complete cast of characters of "Dixon-Yates." Appendix II is a legal opinion of the staff in which the testimony taken during the hearings is analyzed and the conclusion expressed that the Dixon-Yates contract is void under section 434 of title 18 of the United States Criminal Code because of the fact that Mr. Adolphe Wenzell, an officer and director of the First Boston Corp., of which his wife was a stockholder, participated in the negotiations for the contract although he was at one and the same time a consultant to the Bureau of the Budget and an officer of the First Boston Corp., one of the beneficiaries of the proposed proceeding inasmuch as it was a financial corporation dealing in corporate securities. The |