The Hawaiians are praised for three contributions to music history: slack-key guitar, the ukulele and the steel guitar (http://alohaisles.com/hawaii/culture.html). I have discussed the first two earlier and will focus on the steel guitar now and then falsetto singing in my next posting.
Joseph Kekuku (1874-1932) is regarded as the inventor of the steel guitar. Kekuku was born in Lāie, a village on the island of Oahu, Hawaii. As a boy, he would experiment with guitar techniques; sliding ordinary household objects across the strings to see what sounds could be produced. By the time he was an adult, he had developed a unique style of playing. He traveled extensively, teaching and performing throughout the USA and Europe. He died in Dover, New Jersey January 1932 (personal footnote: I used to vacation nearby at Cranberry Lake). (http://www.enotes.com/topic/Joseph_Kekuku)
Legend has it that around 1880, Kekuku, while just a schoolboy, discovered the sound while walking along a railroad track strumming his guitar. He picked up a bolt lying by the track and slid the metal along the strings of his guitar. Intrigued by the sound, he taught himself to play using the back of a knife blade.
The steel sound imitates the characteristic vocal vibrato prevalent in Hawaiian singing. He shared his style with others and the sound became popular in Hawaii. The name 'steel guitar' comes from the fact that it's played with a steel bar, and usually played lying flat. It's not to be confused with 'slide guitar' where a guitarist uses a glass bottle neck or metal hollow slide to make notes. http://www.pedalsteelguitar.net/histeel.php
The Hawaiian steel guitar is laid across the knees of the player, who stops the metal strings by gliding a metal bar along the neck. The strings are usually tuned to the notes of a given chord. http://www.guitarsite.com/history.htm
There is no one standard tuning for the steel guitar and the solid body electric steel allowed for instruments to be made with two, three and even four necks, each tuned differently. Multiple necks made holding the instrument on the lap almost impossible, and legs were added, making the first 'console' instruments, although a few single neck consoles were already being played by 'steelers' who preferred to stand.
In the early 50's several players began experimenting with adding pedals which raised the pitch of a string, and in 1953, Bud Isaacs was the first player to use a pedal steel guitar on a hit recording: "Slowly" by Webb Pierce. The sound quickly caught on and many steel players converted to playing the 'pedal sound’. http://gohawaii.about.com/cs/hawaiianmusic/a/steel_guitar.htm
Both lap and pedal steel guitars were closely associated with the development of country music and western swing. The pedal steel's liquid, yearning sound is still coveted by many modern musicians, even in jazz and blues.