The history of Hawaii after European contact can be traced through a succession of dominant industries: first sandalwood, followed by (beef on the Big Island), whaling, sugarcane, pineapple, military, tourism, and education. Since statehood in 1959, tourism has been the largest industry, despite efforts to diversify.
Sandalwood ('iliahi) is the name of different fragrant woods. These woods are often used for the essential oil they contain. The wood is heavy and yellow in color as well as fine-grained, and unlike many other aromatic woods it retains its fragrance for decades. The sandalwood fragrance is very distinctive and is used in countless applications. Sandalwood has been valued and treasured for many years for its fragrance, carving, medical and religious qualities.
Unlike most trees, sandalwood is harvested by toppling the entire tree instead of sawing them down at the trunk. This way, valuable wood from the stump and root can also be sold or processed for oil. http://en.wikipedia.org/wiki/Sandalwood
By the time Captain Cook landed on the Hawaiian Islands in 1778, India's supply of sandalwood was nearly depleted. This set the stage for Hawaii's entry into the international commercial market. During the 1800s, traders made deals with Hawaiian chiefs to cut down the native sandalwood trees, and sailing ships carried thousands of tons of heartwood to India, Asia and Europe. Soon the native forests of sandalwood and other beautiful hardwoods (such as Acacia koa) were all cut down, a massive deforestation from which the islands have never recovered. http://www.indiadivine.org/audarya/hinduism-forum/189256-sandalwood-india-hawaii.html
(Sandalwood trade in Rarotonga)
In 1811 Kamehameha controlled the sandalwood trade as a near-monopoly through the use of his agents. While a few individual chiefs also dealt directly with traders, it was not until the death of Kamehameha I that a wholesale pillaging of sandalwood forests took place. While Kamehameha I still held the reigns, he placed a kapu on young trees and no transaction was ever done on credit.
After Kamehameha's death in 1819, his son Kamehameha II fell into debt with sandalwood traders. Having given away his own lands, he relied on the wood supplies of others. http://www.hawaiihistory.org/index.cfm?fuseaction=ig.page&PageID=274
In December 1826, the kingdom of Hawai'i enacted its first written law — a sandalwood tax. Every man was ordered to deliver to the government a half picul of 'iliahi, or pay four Spanish dollars, by Sept. 1, 1827. Every woman older than 13 was obligated to make a 12-by-6-foot kapa cloth. The taxes were collected to reduce a staggering debt level.
This period saw two major famines as 'iliahi was harvested to the point of near extinction in Hawai'i forests. The common people were displaced from their agricultural and fishing duties, and all labor was diverted to harvesting sandalwood. http://the.honoluluadvertiser.com/article/2006/Apr/14/il/FP604140306.html
By 1830, the trade in sandalwood had completely collapsed. Hawaiian forests were exhausted and sandalwood from other areas in the Pacific (e.g., Rarotonga) drove down the price and made the Hawaiian trade unprofitable. Although forests were ravaged, sandalwood trees still survive today, tucked away on less accessible mountain slopes. http://www.hawaiihistory.org/index.cfm?fuseaction=ig.page&PageID=274>