SEQUELS: Dixon-Yates Upheld

From the beginning, the great Dixon-Yates ruckus of 1954-55 was more a teapot tempest than a Teapot Dome, but the Eisenhower Administration recoiled from it as though it were superheated steam. In Washington last week, the U.S. Court of Claims ruled the celebrated power contract "honest" and, in effect, rebuked the Administration for not having the courage of its convictions.

Originally, the plan to build a private steam-power plant (under contract with two Southern utility firms, headed by Edgar H. Dixon and the late Eugene A. Yates) to feed the expanding power load of the Tennessee Valley Authority was hailed as part of the President's policy of slowing "creeping socialism." But the White House dropped the plan discreetly, soon after TVA-minded Democrats cried scandal over an apparent conflict of interest: Banker Adolphe H. Wenzell had served at the same time as 1) a vice president of New York's First Boston Corp., a Dixon-Yates financing agent, and 2) a Budget Bureau consultant on the contract. Then Attorney General Herbert Brownell went on to rule that Dixon-Yates investors were not even entitled to payment for costs already incurred, because Wen-zell's dual role made the contract invalid. The Dixon-Yates utility firms went to court to recover the costs.

In ruling that the U.S. Government owed Dixon-Yates investors $1,867,545, the Court of Claims dismissed as "cynical'' the Administration contention that Wenzell's role invalidated the contract. Argued the court in a 3-to-2 decision: the Budget Bureau, aware that Wenzell was a First Boston officer, employed him to expedite the contract to further the Administration policy of fostering private rather than public power. That policy, held the court, was "perfectly legitimate." Argued the two dissenting judges: Wenzell's dual role involved a conflict of interest that violated "dominant public policy."

Vindication of Dixon-Yates came just four weeks too late to help Lewis L. Strauss in his unsuccessful battle to win Senate confirmation as Secretary of Commerce. During the prolonged Strauss hearings (TIME, June 15 et seq.), Democrats made much of his role as AEC chairman in working out the Dixon-Yates contract, used it against him in the fight that led to the first turndown (49-46) of a presidential Cabinet nomination since the days of Teapot Dome.