AFTER MAURY MAVERICK, Franklin Roosevelt's devoted follower, lost the San Antonio mayoralty in May, 1941, the President wrote Maverick's sixteen-year-old son to console him for his father's defeat. "I know he feels badly about it but I also know, because I know him, that he is quietly sure his point of view will prevail in the long run. The same thing is true about Lyndon Johnson. … The things for which he stands will eventually win. He will tell you that, your father will tell you and I also tell you. … Temporary defeats mean nothing as long as our side wins the last battle."
At the moment at which Roosevelt was writing about "our side"—the side he believed Lyndon Johnson was on—Johnson had already joined the other side, the rabidly anti-New Deal San Antonio City Machine that had defeated Maverick. Roosevelt did not know this—and never found out. He never got more than an inkling of Lyndon Johnson's quiet alliance with the New Deal's enemies in Texas.
Nonetheless, sympathy for losing politicians—or, indeed, even tolerance for them—was not one of Franklin D. Roosevelt's most notable qualities. More than one of Roosevelt's Capitol Hill supporters who had been defeated in a try for re-election or for election to the Senate had found, after his loss, that his previous access to the smiling, genial President had been cut off, cut off completely, regardless of the depth and extent of his loyalty to Roosevelt and the New Deal. Among those who had suffered this fate, in fact, was Lyndon Johnson's predecessor in the role of New Deal informant within the Texas delegation: W. D. McFarlane. Ousted from his House seat in 1938 despite a personal appearance by Roosevelt in his behalf, he asked the President to "keep him in mind for any existing vacancies" on the Federal Power Commission, the Federal Communications Commission, or the federal bench. Roosevelt kept him in mind for nothing. McFarlane received a federal appointment—a temporary, low-level appointment as a Special Assistant Attorney General assisting in condemnation proceedings in connection with the Denison Dam—only through the intercession of Sam Rayburn, who did so because McFarlane had been one of the old group of Populists in the Texas Legislature. White House aides were wondering whether Johnson's loss, with such strong Roosevelt backing, had not proven embarrassing to the President—and they were wondering what Roosevelt's reaction would be.
They were not kept long in doubt. After his defeat, Lyndon Johnson sent a two-paragraph note to Franklin Roosevelt.
Sir:
In the heat of Texas last week, I said I was glad to be called a water-carrier—that I would be glad to carry a bucket of water to the Commander-in-Chief any time his thirsty throat or his thirsty soul needed support, for you certainly gave me support non-pareil.
One who cannot arise to the leadership shall find the fault in himself and not in you.
Sincerely,
Lyndon
In the margin of the note, the hand of Franklin D. Roosevelt wrote, "General Watson—I want to see Lyndon."
The day after the two men met, Johnson wrote Nan Honeyman: "Had a visit with the Boss today and enjoyed it immensely." The enjoyment was understandable. The President had asked Corcoran what he could do to cheer "Lyndon" up, and had accepted Corcoran's suggestion: Roosevelt was to address the national convention of Young Democrats in Lexington, Kentucky, in August; Corcoran suggested that the President put Johnson on the program with him. Roosevelt did so. When Johnson came in to see him, the President told him he had already arranged for him to give a speech preceding his own. The young Congressman's defeat had only strengthened Roosevelt's "special feeling" for him—despite the defeat, the older man had arranged to give him his first national exposure, the national exposure that he craved.
So completely had Roosevelt accepted Johnson's excuse—that he had lost the election only because he had been cheated out of it—that he joked about it, telling him, "Lyndon, apparently you Texans haven't learned one of the first things we learned up in New York State, and that is that when the election is over, you have to sit on the ballot boxes."
FRANKLIN ROOSEVELT'S GREATEST SERVICE to Lyndon Johnson in connection with the 1941 campaign came not during the campaign but long after it had ended.
In July, 1942, while examining the books of Brown & Root, Inc., in connection with other matters, Internal Revenue agents became suspicious of the large bonuses to the firm's officials and of various "attorney's fees," and began following the trail of that money to see where it had ended up—and the trail led to the Lyndon Johnson campaign.
Brown & Root, Inc., had been advised by tax counsel that campaign contributions by the corporation would not be deductible business expenses. But Brown & Root had deducted hundreds of thousands of dollars in "bonuses" and "fees" that IRS agents now suspected were actually disguised contributions. Moreover, while the potential financial liability (payment of additional taxes plus penalties and interest) would be substantial for Brown & Root even at the new level of affluence to which Lyndon Johnson had raised the firm, as the IRS investigation intensified and widened, the dangers were no longer limited to the financial. The agents had begun to wonder if Brown & Root's attempt to avoid taxes by such devices was so blatant that it might constitute an attempt to defraud the government—and tax fraud was a crime that could result in jail terms for those convicted of it. By the Autumn of 1942, Brown & Root's officials knew, as one of their attorneys, Edward A. Clark, puts it, that "they had big IRS trouble."
The man to whose campaign the contributions had been made had trouble, too. Charges involving contributions to his campaign—or even the revelation that charges were being considered—would result in highly damaging publicity. Revelation of the astonishing sums involved—hundreds of thousands of dollars when the Corrupt Practices Act limited the permissible expenditure by a candidate to $25,000—could result in a scandal of dimensions that could end a politician's career.
For about four months after the investigation began, all concerned felt it could be deflected because of Johnson's White House connections. Brown & Root retained Alvin Wirtz as its attorney on the matter, but even a former Under Secretary of the Interior might have trouble winning this case; it was Johnson on whom the firm was depending. "They hired Wirtz for the IRS thing because they knew Johnson would be associate counsel on the case," Clark says.
Johnson did not shrink from the role; he was developing a line of strategy to solve the problem. The first step was to convince James H. Rowe, Jr., who was Johnson's liaison to the President, that the Internal Revenue Service investigation of Brown & Root was politically inspired by IRS officials in Texas loyal to the Garner-Jesse Jones group—and was aimed at cutting off vital Texas financial support for the New Deal. Although this was not true, it was not difficult for so persuasive a talker as Lyndon Johnson to convince men who knew nothing about Texas politics that it was. Rowe, who admired Johnson and believed in him, was thoroughly convinced. During the Summer of 1942, he was to recall,
I sent to the President a memorandum telling that Internal Revenue agents were going all through Texas stirring up political trouble for "our crowd." …
I sent to the President this memorandum saying that they were after the "third term crowd," who had done the job in Texas, that they were going to all the banks and to the lawyers checking up on political contributions and that if it wasn't stopped we wouldn't have a friend left in Texas.
Rowe was later to tell Grace Tully that the President had responded to the memorandum: "So far as I can determine, and I think it is with accuracy, the President spoke to Marvin McIntyre about it. Mac called John Sullivan [Assistant Commissioner of the Bureau of Internal Revenue]. …" Rowe assumed that the matter had been closed.
But it hadn't. The contributions to the Johnson campaign that were being investigated were too large, the manner in which they had allegedly been concealed too blatant.
The next attempt was made with Sullivan's superior, Internal Revenue Commissioner Guy T. Helvering, known to Washington insiders as "the President's man at IRS." Johnson made the attempt himself; he went to Helvering, told him the same story, and asked him to kill the investigation. But this attempt foundered on the invincible integrity of Helvering's superior. Internal Revenue was a bureau in the Department of the Treasury, and the Secretary of the Treasury was Henry Morgenthau, Jr., a man detested by the young wheelers and dealers of the New Deal for his unshakable adherence to the law. The investigation would go right ahead, Morgenthau declared.
Now, Rowe recalls, "the Browns were worried … and so was Johnson." Johnson, he says, "was in trouble," and he knew it. In October, 1942, Wirtz and George Brown came to Washington and discussed the situation with Johnson. Then Johnson and Brown talked to Rowe. Johnson and Rowe both realized how thin was the ice they were treading on now. Rowe had been invited to the Washington town house Brown & Root maintained at Sheridan Circle. When Rowe learned what the subject of the discussion was to be, he recalls, "I said, 'I'll talk to you outside on the street. The IRS probably has this house bugged.'" And that is where they talked—three tall young men, the newly made millionaire, the advisor to Presidents, and the future President, standing on a street in Washington.
"Johnson was worried," Rowe recalls. Reiterating that the investigation was a form of political persecution, a reprisal for his support of Roosevelt, he asked Rowe to take further steps to kill it. Rowe tried. He went to see Helvering himself, and they discussed the matter: "just the two of us—no, no, that's not right; he had a witness like those fellows always do. But I said, 'What the hell, I'll talk anyway.' He said Johnson had been to see him to ask him to kill it. 'Well, I can't. I would, but the Secretary [Morgenthau] won't let me.'"
Rowe had made this approach "on my own." Now he knew that a stronger hand was needed. On November 20, he attempted to bring the subject to the attention of Morgenthau's superior, by sending a memo ostensibly addressed to Grace Tully. "Helvering has indicated that he can take care of this Texas situation without any trouble, and fairly, but he won't do it if Morgenthau is going to interfere at the last minute. If Helvering gets told by the President to handle it, and if he is backed up, he will do it." Apparently Morgenthau's superior took an interest in the case. Says Rowe: "Then I—and this I would not have done without Roosevelt's clearance—I went in to see Morgenthau and I got to thinking, 'Rowe, you'd better be tactful.' Morgenthau taped everything—everyone knew that. And I just mentioned it—vaguely; just brought it up; I mentioned it to see what he'd say, and he didn't say much. And I just faded out."
Morgenthau may not have said much to Rowe, but the Secretary may have issued instructions nonetheless. The IRS agents had, some weeks earlier, been ordered by one of Morgenthau's aides to stop working on the Brown & Root case until further notice. On December 17, 1942, shortly after Rowe's approach to Morgenthau, the agent coordinating the case, E. C. Werner, was told to send the Brown & Root file to Washington, which he did by special delivery. Shortly thereafter, Werner and James M. Cooner, special agent in charge of Texas and Louisiana for the IRS, were summoned to Washington to meet with top IRS officials, who, Werner was to write in his diary, "had me explain in detail the fraudulent items and suspicious items." The next day, they called him back, and gave him his instructions: in Werner's words,
that the investigation was to continue; that it was to be expeditiously but thoroughly conducted; that no outside persons were to be interviewed but that the investigation was to be conducted from within; that suspicious items found should be brought to his attention and that we were to be diplomatic in our investigation. [Deputy IRS Commissioner Norman D. Cann] said that no criticism was being made of any of us.
And in 1943, the Internal Revenue Service began to close in on the truth behind the financing of Lyndon Johnson's senatorial race.
On January 22, the six agents involved held a conference in Dallas, and decided on their tactics. Some moved right into the Houston offices of Brown & Root and began checking through the firm's records. Others went to banks and began checking the deposits and withdrawals of some Brown & Root officials. Still others began interviewing these officials and began checking their stories against the records.
The largest sums of money the agents were investigating at this point were the "bonuses" totaling $150,800 that had been paid to Brown & Root's treasurer and to four of the corporation's vice presidents. These bonuses had, according to an entry in the company's books dated December 27, 1940, been authorized at a meeting on that date. But now the federal agents tracked down a former Brown & Root bookkeeper, Robert C. Home, and interviewed him at McAllen, Texas. Home told the interviewers that, despite the date in the books, the bonuses had actually been authorized not in 1940 but in 1941. The agents investigated further; as a result, Werner was to write in a report to his superiors: "Sufficient evidence is on hand, it is believed, to show minutes authorizing above bonuses to be fraudulent." Other, smaller, bonuses totaling $24,000 had been paid to lower-ranking Brown & Root executives, the agents found. They obtained transcripts and photostats of the executives' bank accounts, and Werner reported that he and his men were tracing the disposition of this money; that they had already found, and taken possession of, one check by which $2,500 had been transferred to the Johnson campaign's bank account; and that a substantial portion of the rest of the $24,000 "is believed to have been used for [Johnson's] Senatorial campaign."
The more they worked on the case—Case No. S.I. 19267-F in Internal Revenue Service files—the more questionable transactions they uncovered. Some of the routes by which, the IRS agents believed, the Brown & Root money had reached Lyndon Johnson's headquarters were extremely circuitous. Some of them, in fact, led not from Brown & Root but from one of its subsidiaries, the Victoria Gravel Company. It had been not Brown & Root but Victoria Gravel, for example, that had paid a total of $12,500 in "attorneys fees" to Edgar Monteith, a Houston lawyer. And further steps, they believed, had then been taken to cloud the ultimate destination of the money. Ten thousand dollars of it was given by Monteith to his partner, A. W. Baring, as a "profit distribution." Then Baring had transferred the $10,000 back to Monteith. And the checks Monteith wrote were not to the Johnson campaign directly, but to pay bills owed by the campaign to radio stations and printers. The remaining $2,500 of the "fee" paid to Monteith was passed on by him to another attorney, and it was through this attorney that the money reached the campaign. The trail of some of the money was made harder to follow because while it may have started out as checks, it was soon converted into cash. When, for example, J. O. Corwin, Jr., was given a Victoria Gravel check for $5,000, he cashed it, stuck half the bills in an envelope, and mailed the currency to Johnson headquarters. And, the agents believed, some of the money didn't even start out as checks; it was cash from the start—large expenditures being made from a "petty cash" fund under the control of Brown & Root Vice President J. M. Dellinger.
Attempting to trace the trail of the various Brown & Root contributions, the Internal Revenue Service agents found themselves encountering evasions and denials from Brown & Root officials and from some of the attorneys involved. Lyndon Johnson himself was not questioned at the time, apparently because of the directive from Washington that "no outside persons" be interviewed. (Years later, when the matter threatened to come to light in a series of columns by columnist Drew Pearson, Johnson was asked about campaign contributions made by Monteith, and he flatly denied that he had received any financial help from him. He also said that he had never even heard of Monteith, although, as Pearson noted, "Monteith's father was the former Mayor of Houston and a well-known personage" in Texas political circles.) But the agents, digging through corporation and bank records, finding—and photostating—checks and campaign bills, were able to uncover facts that contradicted the denials by the Brown & Root officials and the attorneys.
The agents found the checks involved in the various transfers of money revolving around Monteith's "attorneys fees"—including the checks to pay the campaign expenses. As for Corwin, he was interviewed by an Internal Revenue Service agent about his $5,000 bonus. Did you use any of it for political donations? the agent asked him. "Yes, I did," Corwin replied. To whom? the agent asked. "Oh, I probably contributed half of it to one of the Lyndon Johnson clubs," Corwin said. In what form? Corwin replied that he had mailed it to a Johnson club in Houston—"in currency [cash]." And the balance of $2,500? the agent asked. Corwin replied, "Oh, I spent it." But the agents were tracing checks. The $2,500 balance, the agents said, had actually gone to another Brown & Root official, D. G. Young, who was reputedly the corporation's principal "contact man" with politicians. The money had been transferred by, in agent Werner's words, a "circuitous route. Both Corwin and Young gave false testimony on above item." Another bonus—$2,500—had been paid by Victoria Gravel to Randolph T. Mills. Questioned by Werner, Mills was, Werner reported, "very evasive," but Werner finally pinned him down.
Q 118. Did you keep them [the money]? "Yes, I put them in my account."
Q 119. And retained them? "Well, I didn't retain them very long, no; that is, I paid out of course."
• • • • • •
Q 125. Well, you, in other words, the bonus was used by you in connection with your living expenses or obligations, etc.? "Well, I wouldn't say all of it was. It was in connection with my living—I gave $2500 to the Campaign, Democratic Campaign of 1941."
Mills finally told Werner that he had made out a check—either "to Chairman, committee, or Johnson"—"shortly after time of receipt of bonus." He told Werner that he was "pretty sure" he no longer had the check, but Werner wasn't concerned with that; he had a facsimile of it, made out to one of the campaign's finance directors.
The more the Internal Revenue Service team searched, it seemed, the more they found. The transactions of which they were suspicious became larger; previously, the largest single questionable transaction had been the $45,000 bonus paid to Brown & Root Vice President W. A. Woolsey; now Werner, checking the account of Brown & Root Treasurer J. T. Duke at the Austin National Bank, came across another check—and this check, made out to Duke by the W. S. Bellows Construction Company, a firm that was part of the Brown & Root-headed consortium building the Corpus Christi Naval Air Station, was for $100,000. And there were increasing indications that cash as well as checks had been involved in large amounts in Brown & Root's expenditures that the agents believed had found their way into Johnson's election efforts. Durst, a Brown & Root official, for example, told an IRS agent that he had cashed his $5,500 bonus checks, and kept the money on his person, or hidden it in a drawer of his desk, until it was spent on personal expenditures. The IRS, as its investigation continued, was becoming less convinced of the veracity of this account—although Durst insisted that the only donation he might have made to the Johnson campaign was "chicken feed, ten or fifteen dollars, etc." Then the IRS started asking questions about Vice President Dellinger's "petty cash" account. Vice President W. A. Woolsey was asked if he would normally receive monies from Dellinger in checks; "No, he would [give] me the cash," Woolsey replied. "Did he [Dellinger] have some sort of fund? Cash fund?" the agent asked. Woolsey first said, "Well, I don't know," but later said, "When the Naval Air Station was first started, I am sure he kept considerable cash"—which, Woolsey said, was "used" by top Brown & Root officials. In the margin of his notes on this interview, Werner wrote his conclusion about what he was hearing: "Slush fund."
In July, the IRS agents began to focus on the $150,800 in bonuses. They arranged interviews with Brown & Root's top officials—and with Herman and George Brown themselves. At these interviews, as many as three agents would be present, in addition to a stenographer to take down the witnesses' replies. Some witnesses were defiant. Asked if he had donated any of his $17,000 "bonus" to the Johnson campaign, Treasurer Duke replied: "No, we didn't make any—do you think we want to go to the penitentiary by making donations when we have all of these Federal contracts?" Any such allegations, Duke said, were "just plain bull-shit." But clues as to the disposition of the "bonuses" were growing nonetheless. On October 23, Vice President L. T. Bolin admitted that he had made a cash contribution to Johnson's campaign, although he wasn't sure of the amount; it might have been $500, he said. But he admittted paying for, in an agent's words, "some radio time and other things," and the IRS agents determined that Bolin had written two personal checks—for $1,870 for cash, which they found had been given to Johnson headquarters, and for $1,150 to a printing firm for campaign printing. As for the Brown brothers themselves, their answers under questioning were consistent with their personalities. Asked if Brown & Root ever "directly or indirectly" made any political donations, suave George smoothly replied, "Insofar as I know, they haven't." Asked again about political donations, he replied: "We have certainly not directed anybody to give campaign funds. We knew it was not legal to give any political funds, and if anybody working for Brown & Root gave any political funds, it was without our knowledge. Certainly I don't think it has been charged to Brown & Root. If it has, it certainly shouldn't have been." Of course, he said, since others had the authority to sign checks, he "wouldn't make a sworn statement that nobody has done it."* Werner was to write that George personally drew $2,500 from the company, and that, while the money was "believed paid to Johnson campaign," it had not been traced. As for Herman, fierce and unyielding, who drew $5,000, no notes on his interview can be found, but he apparently made no bones about what had been done with money: "admittedly paid to Johnson campaign," Werner wrote.
All through October, 1943, these interviews went on, and on November 1, Alvin Wirtz, telegraphing from Houston, asked Roosevelt for an appointment to discuss AN IMPORTANT MATTER … AT YOUR EARLIEST CONVENIENCE, supplementing the request with a telegram to Pa Watson: ONLY A MATTER WHICH I THINK IS IMPORTANT TO THE ADMINISTRATION, AS WELL AS MYSELF, WOULD IMPEL ME TO MAKE THIS REQUEST. When he was given an appointment, for November 8, Wirtz specified to Watson that it be "off the record."
The matter was apparently being raised with Morgenthau again—with the same result as before. On November 2, Werner was told by Cooner that he had just received a telephone call from Assistant Secretary of the Treasury Elmer L. Irey in Washington. Irey, Cooner said, had relayed a message from Morgenthau: that "the case was to be handled like any other case." And, Cooner said, Irey had added a message of his own: "that it appeared fraud was present in the Brown & Root, Inc. case," and that "if prosecution was in order, then the Government would prosecute." Wirtz was unable, for all his persuasiveness, and for all the compelling political reasons on his side, to get Morgenthau's decision overruled by the only man who could overrule it. The most the President would agree to do was, in Wirtz's words, to leave the matter "open for further discussion."
Further discussion was to be necessary. In compliance with its previous brief, the IRS had thus far not checked "outside," but Morgenthau's message now removed those restraints, and in December, 1943, the agents took their first steps in this direction. They began trying to find out the identity of the individuals in the "Johnson campaign" who had received the possibly illicit contributions, and what they had done with them. Their first approach, on December 6, was to a clerk at headquarters, Mrs. Margarite Kelly, who didn't know enough to be helpful. Their second, on December 15, was to Sherman Birdwell; "He told me nothing," Werner wrote after that interview. Their third was no more productive; Herman Brown had said that he had given $5,000 to Walter Bremond of the Capitol National Bank. Bremond told Werner "he couldn't recall" to whom he paid the $5,000. But the agents had scheduled a fourth interview—with someone who might have told them quite a lot.
He was Wilton Woods, who at college had, on Johnson's advice, dated girls so the White Stars could control them, and had written Johnson's editorials and run his errands—and who had continued to run errands, including the carrying of money, for his idolized Chief ever since.
Internal Revenue agent Werner was particularly interested in several items that involved Woods. One was a sum of $1,000 which the IRS agents believed had been given to him—by "contact man" Young—on June 14, 1941. Another was the sum of $7,500, which had been given to him by Brown & Root. The IRS's curiosity about this item had been piqued by the fact that this was a rather large sum for the company to hand over to an assistant personnel supervisor who at the time was earning $225 per month; by the fact that when the Brown & Root official who had signed the check was asked if Woods had done anything around Corpus Christi to earn it, he replied, "I don't believe so"—and by the fact that, whatever the expenditure might have been for, Brown & Root had not reported it. The IRS agents believed that the $7,500 was linked to a trip Woods had taken to Washington, D.C. They wanted to know to whom in Washington Woods had given the money—and for what purpose. Woods was scheduled to be the subject of a formal IRS interview, at which his testimony would be recorded, on January 6.
By this time, the stakes involved were huge. With the investigation not nearly complete, the amount by which the IRS team calculated that Brown & Root had underpaid its taxes had already mounted to $1,099,944. Since the IRS penalty where fraud could be shown was fifty percent, Brown & Root would owe the government an additional $549,972, for a total of $1,649,916. And money was no longer what was most significantly at stake. Irey's conclusion that "fraud was present" was echoed by Werner, and the penalties for tax fraud, as opposed to tax underpayment, included jail as well as money. Nor were the potential losses only those of Brown & Root. Lyndon Johnson had a lot to lose, too, and not only in terms of career-tarnishing publicity and scandal. Should Herman Brown—and his company, and some of his employees—be found guilty of fraud for the manner in which they had financed Lyndon Johnson's campaign, would Brown be willing to finance other campaigns? Herman's money—Brown & Root money—had been an essential element of Johnson's rise to power, and Johnson was going to need it again. What if it wasn't there for him when he needed it?
A new attempt had to be made at the White House, and it was not to be sufficient for Wirtz to try to make it alone. On Monday, December 27, Werner was working in Austin, preparing for his interview with Woods. Wirtz was working, too. Roosevelt returned to Washington that day after a weekend in Hyde Park, and Wirtz telephoned the White House and asked for an appointment with the President. The appointment had apparently still not been set up when Woods was interviewed by Werner on January 6. He was accompanied by Attorney Everett Looney, and the IRS notes on the interview state that "In re: $7500 in fees from B&R and Washington, D.C. trip," Woods "declined to answer all questions on above fees on advice of counsel on basis that it might incriminate him." He gave the same answer to the IRS inquiries about the $1,000 fee, and when, Werner notes, he was "given opportunity to tell of any other unreported receipts," Woods again "declined to answer on grounds it might incriminate him," although he did say that "at time of preparation of return he thought it was true and correct." And on January 11, 1944, Lyndon Johnson telephoned the White House and asked for an appointment with President Roosevelt. The secretary who took the message for Pa Watson wrote Watson that Johnson "is very anxious to see the President as quickly as he possibly could. He says it is not a 'Sunday School' proposition."
LYNDON JOHNSON AND ALVIN WIRTZ saw President Roosevelt on January 13, 1944, at 11:50 a.m. At 4:30 that afternoon, Elmer Irey telephoned Texas. He had been ordered to be at the White House at ten o'clock the next morning to give a full report to the President on the income-tax investigation into Brown & Root, Inc., he said.
Irey asked Werner to send him, in time for his meeting with the President, "detailed information on political payments made by Brown & Root, Inc., to the Lyndon Johnson 1941 senatorial campaign." So that the information would reach him before he had to leave for the White House, he asked that it be sent over the government teletype in the Houston office of the Bureau of Narcotics. The report was unequivocal: after listing the $150,800 in bonuses, for example, Werner stated: "Sufficient evidence is on hand, it is believed, to show minutes authorizing above bonuses to be fraudulent." Then the report listed specific drawings against those bonuses which had been traced directly to the Johnson campaign—the $2,500 from Randolph Mills, for example, or the $2,500 which "Corwin admits" was donated to the campaign, together with what the IRS team believed was sufficient evidence to prove the case: of the Mills bonus, for example, Werner wrote: "Admitted by Mills. We traced to Johnson Bank Account and have Recordak facsimile of check."
But the opinion of the six agents who had been working on the Brown & Root investigation for eighteen months was not to carry much weight in its ultimate disposition. Johnson and Wirtz had seen Roosevelt on January 13. On that day, a new agent, who had no previous knowledge of the case, was sent to Texas from the IRS bureau in Atlanta, Georgia, to make a "separate investigation" of it. Arriving in Texas on January 17, this new agent began studying the case. He proved to be a quick study indeed. Three days later, he told Werner, "The case as it now stands does not have quite enough evidence, in my opinion, for the Chief Counsel's office to pass it for prosecution but there is ample to sustain the 50% penalty." The next day, he confirmed this, adding that, as Werner put it in his diary, "he would recommend against making a prosecution case in view of Brown & Root, Inc.'s participation in the war effort." Then he left for Washington, D.C.
The Georgia agent had also told the Texas agents that "he could see no reason why we should not be permitted to finish our investigation of certain unfinished work which we had detailed to him." But this work was, in fact, never to be finished. On February 15, IRS Chief of Intelligence W. H. Woolf told Cooner that it had been decided, based on the facts "now in hand," that there was insufficient evidence on the Brown & Root, Inc., case to "sustain criminal prosecution," and that the "likelihood of developing proof adequate for that purpose is too remote to justify further extension of the investigation." The Texas agents were ordered to submit final reports on the "basis of the facts now in hand."
Agents who had actually been working on the case felt that the facts "now in hand" only scratched its surface; because of the earlier orders that "no outside persons were to be interviewed," they had been restricted until recently to interviewing Brown & Root officials; only within the past few months had they begun talking to members of the organization that had received the questionable contributions: the Johnson campaign. In fact, they had talked only to a handful of campaign aides—all low-level. They had not talked to the campaign's higher-ups: Wirtz, for example. They had not talked to the candidate. They did not agree with the Georgia agent's conclusion that the facts "now in hand" were insufficient for prosecution, but even if he were correct, they felt that if they were allowed to investigate the link between Brown & Root and the Johnson campaign thoroughly, much new evidence would be developed.
Werner asked, apparently on behalf of the rest of the team, to be allowed to continue the investigation. On March 2, he received his answer: he was ordered to drop the case—at once, and forever. A letter from Chief of Intelligence Woolf reiterated that the case was to "be reported by the examining agents on the basis of facts now in hand with a view to placing the case in line for disposition under routine field procedure. … A further extension of the investigation as proposed by Special Agent Werner will be inconsistent with this finding and it is accordingly directed that the case be disposed of as indicated above."
On June 28, Werner submitted his final report on Case S.I.-19267-F, showing tax deficiencies of $1,099,944 and a penalty of $549,972. But even this was to be scaled down. After a series of further conferences between IRS officials and Wirtz, Brown & Root was ultimately required to pay a total of only $372,000. There were of course no fraud indictments, no trial, no publicity. Franklin Roosevelt had already done so much to advance Lyndon Johnson's career. In this instance, it may be he who saved it.
*George Brown made three other statements of particular interest: (1) Brown & Root had never paid to get a contract; (2) he was under the impression that amounts paid for goodwill, whether to a Congressman, president of an oil company, etc., were proper; and (3) Brown & Root had on rare occasions promoted local bond elections—including one in Duval County.