LYNDON-BROWN & ROOT CONNECTIONS EXPLORED WASHINGTON Probably the two most important pieces of unfinished business before the U.S. Senate today are : . 1.The election reform bill regulating campaign contributions, and 2.The investigation of these contributions in connection with the recent gas bill battle. Regarding the first, Sen. Lyndon Johnson, the able and powerful Democratic leader. does not want to record contributions to primary elections. Regarding the second, Johnson , has adroitly maneuvered any investigation of the gas lobby-out of the hands of planned a forthright probe, into the hands of a diluted and, so far, inactive Senate committee. In view of the importance of these two moves, it becomes important to examine the past relations of Senator Johnson with. some of the most potent figures in the natural gas industry, including Brown and Root, the big Texas contractors who purchased the Big Inch and Little Inch pipelines from the government and now operate them as Texas Eastern Pipeline; and who also own Texas Eastern Production, producers 6f gas and oil. Brown and Root have been the heaviest backers of Lyndon Johnson during his political career. He has used their private airplane even during the gas debate, to fly back to Texas. It was at the Middleburg, Va., home of George Brown that he suffered a heart attack last summer, and he visited at the Brown home on several week ends during the gas battle. Brown and Root continue to be active in Washington and elsewhere, politically and otherwise. They an important part of the contracting combine_that got a billion-dollar contract to build U.S. naval and air bases in Spain. Power in Texas. And in Texas last month, their close friend, Lieut. Gov . Ben Ramsey, was called before a state grand jury to answer questions about contributions to his own political campaign. Vernon Sanford, of the Texas Press Association, who handled some advertising on behalf of Ramsey’s candidacy, was indicted: Ramsey, who was defended by Brown and Root’s attorney, Everett Looney, was not in It was Senator Johnson who, last year, arranged for Lieut. Gov . Ramsey to be Democratic National Committeeman. At that time, Ramsey was considered Brown and Root’s probable candidate for governor. Since the grand jury was called, he is not considered a likely candidate ….. , Fortunately for the public, a record of Brown and Root’s activities for Johnson has been carefully collected by the Internal Revenue Bureau. It made a thorough investigation of Brown and. Root’s taxesuntil, suddenly, it was stopped. F.D.R. Stops Probe. It was stopped by President Roosevelt on Jan. 14, 1944, after Lyndon Johnson, then a Congressman, had called on Roosevelt Jan. 116, in company with Alvin Wirtz, attorney for Brown and Root and former Undersecretary of the Interior. Roosevelt summoned Elmer Irey, Assistant Secretary of the Treasury, at 10 a.m., Jan. 14, and on Jan. 17, three days later, a special agent from Atlanta, Ga., was sent to Texas to quietly close the entire Brown and Root tax investigation. I have recently obtained photostat copies of approximately 1,000 Treasury Department reports, letters, and exhibits in the Brown and Root-Lyndon Johnson case. They are in a safe deposit box, available to any authorized Senate .committee or any editor for personal inspection. They tell a significant story and shed particular light on why Senator Johnson is not interested in having the ptiblic know about political contributions to primaries or having a Senate committee dig too deep into the gas lobby. Senator Johnson has been confronted with the evidence in this case. His Thief explanation is that Ex-Gov. W. Lee O’Daniel, against whom Johnson was running for the Senate at that time, stirred up the tax probe of Brown and Root. Johnson adthits that he called on Pi-esident Roosevelt on Jan. 13it was a matter of newspaper record at that timebut claims he did not discuss the Brown and Root tax matter. The Treasury records give overwhelming evidence to the contrary, however. Repeated efforts were made to reach George Brown of Brown and Root, but he did not take the telephone calls. Roundabout Contributions. The records show that one device used to finance the Johnson campaign was to make out checks to employees of -Victoria Gravel Company, a Brown and Root subsidiary, then use part of that money for campaign expenses.’ For instance, on May 26, 1941, $5,000 was paid to J. 0, Corwin, Jr., by Victoria Gravel, and charged off as a business expense. Corwin took the check to Austin, home town of Lyndon Johnson, cashed it, and later stated under oath to Internal Revenue agents that he. had mailed $2,500 of the money to Lyndon Johnson’s campaign headquarters. In another. case, Victoria Gravel Company made out a check for $2,500 to Randolph Mills, an employee. He deposited it in his own bank on… the same day, then withdrew it and turned it over to J. Frank Jungman, finance chairman of Johnson’s campaign in Houston. Records of the bank, when Pulling for Lyndon To the Editor: All of us down this way are pulling for Lyndon to head our delegation to Chicago. Shivers’s TV show was quite obvious. He is through. He looked like a fellow going down for the third and last time. Senator Daniel’s was a show lacking in self confidence. The people elected him to the Senate for six years. There he should remain. Should he be elected governor, what assurance do we have he will fill out the term as governor? To bring the state back to the days of Jim Hogg, we should elect Ralph Yarborough and Honest Government 0. PHIL KLEAS Wharton Postscript To the Editor: I realize it would be precarious to write an editorial stating “All Texas Congressmen except Jim Wright are indebted to the oil and gas interests,” but, I think, at least, this one exception should be called to your attention .. PEGGY GREER Fort Worth Book to Nowhere To the Editor: the satiation looks hopeless. A few oil tycoons now own and control the national Congress, the state legis latures, and the sources of informa tion and misinformation such as the daily press, the radio, and television. But I could write a book to get no where. Success to you and your paper. A. J. SEAFF 2704 French Place, Austin checked by Internal Revenue agents, showed that Jungman, in turn, deposited it in the Second National Bank of Houston in the name of the Lyndon Johnson Club. A long list of similar withdrawals were _either proved or in the process of investigation when the heat was applied in Washington. In the end, the Brown and Root tax liability, previously estimated at $1,062,184.87 with a fraud penalty of $531,092.454, was scaled down and settled for $372,000. Lyndon Johnson, a good Senator, was the victim of a systema system which requires tremendous amounts of money in order to get a Senator elected. But having been the victim of a system, he is not now leading the way toward a reform of that system when it comes to primary elections. Instead, he wants to reform al _l the states except Texas and the South, Maine, Vermont, and New Hampshire …. Some Details. Here are some details on how the giant Brown and Root contracting firm which has received, many lush contracts from the Government contributed to Senator Johnson’s first senatorial primary and then deducted the contributions from income taxes. The case , history is important for several reasons. First this unfortunately is a practice used by other companies. They hand out bonuses to vicepresidents, then require that a percentage of the bonus be contributed to a certainpet candidate. Afteizward that candidate, if elected, is in hock-to the company. It controls his vote, which is why Congress today more and more is losing its independence. Second, the Brown and Root history is important because they were actively pulling wires during the gas bill debate. George Brown entertained Sen. Johnson and other bigwigs at his Middleburg, Va., estate on weekends, came to Washington between weekends. Finally ;-Sen. Johnson has exerted his influence to side-track the original forthright probe of the gas lobby proand is now exerting his influence against the recording of political contributions in primary campaigns. Yet it is primaries, including his own in Texas, that really elect senators in about one-third of the states. In Johnson’s own senatorial primary in Texas in 1941, internal revenue agents discovered , that Brown and Root had issued the following checks through their sub,sidiary, Victoria Gravel Co., to Edgar Monteith an attorney in Houston : $5000 on May 26, ’41; $4500 ori June 7; another $3000 on June 7. Monteith then used a complicated, round-about way of using the money. According to Internal Revenue investigation, he distributed $10,000 of it as a profit between himself and his law -partner, A. W. Baring. Then Baring transferred the entire $10,000 back to Monteith, and Monteith in turn wrote checks to pay the expenses of the Lyndon Johnson campaign. When Johnson was given a chance to explain this he. said he had never heard of Monteith and claimed he had never received financial help from him. However, Monteith’s father was the former mayor of Houston and a well-known personage. Internal Revenue Agents found that the Second National Bank of Houston took microfilmed photographs of all checks, including these, and that Monteith unquestionably had used the money to pay for radio time, printing bills, and other Johnson campaign. expenses. Tax Agent’s Letter. Summarizing his opinion of this discovery on the Brown and Root books, James M. Cooner, a special agent in charge ryr Texas and Louisiana, wrote from Dallas on flay 13, 1944: “It is quite obvious that Monteith aided and abetted Brown and Root, Inc., and Victoria Gravel Co., in showing that political contributions for which he was the conduit were attor ney’s fees. This would make his income tax fraudulent …. “I seriously doubt,” Cooner continued, referring to the fact that Monteith refused to testify, “that he was afraid of incriminating himself in connection with his own tax liability, but believe that he was afraid he might be involved in a conspiracy in connection with the evasion of taxes” by Brown and Root, Inc., and Victoria Gravel Company.” Internal Revenue agents also found on Brown and Root’s books an interesting list of bonuses paid to its vice-. presidents and other officials at the exact time of the Lyndon Johnsbn primary election. There was no explanation for these sudden bonuses, and the employees who received them could give no adequate explanation. Nor could they slow any furniture, hoines, automobiles, etc., for which they used the money, despite the fact that they cashed the bonuses on the same day, they got the checks. Here are some of the employee bo, nuses which Brown and Root paid out during the Johnson primary race for. the Senate: L. H. Durst, Purchasing Agent, was paid $3,500 on March 29, plus another check for $2,000 on May 20 ; W. M. Powell, vice-president, paid $4,600 on March 28 ; Carl Burkhart, office manager, paid $5000 on March 29 ; D. G. Young, secretary, paid $1000 on March 18 and another $6000 on April 17, plus a third check for $2500 on May 4′. Immediate Cash. These checks were not deposited in the regular family banking account as is customarywhen an employee receiving a modest salary receives a healthy bonus. All the checks were used in the same manner: They were cashed almost immtdiately and no explanation was given as to what was done with the cash. In one or two cases, however, Internal Revenue agents were able to trace the cash. L. T. Bolin, vice president, was given one of the largest, bonuses$30,000. Revenue agents reported to Washington that Bolin had adthitted to them that he made a cash contribution to the Johnson campaign but strangely could not remember the amount. They found out,’ however, that he had made out one personal check on June 4 for $1150 to the Bell Press for campaign printing. They also traced another campaign check to Bolin for $1870 dated May 2, 1941. These and considerably more were among the facts teletyped to Washington on Jan. 14, 1944 on the morning that Elmer Irey, Assistant Secretary of the Treasury was called to see President Roosevelt. One day earlie’r, Jan. 13, Congressman Johnson and Alvin Wirtz, attorney for Brown and Root, had called to see the President. Johnson, when asked about this visit:, admitted he had called on FDR with Wirtz but claimed they had not discussed Brown and Root’s taxes. He said he thought they had either talked about public power or about ditching Henry . Wallace for Vice-President in . the 1944 campaign and substituting Sam Rayburn. However, Internal Revenue files are unequivocal. I have photostats of the messages sent from Dallas for the White House. Three days later a new revenue agent arrived in Dallas and shortly thereafter the Brown and Root tax case was ordered settled. Yet today, Sen. Johnson, a victim of the terrific cost of raising money in a primary, does not want primary ex penses and contributions made a public record. THE TEXAS OBSERVER MARCH 28, 1956 PAGE 3 Washington Merry-Go-Round: Some Old Records Shed Light On the Senator’s ’56 Approach to Primary Spending Probe Drew Pearson
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