Tke CORRUPTION ISSUE: A Pandora's Box

WHILE the presidential campaign was still in its infancy, Democrats Harry Truman and Adlai Stevenson decided to blow the lid off the issue of corruption in government. "Racketeers," cried Truman in describing the members of the Eisenhower Administration for the edification of fellow Democrats at the Chicago convention. Far from disavowing Harry's reckless wording, Nominee Stevenson last week charged that a "contagion of Republican misconduct and corruption . . . has marked the Eisenhower Administration from start to finish."

Republicans cheerfully accepted the challenge to debate the issue of evil in government operation. In cold fury, Dwight Eisenhower replied to Truman and Stevenson at his news conference. "America," he snapped, "believes I am honest, that I am not a rascal, that I am not a racketeer." Added Richard Nixon at Gettysburg: "We'll be glad to compare the moral standards of the Eisenhower Administration to the Truman Administration any time of the day or night."

The comparison:

Eisenhower's Record

Instances of wrongdoing, real or apparent, under the Eisenhower Administration are easily isolated. Items:

P: In March 1953, Republican National Chairman Charles Wesley Roberts resigned three hours after a Kansas state legislative committee found that he had violated the "spirit" of the Kansas lobbying law in 1951 by taking an $11,000 insurance company fee for his part in the sale of a hospital to the state.

P: During the negotiations on the controversial Dixon-Yates contract to build a $107 million steam plant for operation by private utilities in the Memphis area, Adolphe H. Wenzell acted as a Budget Bureau consultant while at the same time working for the First Boston Corp., financial agent for the project.

P: U.S. Commissioner of the Public Buildings Service Peter Strobel resigned in 1955 after charges that he had used his position to promote business for his New York engineering firm.

P: Strobel's boss, General Services Administrator Edmund Mansure, resigned under Administration pressure after charges that he had helped give a $40,000 insurance contract at the U.S. Government's nickel plant in Nicaro, Cuba to an old Chicago political crony, William J. Balmer.

P: The Interstate Commerce Commission's Chairman, Hugh Cross (a Republican originally appointed to the ICC by Harry Truman), resigned after a Senate committee heard that he had approached railroad companies (over which the ICC has jurisdiction) on behalf of a friend seeking an inter-station transfer contract in Chicago.

P: Air Force Secretary Harold Talbott resigned after evidence that he had made telephone calls and written letters on Air Force stationery to drum up business with defense contractors for the New York efficiency engineering firm in which he was a partner.

That is the record to which Truman and Stevenson are pointing accusing fingers. The instances of wrongdoing in the Truman Administration cannot be similarly isolated; they come as a flow of names in a record of corruption that threatened to poison the entire U.S. Government.

"Expression or Friendship"

The pals that Harry Truman gathered around him in the White House were among the headliners in the Truman Administration scandals. Brigadier General Harry Vaughan, the President's ever-present sidekick, began as early as 1945, helping a perfume manufacturer get around wartime travel restrictions to Europe and receiving, for his trouble, a deep freezer. Also on the deep-freezer list was White House Appointments Secretary Matthew Connelly--convicted only this year of tax fraud conspiracy during his White House days. In 1947 Truman denounced grain speculators for driving prices higher, soon discovered that his personal physician, Brigadier General Wallace Graham, was one of those speculators, to the tune of $22,000.

In the famed five-percenter investigation, the big names were those of Influence Peddler James Hunt and Harry Vaughan. Hunt won fees from business firms on the strength of his claims that he could land Government contracts for them through his friendship with Vaughan and other Administration officials. Harry Vaughan virtuously denied all wrongdoing, claimed that the deep freezer had been just an "expression of friendship."

Close on the heels of the influence-peddling probe came the Reconstruction Finance Corp. scandals and a whole raft of new names. The Lustron Corp., a manufacturer of prefabricated houses, had received RFC loans totaling $37.5 million, much of which had been approved by Loan Examiner E. Merl Young, who resigned and emerged as an $18,000-a-year Lustron official, was later convicted of perjury (18 months in jail). Young's wife Lauretta, a White House secretary until April 1951, received a $9,000 mink coat paid for by a lawyer representing firms that longed for RFC loans. Mrs. Young thereby trademarked the "mink coat" cycle of scandals. Another RFC beneficiary, the American Lithofold Corp., retained the Democratic National Committee's Bill Boyle--who resigned as national chairman after the fact became known. From American Lithofold came expensive cameras as "gifts" to Turney Gratz, an RFC official who became one of Boyle's top national committee aides. Assistant RFC Loan Manager Frank Prince and Matt Connelly. Other evidence showed that White House Personnel Aide Donald Dawson, one of the subjects of a Senate Committee report (which Harry Truman denounced as "asinine"), had exercised a marvelous influence over RFC. A fascinating note of the investigation: Dawson had spent more than 20 rent-free days in $3O-per-day accommodations in Miami Beach's Saxony Hotel, another RFC borrower. During the course of the investigation, RFC Directors Walter Dunham and William Willett were named as having been unduly influenced by Donald Dawson. Both left the Government--unmourned.

From Hatcnery to Thievery

The RFC scandals shocked the U.S. conscience, but they were nothing compared to the corruption revealed in the Bureau of Internal Revenue. As the man who had presided over one of the messiest messes in Washington history, Internal Revenue Commissioner George Schoeneman was allowed to resign because of "ill health." Former BIR Commissioner Joseph Nunan Jr., convicted of evading $91,000 in income taxes for 1946-50, sentenced to five years in prison, wailed that despite his job, he simply had not been much of a tax expert. BIR Chief Counsel Charles Oliphant resigned angrily after Witness Abraham Teitelbaum said he had been told Oliphant was a member of a tax shakedown gang. Former New York Alcohol Tax Unit Supervisor James B. E. Olson popped up on the payroll of tax-troubled companies. Massachusetts Collector Denis Delaney was convicted of bribery, served nine months. St. Louis Collector James Finnegan* had a nice way of obtaining legal retainers from firms doing business with the Government, later went to jail for 18 months. Former Assistant BIR Commissioner Daniel Bolich was convicted of conspiracy to fix a tax case. Ernest M. Schino, a deputy collector in California, was convicted (two years) of tax fraud conspiracy. So was Patrick Mooney, the BIR's chief field deputy in Nevada. In all, some 200 BIR employees were involved in misconduct charges ranging from Hatch Act violations to monumental thievery.

The investigation of the tax-collecting BIR led inevitably to a probe of the tax-prosecuting U.S. Justice Department. On every television screen was the smiling face of Assistant Attorney General (in charge of tax prosecution) Theron Lamar Caudle, whose barefoot wit kept investigators in convulsions as he blandly described rascality (including his own) in government. Not until this year did Caudle get his comeuppance: along with Matt Connelly he was convicted of tax fraud conspiracy.

T. Lamar Caudle had been raised high in the Justice Department by Attorney General Tom Clark (himself the subject of much congressional criticism)--who was soon to be promoted to the U.S. Supreme Court. By the time Caudle appeared before Senate investigators to start blowing explosive soap bubbles around Washington, former Democratic National Chairman J. Howard McGrath happened to be Attorney General. On Truman's order, a wholesale Government cleanup was ordered. To undertake the job, Attorney General McGrath hired New York Lawyer Newbold Morris, an enthusiastic, if inept, reformer. Morris started off with a big bang--by investigating his immediate superior, J. Howard McGrath. This was more than flesh or spirit could bear: McGrath fired Morris--and Truman fired McGrath.

That was just about as direct an action as Harry Truman, who is now talking about Eisenhower racketeers, ever took to clean up the dirty dealings in his own Administration. So bad was the Truman Administration's record that the Democratic Party's 1952 nominee, Adlai Ewing Stevenson of Illinois, tacitly acknowledged, in the famous letter that Harry Truman never has forgiven, that he would clear out "the mess in Washington." The Adlai Stevenson of 1956 must have suffered a considerable lapse in memory when he opened up his Pandora's box on the corruption issue.

* No kin to Pennsylvania's James Finnegan, now serving as Adlai Stevenson's campaign manager.

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