History
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Though commercial sugar production began in the first years of the 1800s, the industry remained relatively minor until the Reciprocity Treaty of 1875. This treaty provided duty-free trade of sugar between the Kingdom of Hawaii and the United States, and it generated massive disruptions in the sugar industry. Plantation growth and consolidation soon followed, with the number of plantations falling from 79 in 1875 to just 20 in 1883.[3] Prior to this disruption, the agencies played a much more limited role in Hawaiian industry. They served primarily to add liquidity to an agricultural industry with long growing periods (18–24 months) by both providing credit against future sales and providing transportation to foreign markets and equipment procurement. With the growth pressure imposed by the Reciprocity Treaty, however, plantations required capital infusions in order to expand their cultivation into more marginal lands, leading to increased reliance on the agencies for credit.[3] With Hawaii's annexation by the United States, this change was locked in as sugarcane plantations gained a new infusion of investment. By eliminating tariffs imposed on sugarcane producers by the United States, planters had more money to spend on equipment, land and labor. Increased capital resulted in increased production. Five kingdom-era corporations benefited from annexation, becoming multimillion-dollar conglomerations that controlled 90% of the sugar business.[4] The companies colluded to keep the prices on their goods and services high. Their profits skyrocketed even more. Soon, the executives of the Big Five sat on each other's boards of directors. With economic power came political power, and the families usually favored the Republican Party of Hawaii.[5]
During the Democratic Revolution of 1954, the unions inflicted a decisive blow against the giants, and when the sugar industry declined after Hawaii became a state in 1959, so did each of the Big Five companies.[citation needed] The greatest post-statehood challenge came as the U.S. Department of Justice challenged the ownership of Matson Navigation Company by four of the five companies (all except Theo H. Davies). The lawsuit was settled when the four companies agreed not to share officers, executives, and directors. Alexander and Baldwin eventually bought out the other three stakes in Matson in 1964.[1]
In the 1970s, as sugar plantations closed, many of the Big Five companies themselves were bought out. Where the companies are now:[citation needed]
- Theo H. Davies & Co. was bought in 1973 by Scottish-controlled Hong Kong firm Jardine Matheson. Until December 2004 it owned the Pizza Hut and Taco Bell franchises in Hawaii. The sole remaining unit is its travel agency which was spun off and sold to management.
- C. Brewer was bought in 1978 by Philadelphia-based IU International Corporation, and was later bought out by its management in 1986. In 2001, the company's shareholders voted to liquidate the company over several years.
- Castle & Cooke merged with Flexi-Van Corporation, owned by David H. Murdock, in 1985. Murdock became its chairman after the merger, then took full control in 2000. It still owns large portions of Central Oʻahu and the Iwilei area of Honolulu around the former Dole Food Company pineapple cannery. Until recently, Castle & Cooke owned nearly all of the island of Lānaʻi; in June 2012, Oracle CEO Larry Ellison bought their share for approximately 500 million dollars.[6]
- Amfac was bought out in 1988 by Chicago-based JMB Realty. In 2002, Amfac declared Chapter 11 bankruptcy and emerged as Kaanapali Land, LLC. It owns 5,000 acres (20 km²) in West Maui. Its department store, Liberty House, was sold to Federated Department Stores and is now part of the Macy's chain.
- Alexander & Baldwin diversified and remains in business. Today it owns about 91,000 acres (370 km²) of land and is the fifth-largest landowner in the state.[citation needed]