This was the beginning of Wenzell's second period of service as a consultant to the BOB. Hughes, when questioned by the subcommittee as to why he had again called Wenzell, 3 months after he had apparently finished his work, answered:

because he was still, as far as I was concerned, sort of a
consultant, inactive consultant, of the Budget Bureau and
we had nobody who knew the particular type of information
that he was an expert on.54

After vigorous questioning and indecisive answers, Hughes eventually testified that he wanted Wenzell to advise him on such matters as interest costs and equity-debt ratios.5

55

Wenzell on January 18 arrived in Washington and conferred with Hughes. Later that day, on an appointment made for him by Hughes, Wenzell met with Strauss in the latter's AEC offices.56 Concerning this meeting there is a direct contradiction of testimony: Wenzell maintained that he described himself to Strauss as a representative of the BOB,57 while, on the other hand, Strauss testified before the Joint Congressional Committee on Atomic Energy (July 13, 1955) that Wenzell at that time held himself out as a representative of the First Boston Corp.58 Neither of these two meetings on January 18 were disclosed in the chronologies officially released by the AEC and BOB on August 21, 1954, purporting to set forth in full all of the events in the development of the Dixon-Yates contract. These chronologies were issued as a result of the President's press conference statement on August 17, 1954, to the effect that the DixonYates story is an open book and that all papers on it would be made available to those who wanted to see them.59

On January 19, after "someone" in Strauss' office called Wenzell confirming the important meeting to be held at the AEC the following day (January 20), Wenzell requested Paul Miller, an associate and assistant vice president of First Boston Corp., to join him on his trip to Washington.60 Wenzell testified that Miller accompanied him as a personal adviser.61 Miller admitted, while being cross-examined during the SEC debt finance hearings, that he had "certainly" hoped that First Boston would get the financing business from Dixon-Yates.62 Furthermore, Woods testified before this subcommittee that Miller came to Washington as a "First Boston man." 63 Wenzell, together with Miller, after arriving in Washington on the 19th conferred with AEC officials regarding the impending meeting on the 20th with McAfee and Dixon. Both, upon signing the required "Visitor's door registration" on entering the AEC Building, listed as the organization they were representing, "First Boston Corp." 65 Wenzell followed this practice on all subsequent occasions.66

64

Two meetings were held on January 20. The first, in the offices of the AEC, involved Strauss, AEC officials, Wenzell, Miller, McAfee,

and Dixon.67 The discussions concerned whether private utilities were ready to organize a block of power, and the advantages of a Memphis site over one at Paducah, Ky., the location of the AEC plant.68 The apparent motive behind the Memphis site was that the private power supplied to TVA in that area could be utilized to meet TVA's growing obligations to the city of Memphis.69 This would reduce the power demand on TVA sufficiently to allow them to meet AEC's requirements. The officially released chronology recorded this meeting and all its participants except Wenzell and Miller, whose names were deleted, 70

Members of the AEC staff, with Wenzell, Miller, McAffee, and Dixon, met in a second meeting in the afternoon with Hughes and BOB officials at the latter's office to discuss the same matters.71 Again Wenzell's and Miller's names were omitted from the released record. Furthermore, Hughes, although admitting that the meeting was a highly private one,72 testified that he never met Miller, 73 and stated that he did not know whether Wenzell was present. On the other hand, Wenzell and Miller unequivocally stated that they attended this meeting, Miller testifying that he was introduced to Hughes.75

Recalled to the stand on December 5, 1955, Hughes in a prepared statement said that while he must have been introduced to Paul Miller on January 20, 1954, "I do not recall him, and I believe that that was the only occasion when he visited my office." 76 Miller's explanation of why Wenzell wanted him makes clear that First Boston wanted the financing business. At one point Miller testified:

Mr. Wenzell felt it would be a good plan if I were to be there to aid him in his job."7

When Senator Kefauver pointed that both Wenzell's and Miller's expenses were charged to First Boston so that Miller was on company business, Miller replied:

As it turned out the business eventuated; there was no business when I got here.78

At another point Miller said the "thinking" at First Boston was that the Dixon-Yates deal

showed the potentiality of being a large piece of financing, an
interesting piece of financing which would attract notice
among private utility executives, and we were glad to be
associated with it whether we got a fee or not.

79

Before the SEC, Miller very frankly stated that in accompanying Wenzell to Washington he "certainly had hoped" that First Boston

would get the financing business and added "We were all going in the same direction." 80 And before the subcommittee Miller explained:

Mr. Wenzell presumably thought that if a block of power was going to be supplied, my knowledge of the Ohio Valley transaction might be of use to him, in his function, which was to keep an eye on things from the Budget Bureau's point of view, and as I understand it, to push the project along.s (Emphasis supplied.)

81

And before Miller came, Wenzell received approval from Woods or Linsley of First Boston.82

Between January 20 and January 30, Wenzell, at the request of Hughes, met in New York 83 with T. G. Seal (vice president of Ebasco Services, Inc., the concern that was to manage and construct the powerplant to be created by Dixon and Yates to carry out their contract with the Government) and Paul O. Canaday (vice president of Middle South Utilities, of which Dixon was president).84 As to this meeting and the series to follow, Wenzell testified that

my instructions from Mr. Hughes were to meet with these
gentlemen and try to do everything I could to help advance a
written proposal, which was to come out. *** So I attended
meetings and answered questions and tried to advance any-
thing that would move along a proposal, which, as you know,
finally came to fruition on the 25th of February 85

These meetings also were entirely omitted from the official chronologies.

Some time around February 1, Wenzell and Dixon met on a plane between Washington and New York. According to Wenzell they discussed certain financial problems of the Dixon-Yates venture, notably interest rates, and a timetable regarding the impending Dixon-Yates proposal.86 Dixon, however, claimed this discussion was limited to financial conditions generally.87 It was at approximately this time that Dixon requested Wenzell to look into the "money market" for him and to consult his associates at First Boston.88

89

91

On February 1, Wenzell, "representing the Budget Bureau", met with Dixon, Seal and Canaday in New York to discuss the planned proposal.8 On February 5,90 and on the 10th, Wenzell, at Hughes' and Dixon's request, met with three of his associates at First Boston to discuss interest rates and equity-debt ratios. On February 8, Wenzell met with Kenneth D. Nichols (general manager, AEC), McCandless (staff, BOB), Dixon, Seal, and Canaday.92 On February 13 or 14 Wenzell attended a meeting at Dixon's office with Dixon, Canaday, and Seal.93

80 302.

81 106.
82 301, 548.

83 433.

84 433.

85 433.

86 441-442.

87 1004.

88 1005, SEC debt: 274.

89 443.

90 437, 259-260.

91 446, 259-261,

$3 445, 261.

93 447, SEC debt: 834.

At about this time, according to Dixon, he first became concerned over Wenzell's dual role and the possibility that a question might be raised concerning his "conflict of interest." 94 Dixon discussed this matter with his counsel, Daniel James, of the Cahill, Gordon law firm, who suggested that although "it was just a business matter," he (Dixon) should advise Wenzell to take the matter up with the First Boston Corp. and their counsel and possibly discuss it with Dodge or Hughes.95

Dixon maintained before the subcommittee that even though he was confident that there were no improprieties involved, his motive was merely to avoid possible "embarrassment" for First Boston Corp. and the Bureau of the Budget.96 Dixon testified that he did bring the matter to the attention of Wenzell, who later reported back to him that he (Wenzell) had consulted counsel and had been assured that there was nothing about which to be concerned.97 Wenzell testified, however, that when he had consulted First Boston's counsel, Sullivan and Cromwell, on February 26, he was told to sever his relationship with the BOB as soon as possible.98 Arthur Dean, of Sullivan and Cromwell, confirmed this in testimony before the subcommittee.99 Concerning this matter, Dixon and his counsel, James, testified that sometime later they raised the question of Wenzell's dual role with Hughes and James and told Hughes that there was a policy question to be seriously considered and that

it was extremely unwise for that reason to have Mr. Wenzell in the Bureau of the Budget if there was going to be any consideration of his firm as financial agents for the dealings of the company with the insurance companies and the banks." 100 Recalled, Hughes swore "he had no recollection of any conversation" as that to which both Dixon and James testified. Hughes said he had read their testimony and commented "I do not know what they said. If they said anything but nothing registered that they were talking about." 101

Eugene A. Yates (president, Southern Co., a utilities holding company) at a meeting on February 19, with Dixon and Wenzell in Southern Co.'s New York offices conferred about Southern Co.'s joining Middle South Utilities in making the power proposal to the AEC.10 And on February 20 Yates informed Hughes and Nichols of this development.103

The official chronologies record a meeting of February 23 at the AEC in which Dixon and Yates discussed the letter they were planning to send to the AEC "pertaining to their proposal for furnishing power. The chronologies fail to record, however, Wenzell's presence at this meeting which reviewed the entire proposal that was going to be submitted to the AEC on February 25.0 104 Even more significant is the chronologies' omission of the discussion of a draft letter drawn up by Wenzell concerning the financing of the Dixon-Yates proposal.'

105

The information in this letter was the basis of the financing provisions of the Dixon-Yates proposal. In fact, except for one paragraph, it was identical to an April 14 letter from First Boston to Dixon upon which the ultimately accepted offer was based.106 Even though the draft letter was addressed from the First Boston Corp. to Dixon, signed by Duncan R. Linsley (chairman, executive committee, First Boston) and drawn up in First Boston's offices, Wenzell testified that he drafted the letter as "a representative of Bureau of the Budget." 107 Wenzell, according to his testimony, began to worry about his dual role at approximately this time,108 and conferred with Hughes on February 23 concerning his relationship in the Dixon-Yates matter. He told Hughes that since the project was taking form and a definitive plan might evolve, "the fact that I had been working on it" might cause some embarrassment later on.109 Wenzell related to the subcommittee that Hughes replied to the effect that he did not think the problem was so serious as Wenzell did and indicated that Wenzell was exaggerating its importance.110

On his recall to testify on December 5, 1955, Hughes frankly acknowledged that, in February, Wenzell had asked him "if anything eventuated on this, would the First Boston be shut out as a participant in any financing syndicate?" Hughes says he replied: "Well, I don't know. You will have to check that back with your own people and then talk to Mr. Dodge about it." 111

Senator Kefauver inquired whether Hughes had talked "with Sherman Adams or anybody at the White House about Mr. Wenzell's position with the First Boston." Hughes replied:

I am afraid I will have to bring up that old question which has been hammered out before on the privilege of communications with the White House.112

The Senator then said:

Even in the face of the President's apparent desire that all the cards be put on the table here, face up?

but Hughes replied:

We have put all the cards on the table, so far as we are concerned. I do not think we can put the cards on the table about somebody else unless either the President tells us to, or tells them to or they do it themselves.113 (Emphasis supplied.)

When Senator Kefauver reminded Hughes at the December 5 hearing that on the first two hearings in June, he had testified freely as to what he said to the President and what the President said to him, Hughes remarked:

Well, I think that under the present circumstances, I should not have testified about anything I said to the President, and I do withdraw that.114

Subsequently, on the suggestion of James Coggeshall (president, First Boston), Wenzell on February 26 consulted Sullivan & Cromwell

106 453-458, exhibits 5 and 16.

107 452.

108 455-456.

109 456, 571.

110.571

111 1222.

112 1230-1231.

113 1231.

114 1233.