Guide to Dixon Yates
BY MARK ROELOFS THE Dixon Yates controversy has been a part of the American political scene for well over a year. There are some who fervently intend to keep it a part of that scene for many months to come, even though the contract around which all the commotion and emotion centres has now been cancelled. These people, mostly but not only Demo- crats, hope that in this controversy they have struck 'pay dirt' which will taint much more than the Republican Party. They hope that this time they can at last tag Eisenhower himself. And they may.
But the fascination of the Dixon Yates affair lies not only in itself and its special significance for the opponents of the President. It has the added virtue of providing an almost perfect textbook example of the classic manner of American political debate. Even less than his counterparts in other Western democracies can the American politician afford to initiate political discussion on the basis of general principles. Rather he must find, or, better, attempt to create, some particu- lar issue, take his stand for or against, and gather, ad hoc, allies as they come. This is the lasting significance of the Dixon Yates affair : It has become a symbol, burdened with many meanings, in terms of which the American political public can once again, and for the usual diversity of individual reasons, divide themselves into `pros' and `cons,"conserva- fives' and `liberals.'
Hence it should surprise no one that the principal role, politically, in this affair is played by the Tennessee Valley Authority, even though TVA is not a direct party to the Dixon Yates contract. The contract itself is almost minor business, involving only some $107 million and the building of one power station. It is only when the contract is interpreted as an 'attack' on TVA that you are expected to hiss or, on the contrary, cheer. TVA has flourished mightily since it was established nearly two decades ago under the Roosevelt Administration in the depths of the depression. By all accounts, it has been successful in achieving all the aims set for it by its initiators, and has, to boot, been making a handsome `profit' in its power-generating activities. For 'liberals' it has become a landmark of political accomplishment, a symbol of what 'public power can do and has done, and what private enterprise cannot and will not do.' For others, however, TVA is the prime example of a governmental agency coming dangerously close to dominating and controlling the activities and welfare of the peoples of a whole region, a symbol of that 'creeping socialism' which chokes off opportunities of expansion by private enterprise of many sorts. They charge further that TVA's 'profits' and low power rates are possible only because of its 'favoured' tax position, and that, on any realistic accounting basis, it is a government give-away pro- gramme for the benefit only of the people of the area and at the expense of everybody else. They charge finally that TVA has expanded well beyond its original geographic boun- daries, and point out that somewhere between a third and a half of the authority's present installed generating capacity comes not from the dams but from ordinary steam-power stations.
Besides TVA in the leading role, others in the Dixon Yates cast include, in the first place, two major consumers of TVA power: the city of Memphis, located down at one end of the TVA franchise, and the Atomic Energy Commission, which has been building some important new installations up at the other. It became clear several years ago that TVA was going to have difficulty in meeting the rapidly expanding power needs of these principal consumers. The first plan, shelved as soon as the Republicans took over in Washington, was a pro- posal by the directors of TVA to build a new steam generating plant at Fulton near the city of Memphis. Then, apparently, Eisenhower himself stepped in and personally directed that the Dixon Yates contract be negotiated as an alternative. Eisenhower's personal involvement was odd, but was explain- able in terms of his devotion, enunciated repeatedly in his election campaign, to the principle that in matters of public power, local initiative and private enterprise should have every opportunity, the national government entering the picture only when all else had failed. But the oddity of Eisenhower's personal interest in this matter was nothing compared to the contract proposed. Not only was TVA not a party to it; neither was Memphis, even though that city, by the contract, would consume all the new power generated. Negotiation was to be between the Atomic Energy Com- mission and a private corporation (MVGC, the Missouri Valley Generating Corporation) created expressly for the purpose by two private Southern utility companies headed, respectively, by Mr. Dixon and Mr. Yates. The contract called for the supply of power by the MVGC from a plant to be built just across the river from Memphis, and therefore out- side the TVA franchise area, to the city of Memphis through the existing TVA grid system. And there were other oddities. So far as could be determined, there had been no public bidding for the contract, and, of the total capital involved, the Dixon Yates combine were to put up only 5 per cent. because, it was explained, this was a government contract which put a fixed ceiling on the profits to be made.
When the story 'broke' early last year, charges flew. The main one was that the contract represented the first step in a deliberate effort to 'dismantle' TVA. This was flatly denied by the President himself, who, in an effort to disarm the critics, directed that 'all relevant papers' on the contract be published. They proved little and revealed less. It was in this form that the 'affair' went through the 1954 Congressional elections in which there was much innuendo but no charge more serious than that Dixon Yates represented an extra- ordinarily bungling and bull-headed effort to promote private enterprise at all costs. The Democrats won that election, how much helped by the controversy no one can tell, but in any case not in time to prevent approval of the contract by the appropriate Congressional committees. Opponents of the contract, led notably by the two Democratic senators from Tennessee, Kefauver and Gore, vowed even so that they would fight on. But it was apparent that, however much they were getting the Administration out on the wrong end of the general political issue of 'public v. private' river development, the opposition could not gather the support they needed on this particular issue. For one thing, the contract was far enough along to have developed its own vested interest groups; for another, the critics were trying to buck Eisenhower himself, and head-on at that.
It is only in the past few weeks that the tide has suddenly and swiftly turned. Late in June the city of Memphis voted in council to build their own plant. They therefore would no longer need power from TVA who, in turn, would no longer need power from Dixon Yates's MVGC. It was clear that the Administration much doubted the sincerity of Memphis's intentions. The President ordered a restudy of the need for Dixon Yates, and the contract, again on the personal order of the President, was called off. All that remains is for the government to settle with Dixon Yates on a cancellation fee, if any. Champions of the President insist that he has won down the line. The new power needs in the Tennessee area are still to be met by local initiative. Moreover, the city of Memphis has been successfully detached from the TVA system.
The Democrats were exultant over the killing of the con- tract; they were even more excited by the simultaneous developments taking place before the Senate investigating committee headed by Mr. Kefauver. For it was there that questions were being asked about a certain Mr. Wenzell. There were a number of things wrong about Mr. Wenzell. The fact that he was a representative of a large Wall Street investment banking firm will not be held against him by many, but it adds a nice touch. More important, it was soon clear that from the very beginning he and his firm had been involved in the Dixon Yates contract, but that no mention of either had been made in the 'full accounting' which Eisenhower had directed be made more than a year ago. It was contended, both by the President's director of the Bureau of the Budget and by the President himself at his press conferences as recently as two weeks ago, that Mr. Wenzell had not been mentioned because his role had been very small, that he had been hired by the Bureau of the Budget only as a consultant on TVA's account- ing system, and that his services had been terminated before Dixon Yates had been put up as a concrete proposal. Mr. Kefauver charged 'cover up' and the investigation went on. It then developed (by this time the President was ordering his restudy of the need for Dixon Yates, a coincidence the Demo- crats were quick to note) that Mr. Wenzell, even while consulting in Washington, had maintained office hours at his New York firm; that, indeed, he had appeared at conferences in Washington as the representative of his firm; that he had advised the government on the financial arrangements possible for the project, and that his firm had later become the financial agent for the contract itself. (It refused fee, though why and when the decision to refuse it was made is not yet clear.) The charge was now 'conflict of interest,' and even the New York Times was editorially shocked. And there was more to come. On his own admission, Mr. Wenzell was personally very Much against 'public power,' and, at the request of the government, had written The Wenzell Report, a general survey of TVA, which looked to the effective disestablishment of the authority in every respect save for purposes of flood control and navigation. Of four alternative recommendations for the achievement of this end, one was obviously identical to the form which the Dixon Yates contract actually took. The critics now claimed that, in addition to all their other charges, they had documentary evidence that Dixon Yates had indeed been a deliberate effort to dismantle the TVA system, and that this was in direct conflict with existing Con- gressional statutes which the Administration had been trying to get around on the sly. There was one final touch. Senators had first learned of Mr. Wenzell when he had been called as a witness before one of the Regulatory Commissions where the Dixon Yates group were seeking approval for their financing arrangements. It appeared that on the day that Mr. Wenzell was originally scheduled to give the testimony which revealed so much about his role in the affair, Congress was about to bring to vote the measure allocating funds for the extension of the TVA grid across the river to the new plant. A delay (for the study of 'procedural questions') in those hearings was called, thereby effectively postponing Mr. Wen- zell's testimony until after the vote in Congress had been taken. Testimony before Mr. Kefauver's investigating committee brought out that that delay had been personally requested by none other than Mr. Sherman Adams, the President's 'chief of staff' in the White House.
The prospect is that the charge that the Administration was out to get TVA can be made to stick. Something also may be done with the idea that Eisenhower Republicans are willing to 'subvert' the democratic process on behalf of 'big business.' It has also been shown that Eisenhower and his associates are willing to play 'politics,' even though with an ineptness almost incredible in the twentieth century. It is probable, too, that the euphonious 'Dixon Yates' will be a slogan long used and remembered. But there will be no scandal, no criminal pro- ceedings, no forced resignations. The Administration will maintain an attitude of happy serenity and, knowing that Mr. Kefauver can now gather sufficient allies, will attempt nothing like Dixon Yates again. Two other things are clear. One is that in Tennessee Republicans will not win again, as Eisenhower did in 1952, for a long time to come. The other is that it is fortunate for the President that he had no press conference this week, and that, because of Geneva, he will have none next week. He can hope that by the time he comes down from 'the summit' the papers will be full of other things.
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