107
Mr. HUBBARD. I have only three more questions. Could you elabo-
rate on your statement that the pre-1951 distinction between
inside- and outside-the-locks claims was based on budgetary consid-
eration?
Mr. BEALE. In my paper, Mr. Chairman, there are a number of
annotations. I went through the legislative history. I have cited the
U.S. Code Congressional and Administrative New. The reference
material demonstrates that reasoning.
Furthermore, I would like to cite the subcommittee some other
references which discussed the 1951 legislation. Grace Lines v. the
Panama Canal Company, 243 F2d, 844. This is a decision of the
U.S. Court of Appeals for the Second Circuit. There was further
discussion in a U.S. Supreme Court decision, which points up con-
gressional reasoning.
The official citation to the Supreme Court case is 356 U.S. 309.
Those Federal courts go into great depth to explain why there was
the need to make the tolls provision mandatorily cover the oper-
ation of the canal.
Those cases, of course, talk about claims. It is clear that one of
the reasons Congress passed the legislation that went into effect in
1951 was to grant the Canal Company the budgetary means to pro-
vide a recapture in the toll system and pay all costs of operations
including claims.
Mr. HUBBARD. I must leave now for a vote. We will recess for
about 10 minutes.
[Recess.]
Mr. HUBBARD. The subcommittee will now reconvene.
Mr. Beale, you state that Congress in 1951 gave the Panama
Canal Company full authority to compromise claims because the
cost of this could be recovered in tolls. Isn't it also possible to
deduce from the legislative history that the full authority to pay
claims in the 1951 law derived from the corporate structure of the
Panama Canal Company and Congress believed that a government
corporation should be able to sue and be sued like other corpora-
tions?
Mr. BEALE. Mr. Chairman, that is partially correct. However, one
has to look beyond to why Congress made the canal operation a
corporation. In the legislative history, and the cases cited, the his-
tory shows President Truman was contemplating a toll increase in
1948-49. Congress asked the President to delay the increase so it
could study the entire structure. There were a number of hearings
and a lot of statistical analysis was disclosed therein.
The net result was Congress decided to make the canal self-sus-
taining. This was the reason Congress put the entire operation into
one corporation, both the agency and the railroad company func-
tions. So in a short answer to your question, I think the reason the
canal was organized as a corporation was not so it could sue or be
sued; it was so it would be self-sustaining But as a result of the
canal operation becoming self-sustaining, Congress allowed the
canal to be sued on all vessel accident claims.
Mr. HUBBARD. Thank you very much. You did want to make a
closing statement?
Mr. BEALE. Just one short thing. I think it is very important for
the subcommittee and all of Congress to consider that whatever