Power Brakes

The Democrats had a grand time when they baited the Administration over the big Dixon-Yates contract that would have allowed private utilities to build a $107 million steam plant to service the Memphis, Tenn. area (TIME, Aug. 15, 1955). They claimed that the deal bypassed and weakened the TVA, thus focused the argument on public v. private power. Further, they said, the AEC had no statutory authority to make the contract. The Democrats' best ammunition came late in the debate when Senate investigators learned that one Adolphe H. Wenzell had acted as consultant to the Budget Bureau on the Dixon-Yates contract while at the same time advising the First Boston Corp. on financing for the project.

The Democratic drumfire finally got too heavy for the Administration, and President Eisenhower gladly canceled the Dixon-Yates contract when the city of Memphis decided that it would build its own municipal plant. Whereupon Dixon-Yates (actually a combine of the Southern Co. and Middle South Utilities, Inc.) went to court demanding from the Government $3,534,778.45 it had already expended on the project. Last week Attorney General Herbert Brownell's Justice Department braked to a halt, wheeled about, asked the Court of Claims to dismiss the Dixon-Yates suit because--in the Department's words--the contract was from the start "unlawful, null and void, and contrary to public policy."

In so doing, Brownell had to repudiate virtually everything the Administration had claimed during the earlier spirited defense of the contract. The Justice Department's brief maintained that the AEC indeed had no authority to make the contract, and furthermore, that the Wenzell conflict of interest certainly invalidated the whole deal.

If the Court of Claims finds for the Government, Brownell will have saved the Treasury $3,500,000. Yet the irony is that nobody has ever accused Dixon-Yates of the slightest wrongdoing. As far as anyone could see, the utility group's only fault lay in working speedily to fulfill a Government contract--a contract that was bad, if Brownell's brief is to be believed, largely because it was badly fouled up by the Administration.

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