Michael: Most people think trade deals make countries richer and more stable. But what if a single, wildly profitable treaty could actually destroy a kingdom? That’s not a hypothetical—it’s the story of how Hawaiʻi lost its independence, all starting with sugar. Kevin: That's a wild claim. You're saying a trade deal, not a war, was the final nail in the coffin? That sounds like a conspiracy theory you’d find in a deep-cut internet forum. Michael: It sounds like it, but it's a meticulously argued case. And it's the central argument in a fascinating book we're diving into today: Hawai'i: Eight Hundred Years of Political and Economic Change by Sumner La Croix. Kevin: Sumner La Croix. I see. Michael: What's incredible is that La Croix is an economist at the University of Hawaiʻi, so he brings this sharp, analytical lens to a history that's often told only through battles and royalty. He spent decades researching this, and his work is widely acclaimed in academic circles for its depth. Kevin: An economist's take on an 800-year history. Okay, I'm intrigued. Where do we even start with a story that long? Michael: We start at the very beginning, with the source of all power in ancient Hawaiʻi: the land itself. Today we'll dive deep into this from three perspectives. First, we'll explore how ancient Hawaiians built kingdoms from their agricultural wealth. Then, we'll discuss the chaotic arrival of global trade and its paradoxical effects. And finally, we'll focus on that single trade deal that set the stage for the overthrow of the Hawaiian monarchy.

Michael: So, to understand ancient Hawaiʻi, La Croix uses a concept called a 'natural state.' It’s a system where powerful elites agree not to fight each other, but only because they get to control the society's wealth—what economists call 'economic rents.' Kevin: Okay, 'economic rents.' Break that down for me. Is that just like being a landlord? Michael: It's bigger than that. Think of it as the surplus profit a resource generates that’s above and beyond the cost of producing it. It’s the jackpot. In ancient Hawaiʻi, the jackpot wasn't gold or oil. It was taro. Specifically, ponded taro fields. Kevin: Taro? The stuff they make poi out of? That was the source of king-making wealth? Michael: Exactly. The book points to places like the taro fields at Hanalei on Kauaʻi, which have been continuously farmed for over 700 years. These weren't just subsistence farms; they were incredibly sophisticated irrigation systems that produced a massive food surplus. This surplus was the 'rent'—the prize that ambitious chiefs wanted to control. It could feed warriors, priests, and artisans, freeing them up to build a more complex society. Kevin: So, it's not about fighting over scarce resources, but about controlling the jackpot? It's like one family in the neighborhood having the only swimming pool on a hot day. They get to decide who gets in. Michael: That’s a perfect analogy. And that's what drove the shift from small, scattered chiefdoms to large, organized states. The book gives this incredible example of a chief named Māʻilikūkahi on the island of Oʻahu around the 15th century. After a period of intense conflict, he takes power. Kevin: And I'm guessing his first move wasn't to call for peace and unity. Michael: His first move was far more strategic. He ordered a complete reorganization of the island's land. He had his chiefs divide Oʻahu into these wedge-shaped land divisions that ran from the mountains to the sea, called ahupuaʻa. Kevin: I’ve heard that term. I always thought it was just an ancient way of drawing property lines. Michael: It was so much more than that. La Croix argues it was a brilliant political move. Māʻilikūkahi assigned his most loyal supporters to control these incredibly productive ahupuaʻa. He was essentially giving them a cut of the taro jackpot in exchange for their loyalty and their promise not to cause trouble. He was buying peace by distributing the wealth. Kevin: But that sounds almost... corporate. Like a CEO restructuring a company to put his allies in charge of the most profitable divisions. Was it really that calculated, or was it just about stopping the constant fighting? Michael: It was both. He stopped the fighting by making it more profitable for the powerful chiefs to support him than to challenge him. He created a stable system where everyone in the dominant coalition got a piece of the action. This system was so effective that it lasted for nearly 400 years, right up until Western contact. It was a political order built entirely on the strategic control of agricultural wealth.

Michael: And that system, built on land and loyalty, worked for centuries. Then, in 1778, Captain Cook arrives, and the entire game board is flipped overnight. Suddenly, the most valuable resource isn't taro—it's sandalwood. Kevin: Right, the fragrant wood that was hugely valuable in China for incense and furniture. So a new jackpot appears. Michael: A massive one. And this is where the story takes a dark and counterintuitive turn. The arrival of Westerners also brought diseases that the Hawaiian population had no immunity to. The population collapsed—some estimates say by as much as 80 percent within a few decades. Kevin: Hold on. The population is crashing, so labor should have been incredibly valuable. Basic economics says wages should have skyrocketed. There are fewer workers to do the hard work of harvesting sandalwood from the mountains. They should have been ableto name their price. Michael: That’s what should have happened. But La Croix shows the opposite occurred. Real wages for the commoners, the makaʻāinana, actually fell. They were forced to leave their farms, march into the mountains, and cut down sandalwood for the chiefs, often for little to no compensation. Kevin: How is that even possible? It defies the law of supply and demand. Michael: Because another new factor had arrived with the West: guns. Before, if a chief was too tyrannical, people could just leave and go to a neighboring chiefdom. There was competition for labor. But after King Kamehameha used Western cannons and guns to unify the islands by 1795, that exit option vanished. There was nowhere to run. Kevin: Ah, so it's like a company town where the company owns everything and can set whatever wages it wants, because there are no other jobs. Unification, in this case, meant a monopoly on power. Michael: Precisely. The book gives this chilling example from the early 1800s, called the Waialua Incident. A chief named Cox ordered the men of his district to go harvest sandalwood. One man refused. Kevin: Good for him. A little civil disobedience. Michael: Well, Chief Cox responded by having the man's house burned to the ground. The man still refused. So the chief then threatened to seize all his possessions and turn his wife and family out onto the street with nothing. Kevin: Oh, man. So what happened? Michael: The man gave in. He had no choice. That incident perfectly illustrates the new reality. The chiefs, backed by the consolidated military power of the king, could use coercion to extract labor. The economic rules were completely rewritten by political force. The sandalwood boom made the chiefs incredibly wealthy, but for the common people, it was a disaster.

Kevin: Okay, so the kingdom survived that chaos. It modernized, it had a constitution, it was recognized on the world stage. How did it all fall apart in the end? It seems like they weathered the worst of the storm. Michael: They did. But they couldn't survive the final, most deceptive threat. And it came in the form of a piece of paper: the 1876 U.S.-Hawaiʻi Reciprocity Treaty. Kevin: The 'Trojan Horse' you mentioned at the beginning. Michael: Exactly. On the surface, it was a fantastic deal for Hawaiʻi. It allowed Hawaiian sugar to be sold in the United States completely duty-free. The Hawaiian sugar industry exploded. Exports skyrocketed from 21 million pounds in 1876 to over 220 million pounds by 1890. Kevin: That’s a tenfold increase. The islands must have been swimming in cash. The sugar planters, who were mostly American and European descendants, must have been ecstatic. Michael: They were fabulously wealthy. But this created two huge problems. First, Hawaiʻi's entire economy became dependent on this single deal with a single, much larger country. Its bargaining power vanished. When the treaty was up for renewal, the U.S. started making demands, like exclusive access to Pearl Harbor. Kevin: I see. The dependency trap. But what was the second problem? Michael: The treaty created a new class of elites—the sugar barons—who were now immensely powerful, but they weren't part of the traditional Hawaiian power structure. The monarchy couldn't fully control them. And then, in 1890, the U.S. Congress passed the McKinley Tariff. Kevin: And what did that do? Michael: It was a gut punch to the Hawaiian economy. The tariff eliminated the duty on all foreign raw sugar, not just Hawaiʻi's. And to protect its own producers, it gave U.S. domestic sugar growers a subsidy of two cents per pound. Overnight, the Hawaiian planters' massive price advantage was wiped out. Their profits evaporated. Kevin: Ah, so the planters got a taste of massive profits, and when that was threatened, they decided they'd rather change the country than lose their money. Annexation wasn't about patriotism; it was a business decision to get access to that U.S. sugar subsidy. Michael: That's the core of the argument. And this is where the political thriller part kicks in. Queen Liliʻuokalani, who came to the throne in 1891, saw the growing power of these foreign business interests and tried to restore power to the monarchy with a new constitution. Kevin: A move that, while understandable from her perspective, was probably the worst possible timing. Michael: It was the perfect excuse the pro-annexation faction needed. In 1893, a small group of these businessmen, calling themselves the Committee of Safety, staged a coup. And crucially, the U.S. minister to Hawaiʻi, John Stevens, ordered U.S. Marines ashore, officially to 'protect American property.' But their presence had the effect of intimidating any royalist forces. The Queen, to avoid bloodshed, yielded her authority. The monarchy was over.

Michael: What's so powerful about La Croix's analysis is that it shows a consistent pattern across 800 years of history. From the first chief controlling a fertile taro patch, to Kamehameha controlling the sandalwood trade, to the sugar barons controlling the legislature—power in Hawaiʻi has always followed the wealth. The institutions just changed shape over time. Kevin: It makes you wonder how many political shifts today are really just about who controls the economic 'rents.' It's a lens you can apply to almost any conflict, anywhere in the world. It’s not just about ideology; it’s about who gets the surplus. Michael: Absolutely. And the book is praised by critics for how it connects this long history to the sovereignty debates happening in Hawaiʻi right now. It reframes the conversation around land and rights, grounding it in centuries of economic and political evolution. It shows that these aren't new issues; they are the modern echoes of very old struggles. Kevin: It’s a sobering thought. That the fate of a nation could hinge on tariffs and trade deals, decided thousands of miles away. It’s a profound story of how economic integration can be both a blessing and a curse. Michael: It truly is. And it’s a reminder that history is often driven by quiet, structural forces that are far more powerful than any single battle or leader. We'd love to hear what our listeners think about this connection between economics and political destiny. Find us on our social channels and share your thoughts. Kevin: This is Aibrary, signing off.