“The Big Five” Once Dominated Hawai‘i’s Economy, Government and Society

Today, they are mostly gone. But from the overthrow of the Hawaiian monarchy in 1893 to the 1950s, Hawai‘i’s economy, society and government were dominated by an oligarchy of companies known as the Big Five.

The five – C. Brewer & Co. (founded 1826), Theo H. Davies & Co. (1845), H. Hackfeld & Co. (1849, later named Amfac), Castle & Cooke (1851) and Alexander & Baldwin (1870) – were connected by family ties and common interests.

“The Big Five’s power came about as sugar plantations became a more dominant part of the economy, and labor recruitment followed,” says social and cultural historian John Rosa, a professor at UH Mānoa. “Many aspects of life were Big Five-related, all the way up until the mid-20th century.”

Hawaii Business Magazine launched in 1955 as the Big Five’s influence began to give way to a tsunami of economic and social change. One by one over the next six decades, all of their sugar plantations were shut down, their fields turned to other uses or laid fallow. Three of the Big Five companies have disappeared altogether, but two have evolved into modern real estate and residential development companies: Alexander & Baldwin and Castle & Cooke.

Signs of the Big Five endure in street names and historical markers, and more significantly, in the multiethnic society its members shaped. By importing  plantation labor from the Philippines, Japan, China, Portugal and other nations, they changed the Islands forever. Today, water for golf courses, resorts, and residential and commercial areas often comes from irrigation infrastructure they created to grow sugar. And Hawai‘i’s two largest banks, First Hawaiian Bank and Bank of Hawai‘i, descended from institutions established in the Big Five era.

“Friends who have just moved to Hawai‘i are often shocked that we don’t have continental-based national banks,” Rosa says.

In the Big Five era, the Republican Party dominated the territorial government and Big Five officers and investors often served in important posts, including as governor. With the power of the Big Five behind it, the party shaped government regulations in favor of its business interests, Rosa says. But beginning in the 1950s and especially after statehood in 1959, the Democratic Party gained increasing power within state government and eventually established a dominance that continues to this day.

Sugar High 

All established between 1826 and 1870, the Big Five started by facilitating trade and shipping between Hawai‘i and China, North America and Europe. Its members rose to power in the years leading up to the sugar boom of the 19th century as “factors” or agents connecting plantation owners with the supplies and financing needed to run their businesses. They invested in Matson Navigation Co. in the 1910s, which gave them control over transportation to and from the Islands for decades to come.

While generally described as owned and run by missionary descendants, only Alexander & Baldwin can claim this directly: Founders Samuel Thomas Alexander and Henry Perrine Baldwin, who met and grew up together in Lahaina, were sons of early missionaries. Castle & Cooke co-founder Samuel Northrup Castle came to Hawai‘i on a ship that also carried missionaries and was assigned to the “depository,” a combination store, warehouse and bank through which missionaries pooled their resources, purchased supplies, negotiated shipments, and distributed and collected payments for goods. Amos Starr Cooke was a teacher with accounting expertise.

Three of the five companies were based locally but owned by merchants foreign to pre-annexation Hawai‘i: C. Brewer’s founder, James Hunnewell, was a sailor and ship’s captain from Boston; Theo H. Davies was from Britain; and Heinrich Hackfeld was from Germany. H. Hackfeld & Co. became American Factors – later shortened to Amfac – after Germany’s defeat in World War I, when the U.S. government seized the company and ordered the sale of its shares. The largest buyers of the newly formed, patriotic sounding company American Factors included Alexander & Baldwin, C. Brewer & Co., Castle & Cooke and Matson, according to Moon-Kie Jung in “Reworking Race: The Making of Hawaii’s Interracial Labor Movement.”

The Big Five first flourished during the U.S. Civil War, when the North lost its supply of sugar from Louisiana, and Hawai‘i filled the void. In 1875, the U.S. and Hawaiian Kingdom signed the Reciprocity Treaty, eliminating U.S. tariffs on sugar and shielding Hawai‘i’s sugar planters from competition in the world market.

Collectively, their power grew as increased global demand pressured independent plantation owners to keep expanding. In the book “Sovereign Sugar,” anthropologist and social scientist Carol MacLennan wrote that independent plantation owners became more dependent on credit provided by agents for the Big Five companies. Agents then began to require assurances of sound management practices before extending credit for major purchases, increasingly inserting themselves into day-to-day operational decisions.
Some took debt payments in the form of ownership shares in plantation companies.

MacLennan reported that by 1920, the Big Five controlled 94% of the sugar crop produced in the Islands. During the Great Depression, Rosa says, “Sugar prices dropped and sugar plantations themselves had difficulty” with their credit, which benefited the five companies. “Gradually, they came to own plantations themselves,” he says.

The Big Five consolidated power through interlocking directorates, investing in and controlling industries such as shipping, banking, wholesale and retail. Rosa unearthed these relationships in the course of writing his book, “Local Story: The Massie-Kahahawai Case and the Culture of History.” Rosa says that as a result of that notorious case in the early 1930s, the U.S. government sent a federal investigative team to the Territory of Hawai‘i.

“The investigative team looked at the status of the economy and charted who’s in charge. It showed the Big Five firms and how their board of directors were interrelated.” Rosa says the density of the spiderweb-like chart of interrelationships in the investigative report shocked even his mother, who had spent her career working in local banks.

Tides Turn   

Becoming a U.S. territory in 1898 cemented Hawai‘i’s ties with its biggest sugar market. But it also diminished the Big Five’s power over labor and politics. As Rosa wrote in “Local Story”: “First, Hawai‘i was now subject to the same restrictions against immigration from Asia. Second, annexation brought universal male suffrage for those over age 21, and after 1920 these voting rights were extended to women as well.”

The Big Five’s economic power further eroded in the mid-20th century as sugar’s profitability declined and tourism and military spending began to drive more of Hawai‘i’s economy. According to Rosa: “The thing that really changed a lot of Hawai‘i was World War II. Hawai‘i was well known as a stopping point on the way to Asia, but after Pearl Harbor was attacked, there was a realization of Hawai‘i’s importance” in geopolitics. Along with military spending, Hawai‘i’s land values began to spike as the introduction of passenger jets launched a tourism boom in the 1960s. And when trade liberalization policies ended U.S. tariff and quota protections against Hawai‘i’s overseas sugar competitors, hotels and homes became more profitable.

In its heyday, the Big Five also wielded industry influence through the Hawaiian Sugar Planters’ Association.

“That organization helped to fund scientific research on crop management and pest prevention, but also shared information on how to manage workers and how to keep wages low and stable,” Rosa says.

Labor unions became more effective in securing workers’ rights in the decades following the 1920s’ Dual Strikes coordinated by Japanese and Filipino laborers. Asian American veterans of World War II, educated on the GI Bill, became increasingly involved in politics. The veterans and union members – many were both – united within the territorial Democratic Party. In 1954, Democrats elected a majority of the territorial Legislature and the delegate to Congress.

Growing scrutiny by the U.S. government over monopolistic practices spelled the end of the Big Five’s dominance in the latter half of the 20th century. In 1964, the Department of Justice sued to challenge the majority ownership of Matson Navigation by four of the Big Five. At the time, A&B, Amfac, C. Brewer and Castle & Cooke together owned nearly three-quarters of Matson, which carried 80% of all cargo shipped between the mainland and Hawai‘i. The lawsuit was settled under a consent decree that barred the four companies from sharing officers, executives and directors. After that, A&B bought out the other three firms for $22 million, acquiring 94% of Matson.

By 1989, the state’s Department of Business, Economic Development & Tourism declared the death of sugar as an economic driver for the state, reversing decades of support for the industry. The state’s last sugar plantation closed in 2016 but by then, the Big Five era had long since passed.