1 - American Memory

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ping interruptions—with the costs of such inventory-holding being
pas^d on to the consumer, of course—there is little he can do to stop
the hoarding that takes place and leaves his shelves bare or depleted.
And it is the merchant who is blamed for failing to meet consumer
needs.
Some coiisumei"s believe higher prices in Hawaii are the result of
profiteering rather than because of a long supply line combined with
heavy inventory requirements because of the ever-present threat of
shipping interruptions.
This IS certainly not the case as State of Hawaii Department of
Taxation data reveals. A summary of this information for calendar
1971 shows that 45.6 percent of all corporations had no taxable net
income, that 25 percent of all proprietorships reported net losses, and
that only 495 of the 8,071 corporations filing returns that year paid
cash dividends. The majority of the 37,600 enterprises filing tax re-
turns for 1971 would have to be classed as marginal operations. Fur-
ther, all of them combined paid the State only $38.4 million in net
income taxes, representing 7 percent of the State's total receipts of
almost $530 million.
Surface shipping interruptions lasting from 2 to 177 days have
occurred 82 times in the past 28 years—an average of three times per
year. Between November 1968 and December 1972, there were 272
days when shipping from the west coast alone was halted—or 18.6 per-
cent of all the calendar days in that period, the equivalent of more
than 5.5 days per month on the average.
Hawaii could certainly adjust to mterruptions of a few days dura-
tion on an occasional basis. However, shutdowns of surface shipping
for periods of 34 days, 41 days, and 100 days on the west coast during
an 18-month period are devastating to the economy and especially to
small firms.
Once such interruptions end, it takes most businesses from 3 to 9
months to get back to normal in terms of both inventory and financial
stability. The backlog of demand cannot be met overnight and the fi-
nancial setbacks are slow to overcome.
Business in Hawaii is currently very much concerned about the sus-
tained high unemployment rate—8 percent statewide in July and as
high as 10.5 percent for Hawaii County. In June the statewide figure
reached 8.4 percent.
We are faced with 14 longshore and seagoing contracts on the west
coast due for expiration in June, 1975. As the accompanying report
published by the Hawaii Employers Council shows, we are also faced
with four east and gnU coasts contracts expiring at that time, plus six
longshore contracts in Hawaii.
Mr, Chairman, we have a fragile economy. Sugar and pineapple
plantations are closing down at a rapid rate and other agricultural
production cannot, for at least 20 years, if then, replace the losses we
are experiencing in these two commodities. Construction is expected to
be lower next year than in any of the past several years. And tourism,
our current major source of income, has grown at a rate of only 6 per-
cent this year compared to annual growth rates ranging from 11.2
percent to 28.8 percent for the past decade. Defense expenditures, our