With business expanding, Captain Hackfeld decided to improve his sources of supply, seek new lines, and strengthen his connections. Since this required a two-year trip to Europe, he left his young partner Pflueger in complete charge. The business then consisted of two stores, the agency for the two sugar plantations, and the commercial agency of the Russian government, an excellent business connection which Dr. Wood had recently turned over to the company.
At the close of the fiscal year on June 30, 1855 the youthful manager struck off the first statement covering the business. Assets had climbed to $93,711. Liabilities were $48,059, leaving a "balance to net capital" of $45,652. The assets included a dwelling house on Fort Street valued at $3,514. The amount invested in the "Upper Store" now totaled $9,149, and the net profit of that store for the preceding two-year period was $7,765.
To house the company in more commodious quarters, Dr. Wood erected a two-story building on Queen Street, of pressed brick with granite trimmings, with a slate roof. The first day in the new home, July 9, 1856, was celebrated by the company with a public lunch attended by many citizens.
An important change had occurred in the Island monarchy the year before. King Kamehameha III died December 15, 1854, and on January 11, 1855, his adopted son and heir, Alexander Liholiho, ascended the throne as King Kamehameha IV. In the following year, the King married the lovely Emma Rooke, granddaughter of the Englishman John Young, who had been an aide to King Kamehameha I.
The wedding was followed by a great ball in the palace at night, and later the royal pair made a tour of the Islands. In the days that followed there were many parties for the young couple. Most of them were given in the new Court House, the second largest building in town, located at the corner of Queen and Fort Streets.
Brightly lighted with whale oil lamps and candles, some glowing through colored, translucent paper, and adorned with beautifully arranged flowers, the hall was a brilliant spectacle. Guests alighted from their carriages and ascended the steps to bow before the raised dais where their Majesties sat. Behind them, life-sized illuminated figures formed the Hawaiian coat of arms. It was this Court House building, scene of many gay memories in the days of King Kamehameha IV and Queen Emma, which later became part of the American Factors, Ltd., establishment.
One of the first concerns of the new King and Queen was the physical welfare of the Hawaiian people. In his first message to the Legislature, the King asked its members to consider the subject of establishing public hospitals. The birth rate among the native population was low and the death rate alarmingly high. Although disease was prevalent, very little effort was made to prevent it. The measles epidemic in 1848 and the smallpox epidemic in 1853 had been fatal to thousands of Hawaiians. Government funds were not available for some time, but after a law was passed permitting establishment of a hospital, the King and Queen took it upon themselves to raise the money through their own personal efforts. Within a few weeks they succeeded in getting enough pledges to their subscription fund to build the first general hospital in the Pacific area. Started in 1860, it has been described as their Majesties' "finest monument." Among the subscribers was Captain Hackfeld.
The fifties was a significant decade of economic transition for Hawaii. These were the final big years of the whaling trade, which for more than two decades had been the backbone of Hawaii's economy. The American Civil War and the new use of petroleum in the United States brought an end to the industry. As early as 1860, observers began to point out that "the good old days" were over.
The rise of the sugar industry, coming at such a crucial time in Hawaii's economic history, seemed like an act of Providence. But the sugar industry was to experience many difficulties before it could grow out of its infancy. An issue of the Pacific Commercial Advertiser in 1859 published statistics showing that sugar exports had increased from 145 tons in 1855 to 913 tons for 1858. But these statistics do not tell the whole story. In the early fifties there had been a severe collapse of the industry, largely resulting from the boom proportions it had at first assumed. The number of plantations in active operation had dwindled to five -- Koloa and Lihue on Kauai; East Maui and Brewer on Maui, and a fifth on Hawaii near Hilo. Too frequently, the industry was affected by events outside the Islands. During the California Gold Rush the price of sugar had risen to 18 and 20 cents a pound, but three years later it was noted that "the low price of sugar is ruining the planters, two having already failed."
Native Hawaiians had not adapted themselves to field labor, and now their number was rapidly decreasing. From a population of 130,000 in 1830, the total had fallen to 70,000. It became apparent that if the new industry was to advance, outside labor would have to be imported. The first effort in that direction was made in 1852, when recruiters from the Islands went to China and selected the hardiest from the swarms of applicants who wanted to work in Hawaii. Sponsored by the Royal Hawaiian Agricultural Society, the project resulted in the importation of about 300 Chinese.
The experiment failed to come up to expectations, though in later years China provided one of the chief sources for immigrant labor. Not until 1864 when a Bureau of Immigration was established did foreign laborers begin to arrive in Hawaii in considerable numbers. Until that time, native Hawaiians were, necessarily, the chief source of manpower in the sugar industry.
Captain Hackfeld returned from his European travels in the spring of 1857. About that time an interesting development was occurring at the Lihue plantation on Kauai -- a plantation which in later years appointed H. Hackfeld & Co. as its sugar factors. After a five-year struggle against many odds, a ditch was finally dug that would bring water to its fields. It was the first sugar plantation in the Islands to use irrigation. The suggestion that water would improve the yield came from a young immigrant named Paul Isenberg, who remembered the irrigation canals of his native Germany. His idea met with much opposition but, having enlisted the support of one of the owners, W. H. Rice, Isenberg was provided with enough workers to complete the job. This irrigation method proved beneficial. In 1862 Paul Isenberg was appointed manager of the Lihue Plantation.
One of the important social events of that same year was a grand ball given by Captain and Mrs. Hackfeld in the Court House building to honor the officers of the Russian ships then in Honolulu harbor. About 500 invitations were issued.
It was also a year of nation-wide mourning. A young son born to King Kamehameha IV and Queen Emma in 1858 died in August 1862. His death was followed by the death of King Kamehameha IV on November 30, 1863 at the age of 29. His brother, Prince Lot, ascended the throne as King Kamehameha V.
The new King was of the opinion that a strong native monarchy was the best form of government for Hawaii. He disapproved of the constitution of 1852 on the grounds that it was too far ahead of the development of the Ha-
waiians and the needs of the country. A forceful personality, he proclaimed a new constitution in 1864, which was a revision of the former one. It restricted voting to those who owned a certain amount of property and who, if born after 1840, could read and write. Its total effect was to increase the power of the King by giving him wider authority in government activities. Although there was considerable opposition to it, the new constitution became the fundamental law of the land for nearly a quarter of a century.