1 - American Memory

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become short under almost any stockpiling system. (For some items—the special
order, style, and design items—shortages cannot be avoided.)
Unfortunately, in spite of the higher aggregate inventories, some shortages
can be expected. Specifically, it should be expected that a "food crisis" will
always develop after a strike has progressed for a week or two because of the
relatively limited supplies of some perishables and semi-perishables which are
carried by Hawaiian businessmen. To be sure, some firms build their stocks when
a strike threat looms—perhaps more than they should; but many businessmen
probably can be expected to wait until the almost Inevltaole government inter-
vention—either a Taft-Hartley injunction or u.se of the Governor's powers—
permits the building of inventories, because it is not until this time that the extra
cost of carrying additional inventory can be justified. Some expressed their
philosophy as follows: "We would rather take a big hurt when necessary than
many small ones". In other words, they cannot afford to hedge every threat and
still hold prices down. Inventory carrying costs are too high. Also, they wish to
offer you new, high quality merchandise—^not goods which have deteriorated or
are almost obsolete.
Some of these perishable, semi-perishable, and special order items which are
difficult or iraxwssible to stockpile are critical enough so that some type of gov-
ernment intervention probably can be expected to permit these items to come In.
Itut then where should the line be drawn on what is critical? Further, if some
stocks are to be brought in, this would suggest that a patch work solution which
stockpiled only less critical items would be pointless and costly. A solution to the
problem should provide for a supply of the critical items before handling the less
critical ones.
The State could grant a monopoly to someone, or itself, in the distribution of
critical items such as rice and cannetl milk. But then it would have to require all
businessmen to come to these warehouses in order to facilitate rotation of "old"
merchandise. And If it were to maintain larger inventories than are now volun-
tarily built at strike times, it would continually have to dump merchandise as
it deteriorated. This would add to the already high inventory costs. Further, it
would be necessary for the State to continually distribute "old" merchandise
which has been stored close to its limit. In other words, Hawaii's residents would
always be using "old" rice, canned milk, and other products. And probably, not
occasionally, they would purchase spoiled merchandise If the stockpile managers
were seeking to maintain maximum protection against strike threats. One way
around this problem would be for the Governor to be willing to use his emergency
powers to bring in stocks of items such as rice and canned milk just as soon as
an emergency seemed to be developing. This, then, would enable the state monop-
oly to hold down average Inventories and only build large stocks when it was
obvious they might be needed. But this only stimulates current business practice
and does not require a state monopoly. With such a state monoi>oly, perhaps
supplies would be brought in just a little sooner than can be expected with the
present business system where businessmen must watch their costs and prices.
But this modification of a state monopoly probably would not lead to any different
results than the present system if Hawaiian businessmen knew exactly if, when,
and how the Governor would use his power to run ships in case of an emergency.
These decisions would have to be made to make a state monopoly operable. So,
if they can be made, it would seem preferable to modify an existing system which
seems to be functioning quite well, rather than to create a whole new system
which would yield similar results (and probably at no lower costs).'
In other words, the stockpile approach suggested in House Resolution No. 100
Is considered (1) unfeasible to keep the Hawaiian economy running normally
for any length of time, and (2) unnecessary In the short run because Hawaiian
businesses are already providing this function about as well as posible, grfven the
Inherent perishability of some items and the purchasing behavior of consumers
on others, notably on the multitude of items having style, design, color or special
order characteristics.
'The costs mleht actnallv be higher as State offlclals would not have as mnrh concern
with cost. If In doubt, political considerations would probably areue for hlRher (and there-
fore most costly) Inventories. Also, lack of competition would reduce pressure on cost
control.