An Unlikely Revolutionary: Matsuo Takabuki and the Making of Modern Hawaii

CHAPTER FOUR The Financial Revolution

CHAPTER FOUR The Financial Revolution BESIDES THE POLITICAL revolution that was transforming Hawai‘i, there were also exciting economic changes. Returning veterans were educated, highly skilled professionals seeking greater economic participation within the community. They were teaming up with budding entrepreneurs and oldergeneration risk-takers in niches of small business activity. The big corporations on Merchant Street never fully comprehended this social uprising, but simply struggled to keep out the competition and maintain the status quo. Those of us who were part of this economic expansion did not set out with speci fic goals—we sought only the opportunities available to achieve financial growth and security. Ultimately, our efforts helped open doors for all to climb the economic ladder. My own financial goals have always been relatively simple. As a high school student in a plantation town before the war, I realized society had placed limits on my life. The only real opportunity I had for upward mobility was to fulfill my mother’s dream of becoming a sensei. Teaching was an achievable career of high repute, offering steady income and a gigantic step up from the plantation. I could not hope to be rich, but only to achieve some financial security within a meaningful profession . As time went on, however, my goal of becoming a teacher was replaced by the desire to go to law school, preferably a good one. The GI Bill of Rights and my wife’s support helped make that aspiration a reality, and I graduated from the University of Chicago Law School. In October 1949, I obtained my license to practice law in Hawai‘i. My first real job at the 79 Department of Labor of the Territory of Hawai‘i paid $400 a month, which at that time was more than I had ever earned. When I left the Labor Department in 1952 to enter private practice with my friend, Ben Takayesu, I no longer had a monthly paycheck. My income was based on the fees I earned from my practice after paying all the expenses. This type of independent career entailed risks and was based on my ability to survive as a lawyer. In my practice, I assisted clients in the structuring of financial deals. This legal work also offered me the opportunity to participate in business activities that supplemented the income from my law practice. When I was elected to the Honolulu Board of Supervisors, I received an additional $200 per month for this part-time position, but private practice remained my primary source of income. By the time I was thirty years old, I was earning enough from my law practice to pay expenses and provide for my family . In order to build an economic foundation, however, I needed not only to save money, but to establish credit and thereby effectively increase my monetary base in order to invest in financial opportunities as they might arise. In those days a person with limited capital had more opportunities to become a successful entrepreneur than today. For example, a small contractor could commit to buying four or five house lots in a twenty-lot development project with a relatively small downpayment. (The developer, in turn, would then use these sales contracts to collateralize his own loan from a lender.) The contractor could build houses on the four or five lots with building materials and financing provided by the building supply houses. When the houses were sold to the ultimate home buyers, the contractor would pay the developer the balance owed for the lots and pay the building supply houses for the materials. With luck, a nice profit could be made. If the first venture was successful, the contractor could repeat the process of building and selling homes. The growth of these small contracting businesses throughout the 1950s was an important financial opportunity for those outside the haole oligarchy. The Big Five were not involved in home-building ventures on such a small scale. In those days, a 80 AN UNLIKELY REVOLUTIONARY contractor, particularly of local origin, could not easily borrow directly from Bank of Hawai‘i or Bishop Bank (now First Hawaiian Bank), the two major banks that basically controlled the money supply of the Hawaiian economy. Business loans were hard to come by for anyone who was not part of the kamaaina haole establishment. Other sources of capital and financing needed to be developed. In earlier days, the...