In 1844 Robert C. Wyllie, who later became Hawaii's Minister of Foreign Relations, made the mournful statement that "The prosperity of these islands . . . does depend mainly upon the whale ships that annually flock to their ports. . . . Were the whale fishery to fall off . . . the Sandwich Islands would relapse to their primitive insignificance."
There was some justification for his pessimism. The whaling trade could not be expected to go on indefinitely. Mr. Wyllie and others worried about the welfare of Hawaii saw nothing that could take its place. Except for sandalwood, which had been quickly depleted, Hawaii had not yet developed an important enough export of its own with which it could obtain the increasing quantity of goods its population was requiring. By the middle of the century there had been a number of experiments in the raising of cotton, silk and tobacco but none had become profitable enough to excite much interest. Moreover, it was far easier to do business with the whalers than it was to give the soil the time and patience which extensive cultivation required.
Most persons in Hawaii in the middle of the nineteenth century overlooked the possibilities of one native resource that was to provide the Islands with their greatest boon. That resource was sugar. Its development as a profitable product took many long and discouraging years of hard work, but when it finally emerged, it became the motivating force in Hawaii's economy.
Captain Cook noted that sugar cane was indigenous to Hawaii. Yet so complex were the problems of cultivating it that no extensive effort to produce sugar was made until 1835. Even as late as 1837 the total output for that year was only two tons. The first sugar-making in Hawaii is attributed to a Chinese who, arriving on a ship trading in sandalwood, brought with him a vertical mill and two boilers. He set up his apparatus on the Island of Lanai, raised a small crop of cane, and made some sugar; but he soon became discouraged and returned to China. During the 1820'S there were several other attempts, including that of an Italian named Lavinia who hired natives to crush the cane on poi-boards with stone beaters and boil the resulting juice in a copper kettle. But none of these ventures were commercially successful.
The actual founders of the sugar industry were three New Englanders by the names of William Ladd, William Hooper and Peter Allan Brinsmade who established the first systematic sugar plantation at Koloa, Kauai in 1835. Their lease, obtained from King Kamehameha III, was for a tract of 980 acres. It extended for fifty years at a rent of three hundred dollars per year. The lease also gave them the right to hire natives to work for them.
A small area was cleared for sugar cane, and a crude dam and sugar mill were started. The obstacles and struggles which the three partners and their families experienced during their first year were almost incredible. Jealous at seeing their lands being used by others, the local chiefs forbade the sale of all provisions to Hooper, the resident agent. There was a terrible lack of proper implements. At one time, for lack of oxen, forty native workers were hitched to a plow. Labor was hard to find and those who accepted work found it difficult to accustom themselves to the routine of steady toil.
Besides building the dam and the mill, the partners erected twenty houses, cleared and planted 25 acres of sugar cane, together with thousands of coffee trees and some taro patches. Coin was scarce, and the laborers were paid in a pasteboard scrip made by the partners. This "Kauai currency" was redeemed each Saturday at the plantation stores. The hired natives were furnished houses and food at a daily cost of one cent.
Transporting the sugar cane from the fields to the mill was one of the most serious problems. Oxen could seldom be spared from all the plowing and clearing there was to do. At one time a temporary railroad was laid down, and sampans on rollers, rigged with sails, flitted through the cane fields before the trade winds, vastly intriguing the natives.
There was no sugar produced in the first year but in the second year the partners were able to ship a quantity of sugar from the Koloa mill to Honolulu, thus marking the beginning of what was to become Hawaii's richest industry.
At the end of three years, the Koloa plantation yielded twelve tons of cane on a test acre, from which was extracted two and a half tons of salable sugar. But the hurdles of running the plantation finally proved to be too much for the Ladd enterprise and after twelve years it passed into other hands. By that time the young partners had decided that the production of sugar required operations on a larger scale than they could afford.
Not long after the Koloa plantation was started an American businessman by the name of William French tried the less ambitious scheme of buying the sugar cane from the natives and processing it through a stone mill. The historian Kuykendall reports that by 1838 there were twenty mills on the Islands that were run by animal power and two that used water power. In that year the total amount of sugar exported was about forty-four tons. In 1840 it had risen to one hundred eighty tons but it dropped back to thirty tons in the following year.
Except for the Koloa plantation, few of the sugar enterprises in those early days represented any large investment. Yet few survived. One important lesson learned from their experience was that sugar farming and sugar milling must be operated jointly. As one writer put it, "fields had no value without a mill; a mill was worthless without adjoining fields." In other words, large-scale operation, such as is possible on plantations, was essential if Hawaiian sugar was to be produced profitably and efficiently. This fact, as will be shown, had a tremendous influence in the development of Hackfeld and Company.
Among the Honolulu businessmen who came to have a high regard for Captain Hackfeld was a prominent physician, Dr. Robert W. Wood, head of the American Hospital for Seamen. Through loaning funds to Ladd and his partners, Dr. Wood became deeply involved in the Koloa. plantation. Shortly after Captain Hackfeld came to Honolulu, Dr. Wood acquired full possession of it.
The development of the sugar industry in Hawaii owed much to his vision and enterprise. About a year after he acquired Koloa, he became associated with A. H. Spencer in a second plantation located on Maui, which they named the "East Maui" plantation. Thoroughly alive to the importance of improving the quality of their product by the use of better equipment and methods, Dr. Wood encouraged an ingenious young mechanic, David M. Weston, to build a small centrifugal machine for separating sugar from molasses. The machine was placed in operation at East Maui and immediately proved its value. It not only shortened the time of separation from weeks to minutes but it also resulted in a vastly superior quality of sugar which could command a much higher price.
In the summer of 1853 Dr. Wood asked the new partnership of H. Hackfeld & Company to act as agents and shippers for the Koloa Plantation, and shortly afterward, for that at East Maui. Thus began the firm's long history as sugar factors -- a new type of business created to fit the special needs of the growers.
In a country like Hawaii the factors proved to be essential to the expansion of the sugar industry. They acted as agents for the plantations, obtained the tools and supplies the plantations needed, floated loans, collected payments, and handled the sales and shipping of sugar. The plantations could not operate efficiently without them. Many of them were scattered in remote sections of the Islands, away from the commercial world. They needed agents who were centrally located and experienced in business matters, to act for them.
At first, the factors were particularly valuable in handling shipping arrangements for the plantations. In those days the crudely-processed sugar had to be shipped in barrels to markets that took weeks and months to reach. It took a sailing ship 20 days to reach California, 146 days to get to New York and 159 days to London. Moreover, sailings were irregular; the arrival and departure of ships depended on wind and tide, and the availability of their cargo space was often uncertain.