The Flight of the Five

In Rome last week, the controlling interest in Italinvest, a newly organized food-processing and marketing company, passed into unlikely hands. The purchaser: Hawaii's Castle & Cooke, Inc. through its pineapple-growing subsidiary, the Dole Corp. Along with the other famed old companies that constitute Hawaii's Big Five,* Castle & Cooke was busily transferring as much of its stake as possible away from the land of aloha.

Caught by the Century. Founded by Yankee missionaries and traders in the mid-19th century, the Big Five long turned fat profits with their sugar and pineapple plantations, dominated the economic growth of the islands through intermarriages and interlocking directorates. But with World War II, the 20th century overtook the Big Five with some chilling effects. The unshakable grip that the International Longshoremen's Union won over the islands' agricultural workers forced wages in the pineapple fields up to an average of $1.78 an hour at the very time when low-wage countries, such as Formosa and Malaya, were invading the pineapple market. As a result, Hawaii's share of world pineapple sales fell from 78% in 1952 to 64% in 1960, and it is still slipping. Similarly, high labor costs restricted Hawaiian sugar sales to the protected U.S. market.

To the Big Five's mounting economic discomfiture was added last year a political threat: the state legislature passed an antitrust bill specially aimed at the Big Five. So far, the state attorney general has filed two antitrust suits involving

American Factors; the Big Five have reacted by beginning to cut down on their interlocking directorships.

Better than Death. Not surprisingly, the Big Five, though still continuing to invest in Hawaiian projects, are increasingly looking for new fields abroad. Besides last week's Italian venture, Castle & Cooke has over the past six years built up a thriving fish-cannery business in Oregon; its Bumble Bee canned fish last year accounted for 38% of its $4,600,000 earnings. C. Brewer & Co. has set up cane plantations and sugar refineries in Ecuador, Puerto Rico and Iran. American Factors is developing 1,400,000 acres for agriculture in Australia and is experimenting with raising pineapples in Honduras. Theo. H. Davies has burgeoning sugar and cement operations in the Philippines, and Alexander & Baldwin is reportedly dickering to buy a Manila stevedoring company.

Some Hawaiians fear that the exodus of Big Five capital bodes ill for Hawaii's continued growth. Hawaii's economy, which has recently lost some of its zip, rests precariously on four principal sources of income--sugar, pineapples, tourism, and military spending. Any decrease in agricultural income without offsetting increases in tourism and military spending, would be a serious blow and critics of the Big Five argue that by taking their know-how abroad, the companies may actually help foreign producers to cut into Hawaiian pineapple and sugar sales. In rebuttal, defenders of the Big Five insist that Hawaii's pineapple and sugar industries have been developed about as far as is possible under the prevailing high wage levels. Says Dole Corp.'s President Herbert C. Cornuelle: "It's better for Castle & Cooke to go abroad than to die. This way, at least, money still comes back to Hawaii in dividends."

* The other four: American Factors, Theo. H. Davies & Co., C. Brewer & Co., and Alexander & Baldwin.

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