Sandalwood (ʻiliahi) has been highly prized and in great demand through the ages; its use for incense is part of the ritual of Buddhism. Chinese used the fragrant heart wood for incense, medicinal purposes, for architectural details and carved objects.
Sandalwood was first recognized as a commercial product in 1791 by Captain Kendrick of the Lady Washington when he instructed sailors to collect cargo of wood. From that point on, it became a source of wealth in the islands until it was finally exhausted. The wood was shipped almost exclusively from a few recognized harbors on the lee side of the islands.
Sandalwood was a desirable cash crop in Hawai’i because it could be harvested year round and did not have to be irrigated or cultivated. While trade in Hawaiian sandalwood began as early as the 1790s, by 1805 it had become an important export item.
Sandalwood trade was a turning point in Hawai‘i, especially related to its economic structure. It moved Hawai‘i from a self-sufficient economy to a commercial economy. This started a series of other economic and export activities across the archipelago.
In 1811, an agreement between Boston ship captains and Kamehameha I established a monopoly on sandalwood exports, with Kamehameha receiving 25% of the profits. As trade and shipping brought Hawaiʻi into contact with a wider world, it also enabled the acquisition of Western goods, including arms and ammunition.
Kamehameha used Western cannon and guns to great advantage in his unification of the Islands and also acquired Western-style ships, buying the brig Columbia for a price of two ship loads of sandalwood in 1817.
Between about 1810 and 1820, the major item of Hawaiian trade was sandalwood. King Kaumualiʻi held the sandalwood monopoly on Kauaʻi and Niʻihau, Kōloa Landing (Site #10) served as a prominent port of export. Kamehameha I held the monopoly for the rest of the island chain. Kamehameha rigidly maintained control of the trade until his death in 1819, at which time his son, Liholiho, took over control.
When Kamehameha died, although Liholiho should have inherited all of Kamehameha’s lands, the chiefs wanted the revenue from the sandalwood. By persuading the king to give them control of the royal sandalwood monopoly, they effectively removed any regulation of the harvest or sale of the wood. Trade continued at an accelerated rate following Kamehameha’s death.
In America, the Panic of 1819 (the first financial crisis in the United States) made it difficult for traders to obtain sandalwood for the China trade. However, because the Hawaiian chiefs had become enamored of items of foreign manufacture, the islands provided an open market for goods like rum, clothing, cloth and furnishings. Foreign traders shipped these goods to the islands, exchanging them for sandalwood, which continued to be in demand in China.
In December 1826, the kingdom of Hawaiʻi enacted its first written law — a sandalwood tax. Every man was ordered to deliver to the government 66 pounds of sandalwood, or pay four Spanish dollars.
This period saw two major famines as ʻiliahi was harvested to the point of commercial extinction in Hawaiʻi forests. The common people were displaced from their agricultural and fishing duties, and all labor was diverted to harvesting sandalwood.
By 1830, the trade in sandalwood had completely collapsed. Hawaiian forests were exhausted and sandalwood from India and other areas in the Pacific drove down the price in Canton and made the Hawaiian trade unprofitable.