Economic history of Kauaʻi facts for kids

The economic history of Kauai is a fascinating story about how people on this Hawaiian island have made a living over hundreds of years. Before Europeans arrived, native Polynesians on Kauai had a clever way of life, focusing on fishing and trading with other islands. In 1835, the first successful sugarcane farm started in Koloa, Kauai. This began a very successful sugarcane industry that lasted until the mid-1900s. Today, Kauai's economy mainly relies on tourism. In 2017, over 1.2 million people visited the island, spending more than $1.83 billion. However, Kauai still has a strong farming economy, with corn seed as the top crop, along with coffee, guava, and taro.

Kauai's Early Economy (Before 1778)

Much of what we know about ancient Kauai's economy comes from old discoveries and stories passed down through families. The island was not known to the Western world until 1778. Historians believe Polynesian travelers first settled Kauai around 600 AD. Early settlers lived near places good for fishing and farming. The main area for Hawaiians on Kauai was the East side, now called the Royal Coconut Coast. This area was perfect for growing coconuts, taro, yams, and bananas.

The native Polynesians used a subsistence economy. This means they grew or caught what they needed to live, and there was no money exchanged. Around 1100, the population grew a lot. This led to a new way of organizing society because resources became scarce. Three main social classes appeared:

• Chiefs (ali’i)
• Commoners (maka’ainana)
• Priests (kahuna)

The main chief (ali’i nui) controlled all the land and goods in their kingdom. They could share out wealth whenever they wanted. The ali’i nui would lend land to other ali’i, who had common people work on it. The maka’ainana (commoners) who farmed the land paid labor taxes to the land's overseer each week. This land system was similar to feudalism in Europe.

Society and the economy in Kauai before 1778 were mostly based on large families, called ‘ohana'. Families worked together on an ahupua’a. This was a section of land that stretched from the sea to the mountains. Polynesians grew many different crops, including root vegetables and tropical plants. Taro, yams, and sweet potatoes were grown across the island. Hawaiians also raised dogs and chickens. Evidence shows that the maka’ainana lived well and enjoyed many activities, games, and sports.

Over time, Hawaii's economy became more complex. Families began to specialize in certain skills. Different islands became known for specific trades. Kauai's isolated location made trade harder. However, the islands did trade fish, canoes, and bark cloth.

How Kauai's Economy Changed

After Captain James Cook discovered them in 1778, Kauai and the other Hawaiian islands became popular stops for trade ships. Their location in the Pacific Ocean was very convenient. Also, the Hawaiian King Kamehameha I united all the Hawaiian islands in 1810. These two events caused a big change in Kauai's economy. For the first time, Kauai moved to a market economy with money and international trade.

The islands started exporting Sandalwood and trading with China for tea. Hawaiians began to like goods from Western countries. They traded a lot with both Europe and China. This trade continued until all the sandalwood trees on Kauai were cut down.

In 1826, whaling ships from New England started visiting Waimea and Koloa on Kauai. They came to resupply and get fresh water. Whaling was a very profitable business for Western traders in the 1800s. Because of this, Kauai became a major place for ships to get supplies and for sailors to relax. By the 1850s, over 500 whaling ships visited Hawaii every year. This brought a lot of trade and money to the islands. However, the whaling industry declined in the 1860s due to the American Civil War.

The Sugarcane Economy

Sugarcane was already on the Hawaiian islands before Captain Cook arrived. But the first successful sugarcane farm started in Koloa, Kauai, in 1835. This farm, run by Ladd and Company, began the "sugar boom" on Kauai. When this first farm succeeded, it attracted interest from businessmen across the West. The first recorded sale of exported sugarcane was in 1837. Two tons were sold for $200.

In 1848, King Kamehameha III introduced the Great Mahele. This allowed private ownership of land on Kauai. Foreigners could now own land too. This led to sugarcane farms spreading from the West side of the island all the way to Princeville in the North. Sugarcane needs a lot of water to grow. Investors chose Kauai and the other islands because of their warm, sunny climate all year. They also had high rainfall from trade winds.

Through the 1850s, sugar exports from Kauai to the United States kept growing. By 1852, thousands of Chinese immigrants came to work on the farms. This stopped with the Chinese Exclusion Act in 1882 by the U.S. government. Sugar exports soared until the American Civil War ended in 1865. U.S. taxes on sugar caused a big drop in Hawaiian exports. Taxes of 20% to 42% between 1850 and 1870 greatly reduced the profit for sugarcane farms. However, a treaty in 1876 between the United States and Hawaii allowed free trade between them.

The Kauai County Government was created in 1905. This led to many modern developments on the island. Electricity, roads, airfields, and newspapers began to appear. However, immigrant workers on the sugarcane farms faced lower wages and worse living conditions. A Japanese-led strike across the island failed. This caused many Japanese workers to leave the farms and the island. In 1924, fights between Filipino workers, farm managers, and the Kauai police led to 16 worker deaths and 4 police officer deaths. This was the most violent labor-related event in Kauai's history.

The closing of two major sugarcane farms, Kilauea and Grove Farm, showed that the sugarcane industry was no longer the most important in Kauai.

The Tourism Economy

The start of commercial jet flights to Lihue Airport began Kauai's tourism industry. Also, Kauai becoming the 50th state in 1959 helped this new industry grow. Kaua’i Surf, a new ten-story hotel, opened in 1960. This showed Kauai's commitment to tourism. The first McDonald’s opened on the island in 1971, along with the first stoplight in 1973. Coco Palms, a very popular Kauai resort, was featured in Elvis Presley’s movie “Blue Hawaii”. This helped make the small tropical island even more popular. Native Hawaiians protested some of these changes, but the tourism industry kept growing.

By 1970, nearly 426,000 tourists visited the island each year. By the end of that decade, the number grew to over 800,000 tourists. By the late 1980s, 80% of Kauai's income was linked to tourism. Most residents did not like this new economy. Big traffic jams became common, and the island's population grew a lot.

Hurricane ‘Iniki caused huge damage to the island in 1992. The storm caused over $2 billion in damages, including destroying Coco Palms. By 1993, Kauai's tourism numbers were cut in half. However, the island eventually recovered. Roads and buildings were rebuilt. Popular Hollywood movies, including many scenes in the Jurassic Park films, featured Kauai as their setting.

In 2017, Kauai and the other islands had record numbers for tourism. More visitors arrived, and they stayed longer than in 2016. Over 53% of travelers stayed only on Kauai. Daily spending per tourist also increased. In 2017, over 204,000 new jobs were created for the state of Hawaii. Many of these jobs were directly or indirectly related to tourism.

Kauai's current economy relies heavily on tourism. About 19.6% of locals aged 16 and over work in hospitality. Another 10.8% work in retail.