Inalienablility, Rehabilitation, and Interest Group Politics: An Economic Analysis of the Origins of the Hawaiian Homes Program

The Hawaiian Homes Commission Act of 1920 set aside marginal lands for Native Hawaiian homesteads with restrictions on their alienability and use, and funds for their development. The Act preserved all leased government sugar lands for the plantations, and preserved homesteads and federal construction jobs for the Hawaiians. This legislation was largely the outcome of a struggle between these two interest groups to secure benefits at the expense of each other and the Japanese. The rationale for the Act and its land restrictions was primarily to produce a public good - rehabilitation of the dying Hawaiian race through work on the land; and secondarily to internalize an externality - preservation of the Hawaiian way of life.