1 - American Memory

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although airlines continue to function, brings prompt and extensive cancella-
tions of tourists' reseryations for Hawaii.
Purchase of goods by the military forces stationed in Hawaii approximate
$3,000,000 (1954 data) annually. This supply function Is a substantial portion
of the distributive commerce of Hawaii, with more than 800 individual firms
participating in its development. Primary obstacle to increased local procure-
ment is the fear of military commanders that local suppliers will be unable to
carry out their contracts due to unreliable commercial shipping. Since the
military operates its own shipping service (MSTS) local suppliers are by-
passed In favor of West Coast suppliers.
Furthermore, a substantial portion of the local suppliers' normal military
market is lost due to threats of strikes or actual strikes, when the military
transfers its procurement of these Items to the West Coast. This loss of busi-
ness also represents a loss of these cargoes to the American merchant marine.
BUSINESS LOSSES AND PAILUKES
All business firms operating within the State have felt the effects of mari-
time strikes and the ever present threat of a strike.
The cost of doing business is normally higher in Hawaii than in the conti-
nental United States, due to the greater distance from supply and market cen-
ters. However, unreliable shipping has Increased these costs with requirements
for larger protective inventories and substantial transshipment and shortage
costs for strike bound cargoes.
During the 63-day Pacific maritime strike of 1952, the Hawaiian sugar in-
dustry estimated direct increased costs, through such factors as emergency stor-
age and refinery shutdown, at $1,785,000. This is, of course, a small part of the
total indirect cosrt through loss of markets, employment and other factors.
Dairy, hog and poultry farmers have suffered severely from feed shortages and
have been forced to kill off i>art of their livestock. Both large and small farming
have been hard hit by recurrent insecticide and fertilizer shortages.
Many small business failures in Hawaii can be directly attributetl to shipping
stoppages. Unable to secure inventories, and with working capital depleted, these
firms have been forced out of business.
These and other adverse effects on business enterprises, resulting partially
from the unreliability of shipping, have contributed to low corporate income
in Hawaii, a decline In local stock transactions, the tightening of bank credit,
a shortage in venture capital and a moderate out migration in post-war
population.
EFFECTS OF THREATENED STRIKES ALSO SEVERE
The effect of strikes i.s clearly set forth in "The liconomy of Hawaii in 1947"'
as follows:
"The economy of Hawaii is much more susceptible to . . . 'shipping stoppages'
than a mainland community of similar size would be. The extreme vulnerability
of the island economy was clearly demonstrated in the spring of 1947 when
... a shipping strike (was threatened) in June. As early as April, business firms
began to cancel their advance orders for merchandise from the mainland. This
was due to the fact that, during the strike in the autumn of 1946, merchandis«»
delivered to West Coast docks for shipment to Hawaii remained there durint;
the strike while the purcliasers were billed for the Invoiced goods which they
could not sell. New l)usineBS firms and small firms could not afford to pay for
merchandise not actuallj- in physical inventory and, rather than run the risk
of l>ankruptcy, they cancelled orders. This later resultetl in a loss of sales on
such merchandise and created shortages of various types of consumer gooi*".
in the Territory.
"As soon as the shii>ping strike was threatened in 1947, practically all of the
construction contracts that were in negotiation wen? postponed and even cor-
stnictioii wliich was to start in April or May was held up because neither the
owner nor the contractor wished to assume the risk of starting projects when
there was no reasonable assurance that the materials for completing them
could lie obtained.
' Extract from "The EUronoroy of Hawaii In 1947." by James H. Shoemaker: nn 1R6.
Bulletin No. 026 U.S. Department of Labor, transmitted to Confess Jan. 2», 1948.