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Reporter's Statement of the Case

until the Japanese gained possession of most of the rubberproducing areas in the Far East during 1942. Total 1942 receipts of crude rubber in the United States under these agreements aggregated approximately 394,518,501 (176,124.33 long tons) pounds, at an average price per pound, including freight and insurance to United States ports, of approximately 19.4 cents a pound; the bulk of this was received in this country during the first four months of 1942, but there were some receipts during the following four-month period. During the last four months of 1942 Rubber Reserve Company purchased Far Eastern rubber from Ceylon, the only major Far Eastern rubber-producing area not in Japanese hands, acquiring a total of 17,100 gross tons at an average price, including ocean freight and insurance to United States ports, of 24.6 cents a pound. This price did not include War Risk Insurance.

As a result of the Japanese conquest in the Far East, the importations into the United States of crude rubber were reduced from 1,029,007 long tons in 1941 to 282,598 long tons in 1942.

26. Starting in June 1941 the Office of Production Management and its successor, the War Production Board, issued certain orders under the Priorities Act (Act of June 28, 1940, 54 Stat. 678, as amended by Act of May 31, 1941, 55 Stat. 236) to control the supply and direct the distribution of natural rubber.

On December 10, 1941, three days after the attack on Pearl Harbor, the Office of Production Management issued its Supplementary Order No. M-15-b, the terms of which restricted the use of rubber to the manufacture of stated products useful in the war effort or required for essential civilian purposes. Thereafter, permits for the purchase of rubber were issued to domestic manufacturers by the Rubber Reserve Company only upon proof that the rubber was to be used in accordance with regulations of the Office of Production Management and its successor agency, the War Production Board.

By amendment No. 3 to Supplementary Order M-15-b, issued on January 23, 1942, it was provided that purchases and sales of rubber could be made only as expressly per

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114 C. Cls.

mitted by regulations established by Rubber Reserve Company, or upon express authorization of the Office of Production Management (later the War Production Board).

By regulations issued on January 31, 1942, the Rubber Reserve Company prohibited all sales of rubber except sales to it, and prohibited all purchases of rubber except from it. The uses to which rubber could be put were also drastically limited, and the amount of rubber which could be used in the permitted uses was greatly reduced.

On January 31, 1942, and February 17, 1942, the Rubber Reserve Company prohibited all private buying and selling of crude rubber except that delivery of rubber was permitted in the performance of executory contracts of sale which were in effect on January 23, 1942.

27. On January 31, 1942, Rubber Reserve Company established what it described as its "Surplus Stocks Program." Under this program Rubber Reserve offered to purchase manufacturers' surplus stocks and dealers' undelivered stocks of rubber at a price equal to the actual amount paid by the manufacturer or dealer for such rubber, plus freight and insurance charges paid or incurred in connection with the rubber, and plus charges, if any, paid or incurred for the storage of the rubber in commercial warehouses. The first purchases under this program were recorded on the books of Rubber Reserve Company in April 1942, and during the balance of the year a total of 52,633,280 pounds of rubber were purchased under this program at an average price of approximately 23.3 cents a pound.

Where surplus stocks of rubber could not be acquired by purchase under the "Surplus Stocks Program," it was requisitioned.

28. After the agreement of June 1941, described in finding 24 hereof, the remaining substantial source of crude rubber open to American purchasers was in Latin America. This was the so-called "wild rubber." Wild rubber is that found growing in the jungle or swampland of the Amazon River, entailing great expense in gathering and bringing it to market.

The quality of wild rubber is fairly comparable to that

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Reporter's Statement of the Case

of the "plantation rubber" which was requisitioned in this case, but the expense of harvesting it is much greater.

There is set out below a tabulation setting forth sales in the New York Market of such Latin American wild rubber which had been washed and dried so as to remove moisture and impurities and to make it fairly comparable to "plantation rubber."

After January 31, 1942, all purchases were made either for the account of the Rubber Reserve Company or under permit issued by it.

29. During the year 1942 purchases of Latin American wild rubber were made by private dealers in New York. These purchases terminated very shortly after the conclusion on March 3, 1942, of an agreement between the United States of America and the Republic of Brazil providing for the purchase by this country of all Brazil's exportable surplus

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114 C. Cls.

of crude rubber. There is set out below a tabulation setting forth purchases of such Latin American wild rubber which had been washed and dried so as to remove moisture and impurities.

30. On March 3, 1942, the United States of America, acting through the Rubber Reserve Company, entered into an agreement with the Republic of Brazil, under the terms of which Brazil agreed to sell crude rubber to the United States. During 1942, similar agreements were entered into with other countries in Central and South America, as follows:

31. With the exception of the agreement with Bolivia, each of the agreements relating to the sale of plantation rubber, or of the grades of wild rubber most nearly comparable thereto, provided for the sale to the United States by the

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Opinion of the Court

Central or South American country in question of all its exportable surplus or of its entire output of crude rubber. The agreement with Bolivia reserved to that country the right to export 150 to 250 tons of crude rubber to countries other than the United States. Under the terms of these agreements relating to such grades of crude rubber, the United States, with one exception, committed itself to continue to purchase crude rubber from each country in question until December 31, 1946. The agreements also contained other concessions and advances to the selling countries.

From May 1942 to February 1944 the price agreed to be paid for this wild rubber was 45 cents a pound or more.

32. The fall of Singapore in February of 1942 placed under the control of the Japanese Empire the territory producing 90 percent of the world's crude rubber supply. Controls in the remaining rubber producing areas such as Latin America, and in Ceylon, India, Liberia, and the Belgian Congo, made it virtually impossible for plaintiff to obtain rubber. As a consequence of the resulting wartime shortage of crude rubber, there was a substantial demand for crude rubber at prices ranging from $2.00 to $5.00 per pound in areas where controls regulating prices and distribution did not exist.

The court decided that the plaintiff was entitled to recover. WHITAKER, Judge, delivered the opinion of the court: Plaintiff sues the defendant for what it says is just compensation for a quantity of rubber which defendant requisitioned in September and October of 1942. It was paid an amount computed according to the Surplus Stocks Program formula. This was cost, freight, insurance and storage charges.

In Neumaticos-Goodyear, S. A. v. United States, 109 C. Cls. 535; certiorari denied, 334 U. S. 838, we held that this formula afforded the fairest measure of just compensation under all the facts there existing, if there be added thereto a fair mark-up for profit. The facts in that case and in this are the same except in two respects.

In this case plaintiff's costs, freight, insurance and storage are shown; in the Neumaticos case they were not shown, and the average total costs paid under the Surplus Stocks

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