Financial and Historical Effects of Annexing Hawaii

Once American colonizers caught sight of The Hawaiian Islands – previously governed by a thriving monarchy in blissful isolation – they would not back down. Their strategic location for both military presence and sugar trade would assuredly label them as an armed and economic superpower.

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Check out these 5 interesting historical and financial pieces that revolved around President McKinley’s decision to annex Hawaii on this day in 1898.


Why Hawaii?

In addition to its obvious status as in island paradise, Hawaii also boasted over $13 million in merchandise exports, making it an extremely valuable resource for the U.S. And its strategic position in the Pacific certainly didn’t hurt either.

When it came down to expanding its borders, the United States was a bit late to the party. Only a handful of territories remained for imperial grabs by the time they were ready to start looking. However, Hawaii was one such territory that was ripe for the taking. Hawaii was perfectly situated in the Pacific for a U.S. military base – which could help establish them as a world superpower.


How Did The U.S. Position Themselves in Hawaii?

With its true colonial interests in mind, the U.S. found a foothold in Hawaiian agriculture within the sugar trade. Between a huge demand and generous, preferential terms offered to Hawaiian sugar growers in treaties, Hawaiian sugar growers quickly rained wealth and prominence- the price of sugar rose 525% from 4 cents per pound in 1861 to 25 cents in 1864.

However, the McKinley Tariff in 1890, which removed import tariffs on other foreign-imported sugar and therefore saturated the market with other foreign sugars, reduced the price to 2 cents per pound and was ultimately instrumental in annexing Hawaii. The sugar growers realized that if Hawaii became annexed by the U.S., there would no longer be issues with foreign competition.

Hawaii Early 1900s


What Was the Turning Point?

With waves of Japanese workers journeying to the islands, the “threat of the Asiatics” was the catalyst behind annexation. Even with Japanese workers receiving $18 a month for agricultural work, substantially less than their European counterparts, an influx of migrants continued to seek out jobs.

The United States was gradually increasing its colonial presence and decided to make its move in 1898 to keep other powers from absorbing the islands.


What Happened to the Inhabitants?

Like any indigenous peoples being colonized, the immediate negative aftermath outweighed the positives. Jobs opened up (demand for agricultural laborers) and the McKinley Tariff was no more. But with annexation came a dilution of culture, taxation without true representation (being so far from the capital and with natives generally thought of as 2nd class citizens), and an onslaught of political matters that now concerned them.

Raising American Flag Hawaii


What Else?

The Hawaiian dollar (dala) was the currency from 1848-1898. It was equal to the US dollar and divided into cents (keneta). After annexation, the currency continued to circulate alongside the U.S.’s currency, until a 1903 congressional act demonetized the coins, causing most to be melted down or made into jewelry.

Aside from a strategic location and a new source of sugar cane production, Hawaii was also a key provisioning spot for American whaling ships and a fertile ground for American protestant missionaries. Thanks to these factors, before too long, Hawaii’s economy became increasingly integrated with the United States.