THE GROUNDFISH INDUSTRIES OF NEW ENGLAND AND CANADA A Comparative Economic Analysis -\ Circular 121 United States Department of the Interior, Stewart L. Udall, Secretary- Fish and Wildlife Service, Clarence F. Pautzke, Commissioner Bureau of Commercial Fisheries, Donald L. McKeman, Director THE GROUNDFISH INDUSTRIES OF NEW ENGLAND AND CANADA A Comparative Economic Analysis * By Edward J. Lynch, (formerly) Director Richard M. Doherty, Director George P. Draheim, Research Associate Bureau of Business Resesirch College of Business Administration Boston College Chestnut Hill, Massachusetts United States Fish and Wildlife Service Circular 121 Washington, D. C, July I96I * This study was completed in June I96O. The report prepared by Boston College was delivered to the Bureau of Commercial Fisheries in October i960, and it was processed in July I96I. Its publication as Circular 121 does not imply a commitment by Government with respect to any of the findings. ii PREFACE The American groundfish industry, centered in New England, far from participating in the general prosperity which has characterized the national econoBQT in the post-World War II period, has been in a continual stage of decline during these years. The growing unprofitability of the groundfish industry and its effects on new investment, employment, and ressel construc- tion, are matters of grare concern not only to those whose livelihood de- pends on the industry, but also to those concerned with the preservation, development, and utilization of the fishery in an area notably short of resource - based enterprises. The major reasons usually assigned for this decline are the decline of fish populations in local waters to lower but stable levels and the con- sequent high unit costs of operating, the costs and difficulties of marketing the product in competition with other food items, and the impact of foreign competition, principally from the Canadian Atlantic Provinces. This report is an attempt to qualify and quantify these and other causes, both internal and external, of the decline of the New England groundfish industry. In doing so, it will focus on the comparative per- formances of the industries of New England and its chief competitor, the Canadian Atlantic Provinces. It deals with the economic, social, and biological factors which have affected both. The study was performed by the Bureau of Business Research of Boston College, under contract to the Bureau of Commercial Fisheries of the United States Department of the Interior. It was financed with funds made avail- able under the Saltonstall-Kennedy Act, approved July 1, 195U. (68 Stat. 376). The Bureau of Business Research, Boston College, is indebted to many individuals, government agencies, and private firms in this country and Canada, which aided in the study. Among these are Dr. Donald J. White, Associate Dean of the College of Business Administration of Boston College, and a recognized authority on the New England fishing industry^ the various trawler owners in New England and Canada who made their records available to us J the New England Fish Exchange; the Atlantic Fishermen's Union j the Massachusetts Department of Labor and Industry; the Massachusetts Division of Employment Security; the insurance brokers and repair yard owners who gave freely of their time and knowledge; the Fisheries Research Board of Canada; the Newfoundland Fisheries Development Commission; the Department of Trade and Industry of Nova Scotia; and the Atlantic Provinces Economic Council. Finally, the Bureau of Business Research wishes to acknowledge the continuing guidance and counsel, throughout the study, of Mr. Walter H. Stolting, Chief, and Mr. Alton T. Murray, Commodity Industry Economist, of the Branch of Economics, Division of Industrial Research, in the Bui'eau of Commercial Fisheries and the assistance furnished by the Director, Dr. Herbert W. Graham and staff members of the Woods Hole Laboratory, Bureau of Commercial Fisheries. iii iv TABLE OF CONTENTS Page CHAPTER I - BACKGROUND AND THE PROBLEM AREAS 1 Introduction 1 Historical Importance of the New England Fishery 1 The Decline of the New England Groundfish Industry 1 1. Employment 5 2. The Vessels 6 3. Cost-Revenue Relationships 7 The Modem Industry 8 CHAPTER II - THE ATLANTIC PROVINCES OF CANADA U Economic Base 11 1. Atlantic Provinces And Canada 11 2 . Atlamtic Provinces And New England 11 3 . EJmployment And Income 13 The Fisheries 1^ 1. Historical Importance 15 2. Relative Inqportance Of The Fishery 15 3 . Structure Of The Fishing Industry 16 a . The Inshore Fishery 17 b. The Offshore Fleet 18 c . The Subsidized Fleet 19 k . The Fishing Labor Force 23 The Market for Groundfish 29 1 . The Primary Mcirket And Price 31 Governmental Aid to the Fisheries 33 Summary and Conclusions 35 CHAPTER III - THE HADDOCK RESOURCE 39 Introduction 39 The Economic Implications of the Haddock Resource Available to the New England Groundfish Fleet 39 1. History Of The Resource Utilization 1|0 2. Maximum Annual Yield On Georges Bank And Its Effect On Fishing Costs h3 Summary and Conclusions 52 CHAPTER IV - OTHER GROUNDFISH RESOURCES 55 Introduction 55 Ocean Perch Resource 55 1. History ^^ 2 . The Ocean Perch Grounds 55 3. The Ocean Perch Ports 56 Cod Resource 57 Pollock 57 Cusk 57 Hake 58 Whiting 58 TABUS OF CONTENTS - continued Page CHAPTER V - COSTS AND EARNINGS OF NEW ENGLAND TRAWLERS 59 Introduction 59 1. Size As A Factor 59 2 . Trip Activity As A Factor , 60 3. Managerial Skill As A Factor 60 Costs and Earnings in the Boston Industry: 200+ Gross-Ton Trawlers 61 1 . Methodology 61 2. Landings And Receipts 61 3 . Productivity And Earnings 62 h . Vessel Expenditures 61i a . Gear, Repair, and Maintenance 6k b . Insurance 65 5. Crew Earnings 66 Costs and Earnings in the Boston Industry: 150-199 Gross - Ton Trawlers 70 1 . Receipts And Productivity 70 2 . Vessel Expenditures 70 a. Gear, Repair and Maintenance 70 b . Insurance 70 Gloucester and Maine Trawlers 70 1. Landings , Receipts And Productivity 71 2. Costs 71 a . Trip Exp>enditure 72 b . Insurance 72 c . Gear, Repair, and Maintenance 73 Summary 73 CHAPTER VI - COMPARATIVE COSTS IN THE CANADIAN AND 21W m^yUiiD GROUNDFISH INDUSTRIES 75 Introduction 75 Sources of Advantage of the Canadian Groundf ishery 75 1. Geographic Factors 75 2 . Historical Factors , 75 3. Structural Differences Of The Canadian And New EIngland Industries 76 Effect on Costs of Geographic and Structural Differences .. 77 1. Landings 77 2 . Trip Expenditures 77 3 . Vessel Expenditures 78 a. Gear, Repair and Maintenance 78 b . Insurance 79 c . Other Vessel Expenditures 79 Sununary 80 VI TABI£ OF CONTENTS - continued Page CHAPTER VII - RESOURCES AND PRODUCTIVITT 81 Introduction 81 Current and Future Groundf ish Resources , 81 1. Cod 81 2. Haddock 83 3 . Ocean Perch 83 h. PoUock 81; 5. V/hiting (Silver Hake ) 8U 6. Cusk 8U Summary Qk Productivity of the Principal Fishing Grounds 8U 1. Grand Bank 85 2 . Nova Scotia Banks , 85 3 . GuK Of St . Lawrence 86 Summary 86 CHAPTER Vni - SUMMARY AND CONCUJSIONS 89 Summaiy 89 1. The Industries 89 2. The Resources 89 3 . Costs And Earnings 90 Cone lusions 91 APPENDIX: 93 Tables for Chapter I - Tables I-l through 1-16 95 Tables for Chapter II - Tables II-l through 11-19 113 Tables for Chapter III - Tables HI-l through III-17 133 Tables for Chapter IV - Tables IV-1 through IV-1| 151 Tables for Chapter V - Tables V-1 through V-19 157 Tables for Chapter VI - Tables VI -1 through VI -7b 173 Tables for Chapter VII - Tables VII-1 through VII-9 181 vii Vlll CHAPTER I BACKGROUND AND THE PROBLEM AREAS Introduction The economic vitality of the New E>ig- land fishing fleet depends primarily on its major product — groundfish. These are fish that live on or near the sea floor, or on the "ground" of the fishing banks. The broad definition of the species includes a wide variety of bottom fishes, rockfishes, and flatfishes. In "this report, however, the term "groundfish" is vised in a narrower sense, for it is restricted to the follow- ing species, upon which the New Eiigland seafishery is principally founded: haddock, ocean perch (redfish), cod, pollock, hake, and cusk. i./ The groundfish fleet operates mainly on a 260,000 square mile continental shelf extending for 1,000 miles from Long Island, New York to Newfoundland. £/ The princi- pal fishing method en^sloyed is the otter tarawl. This is a large conical net that is dragged across the fishing banks by large steel trawlers and smaller wooden vessels. Historical Importance of the New England Fishery Fishing is New England's oldest indus- try and was once its most important one. The region's e3?)ort trade began with the shipment of salted and dried codfish to Europe. This industry later developed into the famous triangular trade of the I8th century, whereby fish was sent to Europe in exchange for Mediterranean prod- ucts which were brought to the West Indies for sugar, molasses, and rum which were carried to New England, The growing fishery of the 17th and 18th centuries laid the base for early Ne>i England's export trade and the manufactur- ing conplex that characterizes raodem-day New England: -"With the sugar that was brought back in payment for fish, the refining and distilling industries were started} with cacao, the confectionary industryj with hides, the shoe factoriesj with the gold and silver that occasionally returned, the southern New England jewelry manufacture."^ -The brass industry's origin was the market for ship chandlery, -Capital accximulated in fishing and shipping was used to establish the textile industry. New England's bellwether manu- facturing industry for decades. Ihe growth of manufacturing in New England after the Industrial Revolution resulted in the relative decline of the fishenes in the area's economic base. Commercial fishing, once the region's largest single industry, by I88O employed only 37,000 men out of a labor force of 1.5 million, £/ "Die Decline of the New England Groundfish Industry Prior to 1918 cod accounted for the major share of United States groxmdflsh landings. Between 1918 and 19 li? haddock was the leading species, and since 191^7 ocean perch has usually been the species landed in greatest quantity. The ocean perch fishery was established in the inld- 1930's and showed a marked upward trend in landings until 1952, After 1952 catches declined precipitously, with 195? landings hd> percent below those of 1951, Die ood catch also declined markedly, with 1957 1/ This definition of "groundfish" is also used by the United States Tariff Commission in its investigations, (Cf. United States Tariff Commission Groundfish: Fishing and Filleting, Washington 25, D. C, 1957) .2/ Fishery Resources of the United States. Senate Document No. 51, 79th Congress, IsT Session, March, 19i6. p. liti. 3/ Ackerman, Edward A., New Bigland Fishing Industry. Chicago: University of Chicago Press, I9U., p, 3. h/ Ibid, p. li. See also, Itenth Censvis of the United States, Washington 1885 Compendium, pp. 136O-6I, 1366-67, landings 77 percent below those of 19ii5 and 57 percent less than the average annual landings of the 19li6-ii8 postwar period. Between 1922 and 19lj8 the long-run trend in landings of all species of ground- fish was upward. In the latter year over half a billion pounds of groundfish were landed in New England ports. The downward trend began In 19^49, however, and by 1957 landings were down to a third of a billion pounds. The trend in aggregate landings of groundfish since 1939 followed the trend of landings of ocean perch and cod. Haddock landings have been relatively stable, while there has been a substantial decline in the aggregate landings of pollock, hake and cuskj (table I-l in the Appendix which con- tains all tables for this report.) Landed values of groundfish have like- wise declined, especially in the post-World War II period. Landed values in 1957 were $10 million below those of 19li8, (table I-l). Lower ocean perch revenues accounted for U6 percent of the loss; cod for about 2k percent of itj and haddock 21 percent. 2/ During this same period, when groundfish values declined 35 percent, the value of fish other than groundfish landed in New England declined only 10 percent, and the landed value of shellfish actually increased 21 percent, (chart I-l). Thus the depression in the groundfish industry was responsible for the resultant decline of 11 percent in the value of all New England fishery land- ings over this period. This decline occur" red in a decade when wholesale prices were rising 17 percent and when the cost of gear and equipment as reflected by prices paid by fishermen was advancing sharply. If landed values are deflated by the wholesale price index (chart 1-2), it is seen that, in real terms. New England groundfish rev- enues dropped by k2 percent over the 19U8 to 1957 period, and that of all fish and shellfish by 21 percent. This serves to poiiTt up the fact that the absolute decline of the New England fishing industry is due principally to the decline of its ground- fish component. This postwar crisis has been marked by both a diminishing catch and a price structure that has been inadequate to com- pensate for the lower domestic supply and the higher costs of vessel operation. In the 19i48-57 decade landings and values of groundfish declined by the same proportion, indicating little change in unit catch prices, despite the severe change in quan- tities available for sale. Thus, per unit prices remained relatively stable until 1958 when the unit price rose in response to an international scarcity of groundfish, (table 1-2). Significant Ty, the decline in domestic landings was paralleled by a sharp upward trend in imported groundfish products, in- cluding ocean perch fillets, (tables 1-15 and 1-16) . This rapid growth in the volume of imported groundfish products, principally from Canada, has had a serious competitive impact upon the domestic in- dustry. The organization of the Canadian groundfish industry is examined in Chapter n. The groundfish industry is of varying importance to the prosperity of the five leading New England ports, (table 1-3). The Boston fishing fleet is almost complete- ly dependent on groundfish for its liveli- hood; in New Bedford less than 10 percent of fishing revenues comes from groundfish (61 percent from scallops and 25 percent from flounder fishing). Over 50 percent of Gloucester's prijniary fishery values are derived from groundfish. In Portland and Rockland, groundfish are the most valuable category of seafish landed. The lower values of groundfish in relation to all fish and shellfish landed in these latter 5/ The relation between the trend in ocean perch landings and values and total ground- fish landings and values is even more evident if analysis is made of the decline in reve- nues between 1951, the postwar peak, and 1957. In this period, total groundfish values were off $11.2 million, of which 67 percent is accounted for by lower ocean perch sales. X! CO +» o ID a •H r- ^ V §5 O 0\ ^< .H C3 ■g ^ 15 bO fH .H d --I 1 M 0) H J3 > CO 1 J3 "-1 o S) J- ^ ^ T) (x. ,3 2 «H 4S o o > c o r-l «H rH fH O O •H T3 CJ NO :vO. 0\ O a) f-4 o fH (D CO • CO O tH . •H fe lA fH . lf\ TJ CJ o\ rH S^ I n Q " m ^1 CJN -H .-I Cc, S| t^ r-l ON C" CO ;b (T) SE O n a> •p CO c £3 a) o n o •H +> a CO 0] a> •H Cm Vi O Q) x; Lp n IS Ih CO a p (1) (h n s n i (0 o +» Ih CO o cd o c^ o NO o lA o -3 o o CM 0) o o (0 n •H C5 T5 "LA C OS a r-i c-H I SS 7 M CQ "3 I 5 0) to O O f-H| W •H CO M +> o .-1 o n CO c o o § JS n •H c •3 X3 CO n i» •H •H :3 1 .-1 (0 3 c^ •V xr\ 0} On o «H •H & On 0) O CO CO C>N a) .2 .n On •H O CO i-H rH S5 _ T3 TJ ^ • (T •H CO -P :s . -H (^ C ■LA T3 • t3 10 •H Vh «J I iH O "H rH r-1 O •H O C~- 0^ « C\J o\ OJ... -3 o o lA O -3 o o s ♦. I l-t ra (0 •H X '^.^ p o CO 0) ■P o <4 o O C •H (0 o 0) +> c x: • O On 1 two ports is due to the higher values for lobster landings, particularly in the Rock- land area. The fishing ports raost dependent on groundfish landings have not experienced postwar prosperity, (table I-li). The aver- age value of the Boston catch in the 1955- 57 period vras 29 percent below that of the 19li7-ij9 average. Comparing the same periods, Gloucester's catch value was down 21^ per- cent from the 19ii7-l;9 average and off 29 percent from the 1950-52 peak years. New Bedford's landed vtilues have shown a long- terra upward trend because of its prosper- ous scallop fishery. The Maine ports of Portland and Rock- land present a less clear picture. In Portland average landed values for all fish and shellfish from 1955-57 were 23 percent above the 19ii7-li9 average and k percent be- low the 1950-52 average. Further analysis indicates that the in -re as e from 19li7-ii9 to 1955-57 is priraariiy due to groundfish values, which increased 38 percent con^iared with a 13 percent increase in the value of shellfish, principally lobsters. Groundfish landings, primarily ocean perch, increased steadily in Portland from 19^*7 to 1951 and have declined since then, so that there has been a loss in average annual "value be- tween 1950-52 and 1955-57 of 12 percent. In Rockland landed values for all fish and shellfish increased 16 percent between 19l47-lj9 and 1955-57. At the same time, the value of the shellfish catch rose 26 per- cent and the groundfish catch only 9 per- cent. The influence of the groundfish values is more apparent if comparisor. is made of the 1950-52 and the 195^57 periods. Despite a 20 percent increase in the value of shellfish between these two periods, total landed values of all fish and shell- fish in Rockland showed only a negligible increase. The explanation is a 30 percent drop in groundfish values. In retrospect, it can be seen that the depression in the primary groundfish industiy made itself felt in the haddock and ocean perch ports at different times. Boston landings and values began to suffer in 19ii9, while it was not until 1952, when ocean perch became scarcer in local waters, that Gloucester, Portland, and Rockland became sore-pressed. It should be noted. too, that the loss in groundfish values in Maine landings is evident since 1952 de- spite groundfish fleet additions from Massachusetts ports* The severity of the crisis in the groundfish industry has been manifested by many indicators. Declines in employment and earnings, lengthening average age of men and ships, and a drastic loss in the domestic industry's share of the United States groundfish fillet market are com- pelling signals ttiat this industry is rapidly losing its conqietitive vitality, 1. Brployment The wartime prosperity of the indus- try increased en^jloyment between 1939 and 192i7 by 81 percent; (table 1-5). Since then there has been a fairly steady decline in New England's en^sloyraent total, and this has been most striking in Massachusetts. From 19li7 to 1957 total New England em- ployment fell 25 percent, while that in Massachusetts declined 37 percent. Part of the decline in Massachusetts jobs cre- ated work opportianities in Maine, as a substantial nuitfcer of vessels transferred operations from Massachusetts to Maine ports. Employment on Maine trawlers near- ly tripled between 19ii7 and 1951. Jobs there have shrunk 6l percent, however, since 1951. The marked increase in Rhode Island employment does not reflect greater activ- ity in groundfishing, but rather a growth in the fishery for industrial (trash fish used for reduction purposes) fish and flounders. Only 2 percent of the value of Rhode Island otter trawl landings are ac- counted for by groundfish, whereas ground- fish in Massachusetts represents 67 per- cent and in Maine 87 percent of total otter trawler landings. Aiother index of en^jloynent in the groundfishery is the number of trips made annually by large otter trawlers, which land groundfish almost exclusively. The Bureau of Commercial Fisheries reports that the annual nurfcer of trips by such boats based in Massachusetts has fallen from 1,875 in 1917 to 1,101 in 1957. This represents a decrease in activity of I4I percent. 6/ 6/ fishery Statlstica' of the United States. 1947. P. 99; 1957. p. 121. The Massachusetts Division of Employ- ment Security has data showing total earn- ings paid to fishermen on vessels of 10 net tons and over. As shown in table 1-6, to- tal earnings in the fisheries have advanced only 3 percent in the 19it8-57 period. It must be remenibered, too, that this figure includes earnings in all fisheries en?)loy- ing vessels of over 10 net tons. If earn- ings from the relatively prosperous scallop industry are excluded, there is an absolute decrease in groundfish vessel earnings. This is verified by the experience of the groimdfish ports of Boston and Gloucester where total earnings fell 8 percent and employment 25 percent in the period. Since the number of jobs in these two ports de- clined more than did total payments, aver- age earnings for those still employed ad- vanced 2li percent (versus a 17 percent increase in the cost of living). On the other hand, total wage payments in other MassachvLsetts ports advanced 20 percent, while the number employed fell 3 percent, in these ports average annual earnings advanced 2li percent in ihe period. These higher earnings figures reflect the influ- ence of the scallop fishery in N<=>v Bedford. The reduction in employment opportu- nities in the fisheries has had a marked effect on the composition of the fishermen labor force. Table 1-7 surveys the age composition of the Atlantic Plsherraen's Union in 1958. The data may be biased to- ward the older age groups, as there is no way of determining how active the older members are in fishing. A marked differ- ence is seen, however, in the age distri- bution among the unionized ports. In Boston about 6? percent of the fishermen are 51 years or over and only 9 percent under ll years. In Gloucester iju percent are 5l or over and only 9 percent under ij. years. In New Bedford, where there is a prosperous scallop fishery but one reqiiir- ing arduoviB work for deckhands, only 29 percent are 5l and over while h2 percent are imder Ul years. Clearly, the problem of attracting young men into this industry is a major one for the groundfish ports of Boston and Gloucester, Detailed data were not obtained on the age of Maine groimd- fish fisherr.-.en, but the commissioner of the Maine Department of Sea and Shore fish- eries estimates that the average age of Maine trawler men is over U) and that young men are standing clear of the industry, 7/ 2, The Vessels There has been a decliJie in the number of vessels and their size, and a deterio- ration in the quality and equipment of the vessels. In the period 19li7-57 the number of New Qigland otter trawlers declined 13 percent with a li4 percent loss in net ton- nage. The number of trawlers operating out of Massachusetts ports declined 28 per- cent in number and 32 percent in tonnage. Maine ports experienced a 35 percent in- crease in numbers of trawlers and a 16? percent tonnage increase, but here, too, there has been a decline since 195a, (table 1-8). The number of active large and medium trawlers at Massachusetts ports has declin- ed from 295 in 19ii7 to 203 in 1957, (table 1-9 )• The shrinkage in the size and com- position of the Heet is most evident in the case of the Boston groundfish fleet where the number of large trawlers has been halved; medium ones have shown an 18 per- cent increase; and the smaller ones have been reduced by two- thirds, (table I-IO), Not only has the nurfcer of vessels in service decreased, but many of the remain- ing ones have reached an age long past "normal" replacement. As of September 1, 1958 the average age of a Boston otter trawler was 20,8 years. Large Boston trawlers averaged 18 years, medium ones 19, 7/ Fisheries Legislation, Hearings, Committee on Interstate and Foreign Comraerce, United States Senate, 2nd Session, July 15-17, 1958, p. l50. Brief by Ronald W. Green, Conmlssioner, Department of Sea and Shore Fisheries, State of Maine. See also. Assist- ance to Depressed Segmenta of the Fishing Industries, Hearings, Subcoirmittee on Fisheries and Wildlife Conservation of the Committee on Merchant Marine and Fisheries, House of Representatives, 86th Congress, 1st session, April 28-30 and June h and 11, 1959, p. 6l. Statement oX Honorable Beatrice Corliss, Mayor, City of Gloucester, Massachvisetts, and smaller ones 39 years. W Of 6k trawlers in Maine in 1957, W were over 11 years old, most of the large trawlers were over 20 years old, and the average age of the entire fleet was slightly more than 19 years. 2/ The useful life of a large trawler is reckoned at 2$ years and that of a smaller craft at 12 to 1$ years. When these standards are con^ared to the ages of the New England vessels. It is readily evident that the New England fleet has arrived at a crisis period, 3. Cost-Revenue Relationships The declining employment and the di- minishing fleet are not causes of the groundfish depressicxi, but rather the ef- fects of fundamentally inadequate cost- revenue relationships in the industry. As observed earlier, gross revenues and returns per po\u)d of fish landed have declined in constant dollars in the postwar period. Costs, however, have advanced sharply. While labor costs have remained at a fairly constant proportion of gross reve- nues, because of the nature of the share arrangement, there have been substantial increases in overhead costs, Ihe average cost of hull insurance rose dxu-ing the years 1950-51i by 27 percent, while there was a staggering 78 percent increase in the cost of the average protection and indent- nity policy in the same period. i2/ One of the principal marine railways in the area audited its 19^48 sales book and foiuid that to perform exactly the same repair and maintenance work on six average trawlers in 1958 would cost 73 percent more. The majority of the increase was due to higher labor rates: the 19 h8 charge was $2,00 per hour, and the 1958 charge was $3.85 per hour, ii/ For the tiwnty-five New England trawl- ers in this study, for which complete cost data were avciilable for each year 1953 through 1957, insurance expenses per boat advanced 28 percent; repair and maintenance expenditures were lower in 1955 and 1956 than in 1953» but were 17 percent higher in 1957 than in 1953; and gear and supply expenses followed a similar pattern, lower in 1955 and 1956, but 26 percent higher in 1957. Ihe decline of prices and revenues at a time of increasing costs has resulted in deficit operations for many vessels* A recent cost study showed that in each year from 1953 to 1957 aggregate losses outweigh- ed aggregate profits. Fbr the year 1953, 35 vessels lost money, 33 showed profitsj in 1951*, U) had losses and 36 profits; in 1955, Ux had losses and 28 profits; in 1956, 33 had losses and 21 had profits; in 1957, \£) had losses and 22 showed profits. The aggregate losses for each year were: 1953, $116,000; in 1951*, 10.71*, 000; 1955, $175,000; 1956, $118,000; 1957, la.88,000. On a per boat basis this was a deficit in 1953 of $1,706; in 1951*, of $2,289; in 1955 of $2,li31; in 1956 of $2,185; and in 1957 of $3,032. It is not to be wondered then that old vessels in the New England groundfish industry are not being replaced by newer units. To gain a proper perspective of the situaticai in the groundfish industry, it is instructive to examine very briefly the postwar- progress in other major New England fisheries. Have groundfish vessels and fisherman transferred activity to other fisheries? Have ports not as dependent on groundfish landings experienced growth or decline? Shellfish values Increased substantial- ly in the postwar years, while the valiies of seafish other than grouodfish were rela- tively stable in the 191*8-57 decade, (chart I-l). A more detailed breakdown of landings and values in the significant com- ponents of the New England fishery appears in table I-ll. 8/ Comnercial Fisheries Review, Fish and Wildlife Service, United States Department of the Interior, November 195a, p. 29, 9/ Fisheries Legislation, op. cit., p, l5l. ^/ Hull Insurance and Protection and Indeimity Insurance of Conmercial Fishing Vessels, by Warner C. Danforth and Dr. Chris A. Theodore of Boston Uiiversiiy, Special Scientific Report - Fisheries, 2lil, United States Department of the Interior, Fiah and Wildlife Service, 1957, p. 3. 11/ Data submitted by a Gloucester marine railway, January 8, 1959, The growth in shellfish landings and values to a limited degree represents al- ternative employment for grovindfish vessels. The sea scallop fishery, concentrated in New Bedford, uses 70 to 80 boats whose construction and deck arrajsgement are sim- ilar to that of medium-sized groundfish trawlers. Many of the boats are converted ftom trawling to scalloping and back again in order to adapt the vessel to changing marketing conditions in groundfish, floun- ders, and scallops, ii' IMs particular possibility of alternative eD$)loyment is of some moment iu New Bedford, but of little importance as a solution to the region's groundfish problem* The \diitiag fishery is another iiidxistry showing definite growth possibilities. PY*cbi 19li7 to 1957 >^iting landings doubled and value increased over 50 percent. In s\immary it may be said that there have been distinct growth segments in the New Ehgland fisheries and, that of these, scallops and whiting present some alter- native employment possibilities for ground- fish vessels and men* Save for the scallop fishery in New Bedford, and to some extent the whiting fishery in Gloucester, these have not substantially alleviated the economic consequences of 'the decline of the groundfi shery , The growth of industri- al fishing has been remarkable, but it has been in ports not previously groundfish landing sites. In I96O, however, this fishery began to experience some economic difficulties. The Modem Industry Kie Director of the Bureau of Comner- clal Fisheries, Departraant of the Interior, estimated in 1958 that if shore workers and those enployed in allied industries dependent on the fisheries are included, nearly 65,000 persons have their liveli- hood based on the industry. The value of the groundfish fleet alone is estimated at Up million with another $30 million in- vested in processing plants. 13/ Iho landed value of the 1956 New England catch was nearly |60 mill ion j fishery products manu- factured in the area were valued at $108 million, and the retail value of the New England catch was about $l81i million. While the industry occupies a rela- tively minor position in the New England economy, it is of major importance in certain ports such as Gloucester, New Bed- ford, and Rockland. It is estimated that 70 percent of Gloucester's population is dependent on the fishery; in New Bedford it is the second largest industry, with en^jloyment provided for 10 percent of the labor force; in Rockland, it is the lead- ing industry. The State of Maine found for the years 1955-57 that the fisheries segment of Maine maniifacturing represented 2,9 percent of the total manufactured product value in the State, 1,9 percent of the total manufacturing gross wages paid and 2,9 percent of the total manufacturing average employment. Ihf In 1957, fishery products and byproducts accounted for 55 percent of the value of all primary pro- duction, li.3 percent of gross wages, and 5.7 percent of employment. The 9,5ii7 regular fishermen and processing workers represented 3.5 percent of the 1957 Maine labor force. New England fishing vessels in 1957 landed 1,030,883,000 pounds valued at $60,810,000, or 22 percent of the poiuidage and 17 percent of the values of total United States fishery landings. Groundfish constituted about 30 percent of both the poundage and value of the New England total catch of all species. New England accounts for about 95 percent of the United States landings of groundfish of ^Aiich over 80 percent are converted to fresh and frozen fillets. 12/ Sea Scallops Boats and Gear, by J. A. Posgay, Fishery Leaflet hh2f United States Department of the Interior, Fish and Wildlife Service, p. 3. 13/ Fisheries Legislation. Hearings, Committee on ]&iterstate and Foreign Commerce. Unl^d States Senate, HSth Congress, 2d Session, July 15-17, 1958. Testimony of Dona3.d L, McKeman, Director, Bureau of Commercial Fisheries, p. 217. iV Special Study: Value of the Fisheries in Maine Manufacturing Industries. Sta^ of Maine, Department of Labor and Industry, Division of Research and Statistics. July 3, 1958. 8 The production of groundfish flllatg en- abled the area to accoimt for nearly 69 per- cent of the total United States output of packaged fish in 1957. il/ I" tenna of value, haddock is the most inportant groundfish species. In 1957 it contributed 55 percent of the total value of the region's groundfish catch, The other two leading species are ocean perch and cod, which accounted for 28 percent and 11 per- cent respectively of landed values, (table 1-12), Groundfish landings are concentrated in five New England ports: Boston, Glouces- ter, New Bedford, Portland, and Rockland, Landings in these five represent 90 percent of the poundage and 99 percent of the value of groundfish landings of all New Bigland ports, Ihe New England fishery for all species shows soinev^iat less geographical concentration, although these five leading ports account for about two- thirds of the poundage and value of all fish and shell- fish landed, (cf. tab 1-3 1-3). Ihe fisheries for New aigland haddock and ocean perch may be classified geograph- ically in two ways. One is by port, and the other is by area fished, Boston has long bean the home of the haddock fleet, while Gloucester, Portland, and Rockland are the centers of ocean perch operations. Eighty-two percent of the value of all haddock landed in major New England ports in 1957 was concentrated in Boston, (table I-13)» Gloucester, Portland, and Ttockland had 96 percent of the value of ocean perch landings, with Gloucester vessels alone landing about 50 percent of the total. In 1958 Boston-landed haddock represented 78 percent of the value of all groundfish sold in the port and 7li percent of the value of all fish and shellfish landed there. In the same year, ocean perch was the most valuable groundfish species land- ed in Gloucester, Portland, and Rockland and accounted for approximately 65 percent, 72 percent, and 93 percent, respectively. of the valxie of groundfish landings in these ports, (tables l-lli and I-IUA). New Bedford has a more diversified fishery than the other New England ports. Here is the center of the United States sea scallop fishery. Scallops in 1958 accounted for 53 percent of the value of all fish and shellfish landed at that port. The New Bedford fleet also produces a significant amount of flounders. Thus, in 1958, floimders represented 31 percent of the value of all New Bedford landings of fish and shellfish. The causes of the disastrous cost- price squeeze in the groundfish industry are the subject of much ccaitroversy. Nearly all New England vessel owners lay the blame on a demoralized national market structure sapped by foreign inports of cheaply Rroduced frozen groundfish fil- lets. i§/ Aggregate United States con- sumption of groundfish fillets has in- creased about 250 percent since 19i40j on a per c^ita basis the Increase is about 87.5 percent, let New Bigland's pro- duction of such fillets in the 1956-58 period was sli^tly below the 1939-ln. average. In 1939, the region's share of the national market for groundfish fillets was about 91 percent; in 1957, it was only about UO percent. (New England accounts for the bulk of United States production). From 1939 to 1957 imports went from 9,892,000 pounds to liil,180,000 pounds, an increase of 1,327 percent. In the postwar decade alone there was nearly a threefold increase, (table 1-16). The bulk of these imports have come from the Canadian Atlantic Provinces. Im- ports from this area represented 77 per- cent of all groundfish fillet imports in 1957 and 62 percent in 1958. In the lat- ter year Iceland accounted for 18 percent of imports (table 1-15). 15/ Packaged Fish - 1957^ (F.S. No, 1753) United States Department of the interior, Fiih and Wildlife Service, Washington 25, D.C. 16/ This view is not shared by all segments of the United States fishing industry, Cf. testimony of injwrters and domestic distributors before Iftiited States Tariff Commission in recent years. Domestic producers do not contend that they can presently supply all the United States demand for groundfish fillets. They do claim that their foreign competitors, particularly the Canadians, are such low- cost producers that they can sell in the United States at a price which is demor- alizing. This price has to be met, and consequently New England processors are unable to pay the boat owners a price for imp recessed fish high enough to make vessel ownership profitable. This report will attempt to investi- gate and evaluate the comparative costs of production of New England groundiish vessels and those in the Canadian Maritime Provinces. The research will be confined to the costs of procuring the raw material, i.e., of catching and land- ing the fish. It will not examine the processing costs. Basic to an intelligent comparison of the production cost structure of the two competitors is an xinderstanding of the socio-economic nature of the fishery in the Maritime Provinces and of its relation to the general econony of the area. An analysis and development of the Maritime groundfishery in this light will be the task of Chapter II. 10 CHAPTER 11 THE ATLANTIC PROVINCES OF CANADA Economic Base New England's greatest competition in the market for groundfish fillets comes from its nearest foreign neighbor, the Atlantic Provinces of Canada. These Prov- inces are Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland. The first three named have socio-economic character- istics somewhat different from those of Newfoundland and are often grouped together under the term "Maritime Provinces." All four provinces border on the At- lantic Ocean and two (Prince Edward Island and Newfoundland) are islands. Their total land area, excluding Labrador, of 93 thou- sand square miles is about one -and- a- half times that of New England. Population is, however, much less concentrated than in New England. Dominion estimates as of July 1, 1959, place the Atlantic Provinces' population at 1,859,000, or 10.6 percent of Canada's total population of 17,ii82, 000.17/ This is somewhat less than 20 percent of the 9.7 million people residing in the New England States. Indicative of low urbani- zation is the fact that only 2? communities in the four Provinces had a population of over 5,000 in 1956. 1. Atlantic Provinces And Canada The economic base of the Atlantic Provinces is significantly different from that of the rest of Canada and that of New England. There is relatively greater de- pendence on the primary industries of forestry, mining, and fishing, with Lsss employment proportionally in manufacturing and agriculture. Fox^^st^y, fisheries, and mining contributed 25.5 percent of the net value of production in the Atlantic Prov- inces in 1955, while the same industries furnished 11.5 percent of the net value of production nationally. In contrast, manu- facturing, which accounted for 55 percent of the net value of production in all Canada, represented only 37 percent of the net value produced in the Atlantic Prov- inces, (table II -1). Newfoundland is especially dependent on the extractive industries for its economic vitality. Forestry, fishing, and mining contributed U2.5 percent of the net value of production in the Province, while manufacturing was responsible for only 32 percent of product values. Manufacturing in the Atlantic Prov- inces is largely based upon the processing of the raw material resources of the area. Considering the Atlantic Provinces as an economic unit, pulp and paper was the leading manufacturing industry in 1955, followed by fish processing, primary iron and steel, shipbuilding, and butter and cheese . These industries accounted for 51* percent of the total value of factory shipments of the Atlantic Region, ix' The relative importance of the primary industries to the economic base of the At- lantic Provinces is enqjhasized in table II- 2, in which the labor force is distributed by major industry groups. While nationally 26 percent of the labor force were engaged in manufacturing, only lU to 18 percent of the labor force were so occupied in the Atlantic Provinces. In the Dominion, only 5.5 percent of the labor force were in non- agricultural extractive industries (for- estry and logging; fishing and trapping; mining and quarrying, and oil wells), while in Nova Scotia and New Brunswick propor- tionally over twice as many were so em - plojred, and in Newfoundland five-and-a-half times as many. 2. Atlantic Provinces And New England The contrast between the economies of the Atlantic Provinces and that of New England is seen from a consideration of the non-agricultural labor force in the two areas as distributed by industry groups. In Maine find Massachusetts 39 and 38 percent IJ/ Parks, A. C. The Econony of the Atlantic Provinces, 19ii0-1957. Atlantic Provinces Economic Council, September, 1959. p. 3. 18/ General Review of the Manufacturing Industries of Canada, 1955. Bureau of Statistics, Industry and Merchandising Division, Queen's Printer and Controller of Stationery, Ottawa, 1958. p. 123. 11 respectively of the labor force is absorbed by manufacturing, i?/ In the Atlantic Prov- inces, however, only lU to 22 percent of the non-agricultural labor force is engaged in manufacturing. Proportionally more than two -and -one -half times as many workers are in manufacturing pursuits in Maine and Massachusetts as in Newfoundland. On the other hand, while only a statistically minute segment of the non-agricultural labor force in the two New England states have jobs in forestry, fishery, and mining, these industries provide enqployment for 15-16 percent of the labor force in Nova Scotia and New Brunswick and 32 percent in Newfoundland. 20/ The Atlantic Provinces, because of the dominance of their extractive industries, are dependent for their prosperity upon ex- port sales of these reaources primeirily in raw or semi -processed forms. The possi- bilities of expansion in secondary manu- facturing are severely restricted by the limited size of local markets, the trans- portation costs to the population centers in central Canada, and the tariff barriers to the nearby New England market. The economists of the region feel that logically there should be more commerce with New England in terms of processed raw materials and secondary manufactured goods. They do npt place the blame for lack of such trade on the United States alone. Many feel that Dominion policy since Con- federation, e.g., in respect to Canadian tariffs and the transcontinental railroads, (perhaps now the Saint Lawrence Seaway), has shifted the direction of trade from a more natural north-south to a linear east- west orientation. 21/ as the result of ex- tensive provincial financial aid, there has been some development of secondary manufacturing in Newfoundland since Confed- eration with Canada in 19U9. In the other Atlantic Provinces, however, the net value of manufacturing production in constant dollars has not changed significantly in the postwar years. The area has developed a definite re- source-export based econony. This develop- ment stems fundamsntally from the principle of comparative advantage. The Atlantic Provinces have been endowed with certain natural assets such as forest and mineral resources, highly productive fishing banks, and extensive hydroelectric potential. Add to this situation the area's seaboard loca- tion, and it is clear that such an economy must have a substantial export base . There appear to be possibilities for further development of certain of the primary industries. The forest resource is exploited at a rate well below repro- ductive capacity and the long-run outlook for its pulp and paper products in world markets seems very promising. The dis- covery of vast iron ore and other metals deposits in Labrador, the extensive iron resources on Bell Island, Newfoundland, the large deposits of copper, lead, and ainc found in New Brunswick in 1953, and the possibilities of increased production of non-metallics such as gypsum, flurospar, limestone, and barites, make the long-term prospect for minerals encouraging. The important Nova Scotia coal mining industry, however, may suffer a decline because of high cost operations, competition from other fuels and transport costs to central Canadian markets. Coal mining is still the most valuable segment of the mining industry. Little change is seen in the role of agriculture due to the physiography of the region, transport costs, and ex- change difficulties. The economies of the Provinces have been subject to both seasonal and cyclical fluctuations because of their resource and export orientation. Fishing and woods operations are subject to seasoiial varia- tions in production while employment, pay- rolls, and production in mining and in forestry -connected activities have varied cyclically with demand in export markets. The result has been over-specialization, instability in emplojrment, a situation of surplus labor, a reluctance, therefore. ip/ Bureau of Labor Statistics. Employment and Earnings, Annual Supplement, April, 1958. 20/ Census of Canada. 1951. ■^V Paper by S. N. Branch, "A Look at the Economy of Canada's Atlantic Provinces", delivered at the Joint Economic Conference (NEC-APEC), Saint John, New Brunswick, August h, 1958. 12 to substitute capital for labor, and a cor- responding lag in income and living stand- ards when compared with the rest of Canada and New England. 3. Employmsnt And Income The Atlantic Provinces have had chronic \memployraent or disguised unemploy- ment (i.e. - underemployment) . Per capita net value of production in 1955 was less than 50 percent of the national average. 22/ Average incomes in 15*57 were 36 percent be- low the Dominion average . The greatest differences in average incomss occur among rural families. Persons with low incomes who are engaged in subsistence farming combined with part-time fishing and logging are found more commonly in the Atlantic Provinces than in the others. This organ- ization of rural industry is one of the main reasons for the continued lag in per capita incomes in that area as compared with other parts of Canada. 23/ The lower standards of living in the Atlantic Provinces , are an important factor contributing to the lower costs of fishing in the fisheries of the Atlantic Provinces as compared with those in New England. The lower labor cost in the Canadian fishery is not peculiar to that industry but re- flects the generally different level of income and living standard prevailing in the Atlantic Provinces. Employment and earnings data for all industries in the Atlantic Provinces and for all Canada for 1950 through 195? shows earnings in Nova Scotia and New Brunswick were 11 and 18 percent, respectively, be- low the Dominion average in 1957 while those in Newfoundland were 5 percent under the national figure in the same year, (table II-3). Over the entire period, earnings in Newfoundland averaged 8 percent. Nova Scotia 15 percent, and New Brunswick lU percent below those of Canada as a whole. When earnings of production workers in manufacturing in the two areas are com- pared, weekly earnings in Massachusetts in 1956 ranged from 21 to 35 percent above those in the Atlantic Provinces j in Maine the range is from 6 to 18 percent, (table II-U data is based on weekly averages. Annual earnings may vary to a. greater ex- tent in the Atlantic Provinces because of the greater seasonality of employment). Living standards in the Atlantic Prov- inces would be lower still were it not for certain policies of the Federal Government. Dominion transfer payments have played a much more significant role in the increase in per capita personal income in the At- lantic region than has been the case else- where in Canada. Such payrnents have accounted for nearly 25 percent of the in- crease in income in the three Maritime Provinces since 1926. Conversely, the growth of per capita earned incone in the Atlantic region has lagged behind the com- parable growth in other parts of Canada. Lag in income growth is related to a corresponding lag in the role of new capital investment in the Atlantic re^on. "The lag has been in the productive sections of the economy, notably the basic resource industries. Business investment per capita and per member of the labor force in the Atlantic region for the period 195U-1956 was substantially below the average for Canada, being one -half and three -fifths respectively of the Canadian f igxire . One of the main reasons for the prevalence of subsistence operations is ^ the slow rate of new capital investment, '^li/ Surplus labor and living standards lower than those in the rest of Canada and in New England historically have impelled the migration of labor to mors favored areas. Between 1871-1956 there was a net emigration from the Maritime Provinces of 600,000 persons. This trend is a con- tinuing one J between 1951 and 1956 about 140,000 persons left the area. Emigration has so reduced the labor force that there is a relatively smaller labor force in the Atlantic Provinces in relation to total . population, than for Canada as a whole .Zi' Proportionally more nonworkers are de- pendent upon workers earnings and 22/ Canada Year Book, 1956. 2^/ Royal Commission on Canada's Economic Prospects. Final Iteport. Queems Printer and Controller of the Stationery, Ottawa, 1958. pp. U03-U0U. 2U/ Ibid, p. ii08. 2^/ According to the 1951 Census of Canada, the labor force constituted 32.3 percent of"The population in the Atlantic Provinces; for Canada as a whole the figure was 37.8 percent. 13 government aid than elsewhere. Moreover, the migrants ha\re tended to be the younger more aggressive, and skillsd members of the labor force. Another implication of the long-terra labor surplus in the Atlantic Provinces is that it places management in a stronger bargaining position in dealing with labor than in the more industrialized econony of New England where there is less unemploy- ment and a greater range of available al- ternative jobs. Moreover, ownership is concentrated in one or a few producers, in some basic industries and consequently the opportunities for management to take a stronger position with labor are inten- sijfied. The lower per capita income in the At- lantic Provinces has restricted the reve- nues available to the Provincial Govern- ments for social and welfare services. For example, with the exception of Nova Scotia, educational levels have been substantially below the standard prevailing in other Canadian Provinces. In all Canada U5 per- cent of the male labor force have some secondary education but only 33 percent in New Brunswick and 28 percent in Newfound- land have achieved this level. ^/ In periods of cyclical or seasonal unen^jloyment , ptederal transfer payiKnts are a crucially important source of family income. Early in 1959 in Newfoundland, after a fishery failure and a depression in the mining industry, 115,000 of the Province's ]450,000 people were living on Government benefits, 60,000 were receiving unemployment insurance , and the rest were on the rolls for various kinds of social assistance. 2?/ The deficit position of the Atlantic Provinces vis-a-vis the rest of the Dominion, their poorer living standards, and the hi^er per capita governmental welfare costs in the region, have been a source of concern to federal and provin- cial authorities. Economists have con- cluded that there are possibilities for only a relatively slight growth in second- ary manufacturing. Accordingly, govern- mental efforts to aid the regional economy- have been directed toward the resource - based industries. The object has been to increase living standards and income levels by encouraging greater capital investment per worker and thus achieve higher produc- tivity per worker. The aid given has been in the form of outright subsidies, low- interest loans, tax concessions, quick depreciation write-offs, free technical schools, and technical consultation. Much progress has been made in substituting capital for labor in such basic industries as fishing and mining. Yet the Royal Commission on Canada's Economic Prospects concluded that some further special govern- mental assistance may be needed for con- tinued economic development. 28/ Many of the leaders of the region accept the view that more governmental assistance is needed. In a speech before a meeting of the Atlantic Provinces Economic Counsul, Mr. A. B. Perlin, a New- foundland director of A.P.E.C., stressed the need for more federal aid for provin- cial development and said; "Where does Newfoundland stand today? Economically, the position is difficult. Even if there were not a mild recession in newsprint and logging we would still have to face up to the fact that the intro- duction of the chain-saw has revolutionized the logging industry. Once it took 17,000 men to complete our pulpwood cut. Today it is possible for half that number to cut the wood we want in much shorter time . Mechanization has deprived many thousands of their marginal earnings in the fall. The salt codfishery is still uncertain and unstable. Once 1^0,000 men drew their living from it. Today, save in exceptional circumstances, it cannot support 12,000. Our mining industry is doing fairly well. The American bases remain a large but un- certain support to the economy. Basic agriculture has suffei^d from our inability to produce as cheaply as we can buy root crops from the Maritimes. But population ;26/ Ibid. 27/ The New York Times, March 21, 1959, 28/ Final Report, Royal Commission on Canada's Economic Prospects, op. cit, .106. Ih has been increasing at a rapid rate . We have added 100,000 people since Confeder- ation - the equivalent of the whole popu- lation of Prince Edward Island. What can we do to hold that population? That is our big problem. It is aggravated by the fact that our population increase is the result of the surplus of births over deaths. We have no adult ijnmigration . Every year our potential working force rises by from three to four thousand and ovir basic resources cannot enable us to absorb so many "... .Our financial future , the future of our present inadequate services, our ability to maintain then at substandard levels now rests in the hands of the Federal Government." ±2' Mr. R. E. Tweeddale, General Manager of the New Brunswick Electric Power Com- mission, said in a September 1958 speech: "There is no doubt that we in the region are justly entitled to national assistance to help balance the difficul- ties which have been thrust upon us in the past, and this assistance should not be looked upon by ourselves or other parts of Canada as handouts, but merely just com- pensation to a region which has been ad- versely affected by the creation of a Country that trades east and west rather than the logical and natural method of trade north and south . " 30/ The Fisheries 1. Historial Importance As in New England, the fishery is the oldest industry in the Atlantic Provinces, Unlike New England, however, where the industry is now of slight importance rela- tive to the rest of the regional econon^r, the sea fishery of the Atlantic Provinces is a most important part of the area's economic base. Canada was once called "Bacalaos" . This was the name given to the mainland of North America by John Cabot in his explor- atory voyage of 11^97. "Bacalaos" was the Basque word for codfish and Cabot found Basque fishennen off the Atlantic Coast engaged in a cod fishery. 31/ The Canadian Atlantic fishing banks have long been a support of the Provincial economies, par- ticularly Newfoundland's. The political life of the area has been and continues to reflect the economic importance of the fishery. The settlement of Newfoundland was entirely dependent on the fisheries, Halifax was founded in 17li9 to protect the fisheries. The Treaty of Versailles (1783) ending the American Revolution dealt sensitively with American fishery rights in waters off today's Atlantic Provinces, Disputes between the United States and Britain over American rights in inshore waters off Nova Scotia nearly led to armed conflict in 1852. Fear of American encroachment in the maritime fisheries was one of the forces impelling Canadian confederation in 1867. 32/ The Great Depression of the 1930' s destroyed the Newfoundland salt cod market with such disastrous doirestic con- ■ sequences as to result in the collapse of responsible government and the substitution of a British royal governing commission. In 1959, the Provincial Government of New- foundland was led to break a bitter strike of lumbermen. According to Premier Small- wood, the lumbermen's union was trying to establish "an elite corps" of about 5,000 professional loggers which would cut off winter work for upwards of 20,000 fisher- men. The recent policy of Ftederal and Provincial aid to the fishing industry is founded on a long standing public interest in the sea fishery. 2. Relative Importance pf The Fishery The modem-day dependence of the At- lantic Provinces' economics on the fishery 29/ Speech delivered at the meeting of the Atlantic Provinces Economic Council, St. John's, Newfoundland, September 23, 1958. 30^ From an address delivered at the Newfoundland General Meeting of the Atlantic Provinces Economic Council, St. John's, Newfoundland, September 22, 19<8. 31/ Canada's Fisheries. Department of Fisheries, Ottawa, King's Printer, I9U6, p. 3. 32/ Estej-brook, W. M., and H. G. J. Aitken. Canadian Economic Histoiy. The Macmillan Company of Canada, Limited, Toronto, 19^8. "p.' 377. ' 15 may be demonstrated by considering the fisheries contribution to the net value of total production in the area, its absorp- tion of labor force, aind its role in the manufacturing industries. The primaiy fishery in the Atlantic Provinces contributes about 5 percent of the net value of commodity production in the area, (table II-5). In Newfoundland and Nova Scotia, its share is about 7 per- cent, in Prince Edward Island, about 8 per- cent. Fishing operations for Canada as a whole contribute only 0.6 percent of the net value of commodity production. Fish processing is a major part of the manufac- turing complex of the Atlantic region. If the net value of production contributed by fish processing (i.e. the value added by manufacturing to the raw material) is com- bined with the net value contributed by the primary fishery, the sum represents nearly 9 percent of annual net product values. In Newfoundland, the fishery represents about one-eighth of the commod- ity base of the Province; in Nova Scotia, the figuiB is almost 11 percent. Fishing and fish processing in the Maritime Provinces absorb proportionally ten times as much of the labor force as in New England, in Newfoundland, in 19^0, fully 20 percent of the labor force wds in the primary fishing industry, as contrasted to 0.6 percent in all New England, (table n-6). In New England, only 0.7 percent of manufacturing employmsnt is based on fish processing; 15.6 percent, or proportionally twenty times more such employment, is so oriented in the Atlantic Provinces, (table II-7) . In Newfoundland and Prince Edward Island over 25 percent of manufacturing enployment is in fish processing. In terms of manufacturing employment in 1955, fish processing was the leading industry in Prince Edward Island and Nova Scotia, second in Newfoundland, and third in New Brunswick. In salaries and wages paid, fishing processing was the leading industry in Prince Edward Island, second in Newfoundland, third in Nova Scotia, and fourth in New Brunswick. In sales value of. factory shipments, it ranked first in Nova Scotia, second in Newfoundland and Prince Edward Island, and third in New Brunswick, (table II-8). Clearly, fishing and fishery related activities play a prominent role in the economic life of the Atlantic Provinces. It is, moreover, an industry which, un- like the coal industry of Nova Scotia, continues to expand and to be one of the inqjbrtant assets of the region. 3. Structure Of The Fishing Industry As in New England, the most valuable groundfish species landed on Canada's Atlantic Coast are cod, haddock, and ocean perch. Again as in New England, haddock, on a value pejr pound basis is the most Im- portant species, with cod and ocean perch following in that order. Unlike New Eng- land, however, in aggregate landings cod is the largest income contributor followed by haddock and ocean perch. The Canadian Atlantic Coast (includ- ing Quebec) produced aggregate groundfish landings 2.7 times that of New, England in 1957 with a landed value 1.2 times that of the latter. While in New England, cod accounted for only 10 percent of landings and 11 percent of value, in Canada it represented 73 percent of landings and 70 percent of value. Newfoundland fishermen are especially dependent upon cod. It has represented 60-65 percent of the value of their landings in recent years. New- foundland cod landings comprise about two- thirds of the total for the Atlantic region'. Haddock represented 55 percent of the total value of groundfish in New Eng- land but only 20 percent in Canada. Ocean perch amounted to 28 percent of New Eng- land's landed value but only 5 percent of Canada's. Haddock and ocean perch each represented Uo percent of New England landings; in Canada combined they accounted for only 20 percent of landings, (table II-9) . Cod landings by Canadians are over twenty times the amount caught by New Eng- land fishermen. The Atlantic Provinces land about as much haddock as New England, while New England vessels caught about three times as much ocean perch. Canadian fishermen caught 1.7 times as much pollock and 2.3 times as much hake and cusk as New Englanders. 16 While the postwar years in Nevj England have been marked by declining landings and values of principal groundfish species, the Canadian groundfish industry has shown sub- stantial vitality. Haddock landings in the Maritime Provinces increased from 35 mil- lion pounds in 19ii6 to a peak of 93 million pounds in 1956; catch values doubled in the same period. In Newfoundland haddock landings increased from 21 million pounds in I9U9 to 62 million pounds in 19^. Canadians also augmented their ocean perch catch. In the Maritimes, only 2 million pounds were landed in 19)49; by 1956, 36 million pounds of ocean perch were caught. Catch values of ocean perch in the Mari- times in 1958 were ten times those of a decade earlier. Newfoundland landings of ocean perch more than doubled from 18 mil- lion pounds in 19li9 to 38 million pounds in 1951. After 1951, Newfoundland ocean perch landings declined to 16 million pounds in 1957 only to return to 25 mil- lion pounds in 19^, (table 11-10). The growth in landings and value for haddock and ocean perch reflects the in- creased postwar use of offshore ottsr trawlers. The catch is sold in the United States frozen fish market. The cod fishery has not received as much attention. New- found3-and cod production has been signif- icantly lower since 19ii9 with 1958 landings 36 percent less than those in the earlier year. Cod landings in the Mari- times and Quebec have been relatively stable with little increase in catch values . In each of the principal fishing prov- inces of Canada, cod is still the dominant species in both landings and value . In aggregate groundfish landings and values, Newfoundland is the Atlantic Province's leader followed by Nova Scotia and New Brunswick. 33/ if the Provinces are ranked according to cod landings, the same re- sults are seen. Nova Scotia, however, is the leader in haddock and ocean perch landings. In 1957 it produced nearly two- thirds of haddock landings and over one- half of ocean perch landings, while New- foundland caught about one -third of the total poundage landed of each species, (table 11-11). Thus, when the New England industry talks about Canadian, groundfish competition, it is primarily referring to that of the Provinces of Newfoundland and Nova Scotia. a. The Inshore Jilsherv The Atlantic fisheries have two dis- tinct branches - the inshore fishery and the deep-sea fishery. The inshore fishery operates within 12 to 15 miles of land, while the deep-sea fishery is found on the offshore banks. The inshore fishery is moi^ important. It has no exact counter- part in the commerciauL groundfish industry of New England. In 1957, 52 percent of total Atlantic Coast groundfish landings were made by inshore boats. The inshore fishery is primarily a cod fishery; in 1956, 96 percent of Newfoundland cod landings and I4.6 percent of those in the Maritimes and Quebec were from the inshore fishery. Inshore fishing is not a factor in ocean perch landings in either area. It does account for about 20 percent of haddock landings in the Maritimes and Quebec, but is of no significance in the Newfoundland haddock catch. The inshore fishery is conducted by fishermen who, individually or in pairs fish near their homes, making daily trips in small row-boats, sailboats, or motor- boats. The gear used consists principally of hand lines and trawl lines with indi- . vidually baited hooks; in Newfoundland, however, most of the inshore cod is taken by cod -traps. The inshore fishery, particularly in Newfoundland, is the source of the bulk of Canadian saltfish production. The inshore fishermen in Newfoundland live in small, often isolated settlements scattered along the coast. They dry and salt their land- ings and sell to middlemen who are often their source of credit during the off- season months. Although there has been generally a great growth in the Provinces of production for the fresh and frozen fish market, the inaccessibility of these 33/ Quebec, which is not part of this study, ranks third in Atlantic Coast groundfish procfuction due to cod landings, which in 1957 amounted to 79,000,000 pounds. 17 fishing outports prevents their partici- pation in this market. b. The Offshore Fleet The deep-sea fishery has a long his- tory. Until recent years schooners of 70 to 125 tons were used mainly. The schooners were equipped with both sails and engines, and carried crews of from lU to 25 men. The fishermen, when on the banks, fished in pairs from small dories and used long trawl lines with 50O to 6OO short lines which carried live bait. Each day's catch was split, cleaned, washed, and salted. The day of the dory schooner is rapidly ending, however. None over $0 gross tons is left in Newfoundland and only 13 remain in the Maritime s and Quebec. Dory schooners in Newfoundland in 1937 enployed 2,300 men and produced 28,000,000 pounds of salted codfish. Since 1952, none of the fish landed by the Newfoundland deep-sea fishery- has been salted. Since V/orld VJar II the Canadian Atlan- tic seafisheries have witnessed a marked growth in more productive offshore fishing methods. For many years there was a ban in the Canadian Provinces on the use of otter trawlers similar to the ones used in New England since 1905- It was claimed that their dragging operations would destroy the inshore fishery which was the support of thousands of serai -subsistence fishermen. These fishermen were a political force which could not be discounted by govern- ment. After 1929, draggers were gradually elirainatsd from the fishing fleets, with the result that groundfish landings in the Maritime Proviiices dropped from 250 mil- lion to 230 million pounds between 1920 and I9U0. During the same period, the New England groundfish industry, throu^ in- creased use of draggers, increased its catch from 200 million pounds to UOO rail- lion pounds. In latter years, however, the govem- nents have recognized the need to increase the fisherman's productivity in order to raise his level of income and, also, to enable the industry to take advantage of a rapidly expanding market for fresh and frozen groundfish. The growth of produc- tion for this market was possible only through the use of trawlers, as fresh and frozen fillet processors cannot rely on the production vagaries of a seasonal scattered inshore primary fishery. Moi^- over, frozen fillet processors need large supplies of fresh fish and cannot afford the time or the cost involved in getting such fish from the outport areas. The need for a greater volume of fish for the expanding market for frozen ground- fish fillets has been met in two principal ways. One has been to relax the restric- tions on the acquisition and use of trawl- ers and draggers. The other has been to use govemraental subsidies and loans for the construction of new fishing craft of approved types and sizes. The growth in numbers of large otter trawlers in the Atlantic Provinces was substantial between 19li7 and 1956. 2h/ There were 26 vessels in the trawler fleet in 19)47; by 1956 there were 57. In Nova Scotia, where there were only 6 such boats in 19ii9, there were 3li in 1955. The amount of otter trawling from Nova Scotian ports doubled between I9k7 and 1952. Between 1952 and 1955, in the same area, otter trawler landings also doubled. Newfound- land had 22 otter trawlers in 1956 versus 11 in 195U. There are no large trawlers operating in the other Atlantic Provinces. Most of the increase in the otter trawler fleet resulted from imports of new or used vessels, particularly frora Great Britain and New England. Although as of June I96O plans exist for several new and large trawler additions to the fleet, no addi- tional trawlers have appeared in Nova Scotia since 1956 and only one more in Newfoundland. One deterrent has been the recent "one-for-one" policy of the Do- minion government. Under this plan a boat can be imported only if the operator builds another one in a Canadian yard. 3h/ Small trawlers are those under 50 gross tons. Medium trawlers are those 50 gross tons up to 150. A large trawler is 150 gross tons or over. 18 High construction costs in Canada retard further growth of the trawler fleet. In 1956 there were approximately 57 large otter trawlers in Nova Scotia and Newfoundland. There were only 50 in New England. The growth in the Canadian fleet occurred largely during the postwar decade. During the same period the New England fleet was declining substantially. In fact, only eight vessels of the present (June i960) large -traw Ifi r fleet in New England were built in the postwar period. The degree of concentration in owner- ship of large trawlers differs significantly between New England and Canada. The leading vessel operator in New England has but lU percent of all the areats large trawlers. The leading operator in Nova Scotia has nearly 80 percent of that Province's trawl- ers; the leading Newfoundland company owns 35 percent of the trawlers in the Province . The three biggest operators in New England own 36 percent of the total fleet; the four biggest in Newfoundland own 83 percent; there are only three operators in Nova Scotia. Another important difference between Canada and New England lies in the role that the large trawler plays in the busi- ness operations of their owners. Of the 50 New England trawlers only 9 (belonging to two fish processors) are used as raw material sources in vertically-integrated operations. In contrast, all Canadian trawlers are owned by vertically-integrated processors, who buy the catch of their own vessels. One large integrated firm and its subsidiary companies headquartered in Nova Scotia have been gaining control of an increasingly large part of the fisheries industry of the Maritime Provinces, partic- ularly in fresh and frozen fish. This firm, in addition to having trawlers and proc- essing facilities, owns wholesale and re- tail establishments in the central Canadian market into which more the bulk of the domestic fresh and frozen products. 35/ The Canadian fishery has substantially fewer medium trawlers than is the case in New England. In 1956 there were only 31 such vessels in the Maritimes and Quebec and 9 in Newfoundland. New Englamd had about 150 fishing out of its groundfish ports in 1958. Unlike New England, where many medium trawlers are skippered by men who have an equity position in the vessels, there are not sis yet in Canada enough fishermen-captains with sufficient capital to own a medium trawler. Such a vessel would not generally qualify for government subsidy. Not until 1957 were such grants available to boats over 60 feet in length, and most medium trawlers exceed this footage limitation. Canadian large and medium trawlers in 1956 accounted for 27 percent of all At- lantic Coast groundfish landings and for 63 percent of landings by offshore vessels. In the Maritimes and Quebec they caught 9U percent of the ocean perch landed, 63 percent of the haddock landed, and 19 per- cent of cod landings. In Newfoundland, they accounted for 98 percent of all ocean perch landings, 100 percent of haddock landings, and-Ij percent of cod landings. The Canadian offshore fishery then, is divided Into two classes of vessels: the large trawlers, similar to those found in New England, operated by large vertically- integrated fish processing companies, and the small subsidized long-liners and draggers operated by owner-skippers. Vessels of these two classes supply close to 90 percent of the fish for the fresh and frozen industry. c. The Subsidized Fleet Since 19ii7, the use of government subsidy incentive has resulted in a striking growth in deep-sea vessels of less than 65 gross tons. This has been a joint federal-provincial program for the modernization of the Atlsmtic Coast fishing fleets. Since its inception, 32U vessels have been built under the plan's grant assistance, (table 11-12"). The federal grant is $165 per gross ton for boats built to specification. 36/ xhe Province of New- foundlandj also, grants an additional $160 per gross ton on vessels built in that Province . 37/ As an inte gral part of the 35/ Report of the Royal Commission on Price Spreads of Food Products, Vol. I, Queen's Printer and Controller of Stationery, Ottawa. September, 1939. p. 76. W P. C. "21190, SOR/51-227, dated May 2Uth, 1951, Ottawa, Ontario, Canada. 77/ The Fishing Ships (Bounties) Act and Regulations made under the Act, April 27, 1955, Departnent of Fisheries and Co-operatives, St. John's, Newfoundland, Canada. 19 plan, the provincial governments have set up loan funds for construction of fishing vessels at low interest rates. "The program had the following objectives; (1) to enable the small-boat fisherman to break away from his dependence on outmoded techniques; (2) to create a climate of opinion favorable to fleet modern- ization generally, including the expansion of dragger fleets; (3) to bring the primary fish- ing industry in the Atlantic region to a high level of effi- ciency to bolster the competitive position of the processing indus- try which primarily serves the export market. (li) to preserve ownership of fishing vessels by fishermen." 38/ The combination of subsidy and loan has enabled fishermen to build and own fishing craft with a relatively small equity position. Boat construction grants as a percentage of original costs, in prov- inces other than Newfoundland, have on the average ranged from 15 percent to 29 per- cent. In Newfoundland, govemment and federal subsidies are as high as ii2 percent of original cost. Borrowed funds, for vessels other than for Newfoundland trap long-liners, range from Ul to 81 percent. For the same vessels, the cash down pay- nents required of the fishermen have ranged from a low of 9 percent to a high of 37 percent of original costs. As much, however, as 90 percent of the cash down payment is also borrowed, so that the original out-of-pocket investment is mini- mized. Sometimes a source of the funds are fish processing companies owning their own large otter trawlers. The subsidized vassals are not com- petitive with New England boats in the sense that there are only a few craft oper- ating identically to them in New England. They are competitive in the sense that in the aggregate these vessels land consider- able amounts of groundfish. Nearly all these landings are processed into fresh and frozen fillets, most of which eventually reach the United States consumer market as products competitive with those of the New England industry. It is desirable, there- fore, to examine briefly the nature of and role played by the subsidized vessels. Since the program began, construction of these fishing craft has been about equally divided into two types: long- liners and draggers. The draggers are roughly comparable to the small otter trawlers ("dragger") of the New England fleet and procure their catch through a dragging operation similar to that of any standard otter trawler. The Canadian draggers range from 00 to 66 feet in length, have a gross tonnage rtoge of 26 to 6k, have a crew size of 3 to 5, are diescl powered, run at 9 to 10 knots per hours, and generally are equipped with electronic fishing and navigational :iids. Long-liners generally use the hook and line live -bait method to get their catch. 3$ Instead of setting the lines from small dories, however, all are handled from a single 'ship through the use of a powered gTirdy. The long-liners, with the exception of the small Newfoundland trap long-liners, range in length from U9 to 57 feet, have a gross tonnage of 28 to Sh, carry a crew of k to -6 men, cruise at 8 to 10 knots, and, in the case of the larger ones, are equipped with electronic navigational aids. So far only 1,000 to 1,200 fishermen have bscn affected by the modernization program, although their aggregate landings of groundfish were about 150 million pounds in 1957. This was about 17 percent 38/ Excerpt from paper "Purposes of Co sts-and -Earnings Studies in Fisheries: The Govemmgnt'E Point of View", by W. G. MacKenzie, Department of Fisheries of Canada, Ottawa, Ontario, presented at F.A.O. meeting on Costs and Earnings of Fishing Enter- prises, London, 8-13, September, 1958. Reprinted in Fteport of the Technical Meeting on Costs and EamJngs of Fishing Enterprises, Food and Agricultural Organization of the United Nations, London: 1959, P. 13. 39/ Except when swordfishing where line gear is not required. 20 of all Atlantic Coast groundfish landings but was 37.5 percent of all offshore landings. Of the 150 million pounds, 87 million were landed bj'- draggers. The im- portance of the subsidized vessels in the groundfish catch is greatest in New Bruns- wick, where 96 percent of total landings are made by draggers built with federal assistance. In Nova Scotia the assisted vessels land about 19 percent of the total groundfish catch; in Prince Edward Island and Quebec the proportion is Uii percent and 33 percent respectively. it2/ The long-liners are somewhat more ver- satile than the draggers, since they can fish on rough grounds on which the draggers would lose their gear. Moreover, they are able to move from one fishery to another as availability of fish and price dictate. Thus the Nova Scotia long-liners shift from fishing for cod to haddock to halibut to swordfish and back again to codfish, hi/ There have been more SO to 60 feet Nova Scotia long-liners built than any other type of vessel under the subsidy plan. The long-liners have been profitable to operate and would appear to be a financially sound investment, since even without subsidy aid their return on investment payback time is attractive. Their versatility is shovm by the fact that in 1956, 70 percent of their fishing time was spent in long-lining and 30 percent in swordf ishing , with the lat- ter effort producing 3h percent of catch values . U2/ Another popular long-liner is the 30 to ItO foot Newfoundland trap long-liner which because of the low initial cost and substantial operating profits, shows a 22 percent return on investment. Returns on invested capital in the subsidized draggers have been low with the exception of the ( 50-60') New Brunswick Fundy draggers, (table 11-13). Table 11-13 indicates clearly that the program of modernization could not have been effected without government subven- tion. The fishermen did not have the cash resources to build their vessels. This is demonstrated by the heavy borrowings de- scribed earlier, even after subsidies had further reduced the relatively small original cost of the craft . If subsidies had not been available, it is doubtful that the fishermen would have been able to ob- tain the debt financing needed. The ves- sels in the program have a useful life of about 13.3 years. An examination of table 11-13 also reveals that without subsidy only 3 of the 16 classes of fishing boats surveyed would have been able to repay their total debt from net earnings in a period less than the life of the vessel. These three classes represent h7 percent of all vessels built under the subsidy- scheme. Even with the subsidy, only k vessel classes representing 50 percent of those in the program could pay off their debt from earnings in a period less than the vessel's useful life. It is evident then that from 50 per- cent to 55 percent of the vessels in the program will not earn enough to pay off their debt charges and build up a depre- ciation reserve large enough to replace their capital assets. In most instances the combination of net earnings and de- preciation is enough, even without subsidy to pay the debt within the useful life of the boat. The risk margin, however, would be so high as to make lenders hesitate be- fore making loan committments. The net returns on invested capital in 75 percent of the cases are below 12 percent per annum. Clearly, if many of the present classes are to be replaced, continued government subvention must be obtained by their owners . It is more likely, however, that government subsidy will be directed toward vessel types such as the 50-60> Nova Scotia long-liners which do operate profitably and which can be replaced by their owners out of oper- ating funds. Officials are not discouraged ItO/ Operations of Modem Long-Liners and Draggers, Atlantic Seaboard, 1952-1957, by John Proskie . Economics Service, Department of Fisheries of Canada. Ottawa, 1958. Volume 7 - Part 1. p. 10-11. Ul/ Operations of Modem Long-Liners and Draggers Atlantic Seaboard, 1952-1956 by John Proskie . Economics Service, Department of Fisheries of Canada, Ottawa, 1957. Part 1, p, 25. 1^2/ Ibid., p. 27. 21 by the many vessel classes which have not been able to make satisfactory investment returns. The past few years have been ex- ploratory ones "to determine the lost effi- cient and profitable types and sizes of vessels suitable for the conditions found in the various fishing areas along the At- lantic Seaboard isning ," w^ The Director of the Economics Service of the Federal Department of Fisheries be- lieves "that the objectives of the modern- ization program are being realized at least in part" . He notes that the rise in con- struction costs in recent years has led to pressure for higher subsidies, and states that there appears to be a positive corre- lation between vessel size and operating returns. Of importance, too, is his con- clusion that earnings of most fishermen on the vessels in the program now compare favorably with those of workers in industry in the same region. Wi/ There is evidence that on a per week worked basis, fishermen earnings on the subsidized vessels compare well with those of workers in other industries in the At- lantic Provinces. This comparison does not, however, taJce into account the sea- sonality of their fishing efforts . If earnings are prorated over the entire year instead of only the fishing seasons, a less favorable picture develops, (table II-lU) . The severity of the winters, the icing up of many poriis and the danger to small craft in the North Atlantic in winter, restrict the fishing period. Boat days-at-sea range from as low as S\\ for the 50-60 foot New- foundland long-liners to 181+ for Nova Scotian draggers. It would be misleading to make direct comparisons of the operating results of the subsidized vessels with those of craft in the New England fleet. The vessels are too dissijiilar in types and sizes. The costs per pound of the groundfish landed by the subsidized vessels are relevant only to New England operations because of the ultimate competition in the consumer mar- kets. Many of these subsidized boats sell to processing plants which operate their own trawlers, also. The price at which they sell is the same €is that, at which the processors buy from their own boats. It is economical for the processors to buy much of their requirements from the inde- pendent operators. The overhead costs of additional trawlers are thereby saved. To the extent, therefore, that the government subsidy is used to cover costs that the processor would otherwise have to incur, and to the extent that this subsidy permits the independent fishermen to accept a price lower than would otherwise be possible without it, the Canadian fish processor has a distinct and very real competitive cost advantage over his New England rival. The Canadian trawler owner is always a processor. Hence, it is to his advantage to acquire his fish at the lowest price possible. The more he pays the more is his labor cost, as his crew gets 37 percent of his gross revenues. If subsidy keeps prices lower than would otherwise be the case, he has leverage which enables him, also, to pay a lower price for the fish caught by his own vessels. Again, this is a competitive cost saving vis-a-vis his New England counterpart . The development of the subsidized fleet has probably not resulted in a net increase in the size of the combined Canadian Atlantic Coast fleets. The new vessels have replaced a larger naiiber of small outmoded craft. The weakening of salt cod markets and the development of the frozen fish trade has resalted in lower cod landings and higher catches of haddock, ocean perch, and flounder. In the process, long-liners and draggers re- placed the dory schooner and dories of history. hS/ Looking to the future, most industry and government observers do not believe that the offshore fleet will change radically from its present propor- tionate mix of trawlers, draggers, and long-liners . It is expected that there W Ibid., p. 76. ini/ MacKenzie, op. cit., p. 20. IT^/ Proskie, Operations of Modem Longliners and Draggers, 1952-1957, op. cit., p. 12. 22 will be further expansion in the subsidized vessels, particularly a growth in the ver- satile and profitable long-liners and in the large draggers. Subsidy regulations have been eased so that boats over 65' in length can qualify for bounty aid. Larger per ton subsidies for the bigger craft may also be forthcoming. Continued experimen- tation on vessel types and sizes is likely. Nevertheless, despite the somewhat greater emphasis on the subsidized craft, the larger travjler will still be the back- bone of the industry. The seasonality of the fishing effort of the smaller boats and their inability to sail great distances de- mands large trawlers to assure continuity of supply. Trawler owners and government officials do not, however, expect any sub- stantial increases in the trawler fleet because of goveminent import restrictions on foreign-built vessels, local construc- tion costs, and the greater role played by the smaller craft. Replacement rather than expansion is postulated for the trawl- er fleet in the next decade. k. The Fishing Labor Force There are about ii8,000 fishermen on Canada's Atlantic Coast (table II-15). Approximately 16,000 are in Newfoundland, llijOOO in Nova Scotia, and 10,000 in New Brunswick, Despite the progress made in recent years in increasing labor produc- tivity by encouraging capital development in the primaiy industry, the overwhelming majority of the fishermen are handicapped by the employment of primitive equipment. As noted earlier, only 1,000-1,200 fisher- men have thus far been affected by the sub- sidy modernization program. Only about another 1,000 are employed on deep-sea trawlers. In 1956, out of J40,600 fisher- men in Newfoundland, Nova Scotia, and New Brunswick, only 15 percent were on vessels, draggers,, or trawlers. The low productivity per man of the inshore fishermen is apparent if one con- siders that in 1956 the offshore fleet of the Atlantic Coast accounted for about UO percent of all groundfish landings, using about 15 percent of the fishery labor force. In 195h, the Newfoundland dragger and trawler fleet alone emplojngd less than 3 percent of the Provinces' fishermen, but landed 16 percent of the groundfish catch. In 1955, the trawler and dragger fleet in the Maritimes and Quebec employed about h percent of the fishermen in the area, but landed 31 percent of the groundfish catch. It was shown earlier that it is pos- sible to characterize the Atlantic Prov- inces generally as areas of labor surplus. This is particularly true in the case of the inshore fisheries. The fisheries prob- lem is aggravated in times of depression and recession in that workers who have lost other employment return to fishing. This happened in 1957 and 1958 in Newfoundland and had the effect of seriously impairing the incomes of all those in the inshore fishery. Except for those employed on offshore vessels, earnings from fishing are so low as to be a cause for governmental concem. The Royal Commission on Canada's Economic Prospects succinctly described the situa- tion in these terms: "....employment in fisheries is ordi- narily marked by much seasonality, isola- tion, primitive equipment, uncertainty of catch and income, physical hardship and risk and limited social and other cultural opportunities. As a result, thei^e is still much poverty and privation and these are ordinarily combined with concealed un- employment; productivity and incomes are low; education is limited; and opportuni- ties for higher-paid employment are, com- itanly, either unavailable or unattainable owing to lack of training or experience." w These problems are particularly acute in Newfoundland where isolation remains the greatest obstacle to labor mobility and to the transferral of surplus fisher- men to other occupations. "It appears some alternative all areas of the cent of those enj industry live in is predominant. , ...that, while there are occupations available in Province, nearly 75 per- ;aged in the fishing areas where that industry A major shift of the ii6/ Royal Commission on Canada's Economic Prospects, The Commercial Fisheries of Canada. Prepared by the Department of Fisheries of Canada and The Fisheries Board. September, 1956. p. 121. 23 labor force in these areas from the fish- eries into other occupations can take place only if there are fundamental changes in the whole economic structure. Such changes are taking place in some areas, in fact, but by their nature they must be long-term changes ... .In any case, we have to acknowledge that in the areas where fishing remains the basic industry, it is hardly possible for sufficient numbers of fishermen to shift temporarily to other occupations in adverse times." ^7/ A survey conducted by the South Coasb Commission of Newfoundland in 1956 re- vealed that on the Province's South Coast earnings in the local Inshore fishery- averaged $626 per annum versus $1,362 in the local deep-sea fishery. It found that welfare payments averaging $1^60 per annum were made to 19 percent of the people and that about one -fifth of family incomes were made up of family alloxvances and wel- fare payments. ^48/ Low earnings, isolation, and lack of alternative work nearby have an effect not only on living standards but also on edu- cational and social service standards . On the same South Coast of Newfoundland, less than 8 percent of the school teachers had one year of university training. In 19^1, kS percent of the total Canadian male labor force had had some education beyond the eighth grade. Only 28 percent of the New- foundland male labor fol'ce and only 33 per- cent of New Brunswick workers had attained this level. Of the fishery labor force, however, the equivalent proportions are appallingly low; 10 percent in Newfound- land; 19 percent in New Brunswick, and -21 percent in Nova Scotia. In Newfoundland, hh percent of the fishermen had not gone beyond the fourth grade. ii2/ The present situation and the unfavor- able future prospects have induced many of the more enterprising fishermen to over- come the obstacles to mobility and to move to other jobs. This is particularly evi- dent in Newfoundland where, from 19U7 to 195?, about 38 percent of the fishernien took other jobs, SO/ (table 11-13). As the Royal Commission on Canada's Economic Prospects observes, Newfoundland was a special case in that there was a rapid growth of new alternative jobs in the post- war years . ^V In the Maritime Provinces, however, the movement out of the fisheries was less pronounced. If the postwar period (19U7- 1955) is compared with the war and imme- diate years (1937-19U6), the number of fishermen dropped about 18 percent. After I9U7, however, the rate of decrease was much more moderate, so that 1955 employ- ment was only h percent below that of 19ii7. The reserve of surplus fishing labor in the Atlantic Provinces would seem to have certain logical implications perti- nent to a study of the comparative cost advantages of catching groundfish there as compared with New England. One would ex- pect that the effect of many supplying units, as in the inshore fishery, selling to relatively few buying units would put buyers in a strong bargaining position in respect to prices. Canadian industry observers admit that this situation does occur and that such sellers are unable to present a united front to buyers who are much more knowledgeable of market condi- tions . Are, then, the trawler owners in a position to benefit from the generally- more abundant labor market in the Atlantic Provinces, particularly in the fisheries? As indicated previously there is con- siderable concentration of ownership in the trawler fleets, and all are owned by fish processors. The largest single item of trip expense in operating a trawler is labor cost. Hence, it is to a trawler owner's advantage -fco keep this cost as low as possible. This is particularly true if he is also a processor, for every additional penny per pound he spends for hi/ Newfoundland Fisheries Development Committee Report. 1953. St. John's, Newfound- lancT, Canada, 1953. p. 12. U8/ Province of Newfoundland. Report of the South Coast Commission, 1957. St. John's Newfoundland, Canada, 1957. pp. 92-98. h9/ Table 19, Census of Canada. 1951, ^olume IV, Labour Force, Queen's Printer and Controller of Stationeiy, Ottawa, Ontario, 1953. 50/ Many, however, re-turned to fishing in the 1957-1958 recession. ^/ The Comireroia] Fisheries of Canada, op. cit., p. 125. 2U labor will increase the cost of his fillets by 2.5 to li.O cents per pound. ,^2/ a con- dition of labor surplus both in and out of the fishery coupled with a situation where there are few buyers, would seem to put the trawler owner in a formidable position to bargain over wages, lays, layovers, and general working conditions. If he, also, paid a labor rate comparable to or better than that in other industries, this would seem to enable him to exercise discretion in hiring fishermen. The limits of this study do not permit a definitive answer to the question of how strong is the bargaining power of the Cana- dian trawler oimar. Ownership of large trawlers is highly concentrated. In addi- tion, new trawler crewmen can be recruited from a larger fishing labor force than is available to a New England owner. Further- more, as will be developed later, there are legal barriers to the unionization of crew- men in Canada. A recent study by the Royal Commission on Price Spreads of Food Products implies very forcefully that the bargaining over prices is one-sided in favor of the buyers. "....we have noted conditions and de- velopments on the fish buying side of the industry, affecting the spread (of prices) which give cause for concern. The behav- iour of prices at both the primary level and for fishery products sold in the domes - tic market indicates some measure of con- trol maintained in past through ease in managing the relatively small volume throigh the narrow domestic marketing channels. "If it appeared that effective compe- tition in pricing could be achieved, our desire would be to recommend action appro- priate to this end. '".iTe have noted the perishable nature of the products of the fisheries, which reduces the bargaining position of the primarj'- pro- ducer. We have smphasized the problems which, in the fisheries, result from the relatively limited domestic disappearance of fishery products. We have called attention to the high degree of concentration and vertical integration in the marketing of fish prod- ucts. These factors, and the view we have gained of the position of the fisherman, lead us to conclude that the primary pro- ducers jn fisheries should be given the... opportunity to organize for the purpose of participating in the determination of the price received for his product ttirough negotiation with the buyers." 53/ There are, of course, barriers to ex- ploitation. One is the absence of any sur- plus of experienced trawler crewmen. The inexperienced iiishore fishermen cannot, without training, acquire the skill needed for trawler employment. There is indeed a Mortage of masters and engineers, and these officers are able to bargain vigor- ously and to obtain special employment premiums . The other major barrier to exploita- tion rests on the alternative employment opportunities afforded by the growing num- ber of subsidized long-liners and draggers. These are particularly attractive when they permit ownership shares and the fisherman becomes a true co -adventurer. On balance, the Canadian trawler owner is in a more advantageous position with respect to his labor force than is his New England competitor. A job as a fisherman in the Atlantic Provinces while not one with social prestige, does not rank as low on the scale of desirable occupations as it does in New England. Earnings of trawler crew- men in the Atlantic Provinces, while low in relation to those on New England vessels, do compare favorably with those in the in- shore fishery, and are showing long-term upward trends. Fishing for a living has relatively better monetary as well as social attractions in the Atlantic Provinces than it does in New England where earnings are not generally high enough to compensate for the rigors of vessel life. While there is no indication that there is any over-abundance of trawler crewmen, there is a backlog of potential deep-sea crewmen in the Atlantic Provinces 52/ Fillet yields are 25 to 1;0 percent of the raw fish poundage. ^/ Report of the Royal Commission on Price Spreads of Food Products, Vol. I, Queen's Printer and Controller of Stationery. Ottawa, September, 1959. p. 76. 25 and especially in Newfoundland, Although much training is necessary before an un- skilled hand can become a satisfactory crewman, the surplus labor in the inshore fishery, plus a family heritage of genera- tions of fishing, affords access to a larg- er, younger, and more amenable human re- source than is the case in New England. It may be observed here that the aver- age age of a deep-sea fisherman on the South Coast of Newfoundland in 1956 was 35 years. 5V Contrast this with the age of Boston trawler men, where 69 percent are 51 years of age or over. Surplus and underemployed fishery labor is most prevalent in Newfoundland. It is not surprising, therefore, that many Nova Scotian trawlers are manned by New- foundlanders. This situation, incidentally, has its drawbacks, too. The Newfoundlander has not been used to continued year round work for a cash return. Many return peri- odically to their Newfoundland homes when they have amassed some cash. This insta- bility hampers manning operations. To a lesser degree the New England trawler owner also has access to the Newfoundland labor reserve. Many of the Boston trawler crews are from the Atlantic Provinces with a large number of them Newfoundland natives. The general underemployment in the fisheries with its deleterious effect on fisherman productivity, incomes, and living standards makes it likely that there will be continued governmental effort to raise per capita productivity by encouraging further capital expansion. Such subsidies and technical aids as are now given can be expected to continue in the foreseeable future . There are elements of a vicious circle in the government's program to raise low incomes by raising productivity. The Royal Commission on Canada's Economic Prospects puts it this way. "In the first place, the projections of future fish catches. .. .indicate a rela- tively modest expansion of landings. On the other hand, there is much underemploy- ment in the fisheries at present. Accen- tuating this has been the current expan- sion in the use of improved types of boats, gear and fishing techniques and this ex- pansion of capital iray be expected to con- tinue during the next 25 years. The sub- stitution of capital for labour should en- able the marketable catch to be taken by a decreasing number of fishermen. Over-all it seems likely that the demand for labour in the primary industry may be signifi- cantly reduced during the next few decades. If, with the decrease in demand for labor, the supply of labour is maintained at present levels, there is likely to be much greater underemployment than there is now and incomes are likely to be correspond- ingly low." ^ A significant difference in the structure of the groundfish industry in New England as compared with the Atlantic Provinces lies in the role of organized labor. All the New England groundfish ports have fisherman unions which organize and bargain collectively with the vessel owners . No such organizations exist in the Atlantic Provinces. The unorganized status of the labor force is not surprising when one considers the large excess labor reserve in the in- shore fishery--. One economist pointed out that in Newfoundland the potential recerve of unorganized labor in the fishing indus- try, which can be drawn upon for semi- skilled work, was a drawback to organizing a united labor front in all industries. Equally significant, however, are other barriers to the organization of fishermen. The Nova Scotia Supreme Court of 19ii7 unanimously concurred in the opinion that the relationship between the owner and the crew was not that of employ- er and employee but rather that of joint- adventurers. The Nova Scotia Labour Re- lations Board could not therefore make a certificate of bargaining representatives for the crew, 56/ The Court held that the CO -adventurous partnership resulted from the trip-tc-trip "lay" arrangement. The 5U/ Report of the South Coast Commission, op. cit., p. 99. F^/ The Commercial Fisheries of Canada, op. cit., p. 125. |5/ 21 Maritime Provinces Reports (Nova Scotia) 305, Justice J. Doull, 191^7. Lunenberg Sea Products, Re: Application ofj Re: Zwicker. 26 crew payments were not piece work, since the trip proceeds were shared. The decision is binding on lower courts in Nova Scotiaj and if a similar case came before the courts in another prov- ince, the Lunenberg decision would carry weight with them. Deep-sea fishing is con- sidered to be within provincial jurisdic- tion and does not co:me under the scope of federal review. As a result of this decision, the Nova Scotia Legislature the same year passed the Fishermen's Federation Act, now R.S.N. 195U, chapter 103, which provided for a form of collective bargaining for deep-sea fishermen provided the bargaining agent represented the majority of the fish- ermen resident in the country. No use has been made of the Act and no bargaining agent has ever been approved. The reasons advanced for this are: (1) the number of trawler fishermen in the total number of deep-sea fishermen is small; (2) the fishermen on the subsidized long- liners are often joint-adventurers in fact as well as in spirit and do not consider themselves wage earners, and; (3) many trawler men are from other provinces, particularly New- foundland. Although there may be no theo- retical legal barriers to organization, the Federation Act is likely to remain in- operative unless and until some legal dis- tinction is made of the classes of deep-sea fishermen. For whatever reasons , there are two differences in the work arrangements of fishermen on Canadian trawlers as compared to those on New England trawlers. One is the nature of the lay; the other is the layover time . The lay or share arrangements differ radically, although perhaps not so much in the net results to the owner. In New Eng- land, the basis for sharing is as follows: Out of gross receipts, certain trip expenses known as "joint" expenses are de- ducted. The balance is divided with 60 percent going to the crew (the gross crew share) and iiO percent to the owner (the owner's gross share). From the crew's share, the cost of the fuel, food, and ice (for 3 summer months, ice cost is a joint expense) used on the trip is deducted. The owner from his share sets aside 10-11 percent as a bonus to the ship's officers. The remainder is the contribution to ves- sel overhead. In Nova Scotia and Newfoundland, after deduction of any joint expenses the balance is divided with 63 percent going to the owner and 37 percent to the crew. Out of the gross crew share is deducted the cost of the food. Out of the corner's share is deducted the cost of the fuel and ice con- sumed, plus a bonus to the ship's officers of about 12-13 percent of the owner's gross share . One further vairiation between the two lays is that in Boston the crew are guar- anteed earnings of $12 a day per man. V/hen crew shares computed according to the for- mula are less than this minimum, the owner must make up the deficit from his share. On poor trips this has the effect of in- creasing the real share of labor in the catch proceeds. No such minimum payment system exists in the Atlantic Provinces. It is difficult to assess the ulti- mate cost advantages or disadvantages of the two lay systems. Much depends on the cost of the fuel and ice paid for by the Canadian owner relative to his gross re- ceipts. In Newfoundland, where the price per pound for fish on the boats surveyed averaged only 2 cents, the cost of fuel and ice as a proportion of gross revenue was high. Since these costs are deducted from the owner's share, the remaining con- tribution to overhead is lower than it would be if the Newfoundland operator had used the New England lay. (Compare the fjxst two columns of table 11-16). Simi- larly, in Nova Scotia, where the price of fish averaged 1 cent more per pound than in Newfoundland, fuel and ice costs as a proportion of revenue were lower than in Newfoundland. Consequently, the contri- bution to overhead on the Nova Scotia trawlers was somewhat better than it would have been on a New England lay, (table 11-16^ . On balance, however, it would not appear that the variations in the two lays work to the disadvantage of the New Eng- land owner. In fact, he would seem to have an advantage over the Newfoundland operator. The evidence is too limited to make any judgment in respect to Nova Scotia. It must be considered, however, that the variable determining the net difference in the two lays is the 27 proportional relationship between fuel and ice costs and total revenue. If the pro- portion is 23 percent or higher, the Cana- dian owner seems worse off under his lay. The effect of the guaranteed minimum per diem labor share ("Broker payments") on Boston trawlers is not clearly seen in the average figures on revenue distribution shown in table II-16. If there were no "broker" the average gross owner's share would be 38.6 percent of revenue. The dif- ference between that figure and the one actually shown can be attributed largely to the broker payments • Even with these , how- ever, the contribution to vessel overhead does not appear to be too much different from that in Canada. If, however, atten- tion is shifted to the poorer earning ves- sels on which the necessity for paying brokers is a more frequent occurrence, the comparison is less favorable, ( table 11-17) . The difference in layover systems re- sults in a definite advantage to the Cana- dian vessel owner. By union rules in New England, vessels fishing for haddock must remain in port for three days between trips5 those catching ocean perch must lay over four days. In the Atlantic Provinces no such mandatory requirements exist. The owners voluntarily keep their vessels in port 2li to 36 hours. The difference in layover procedure enables a Nova Scotian trawler to make at least 2 more trips per year than a Boston vessel even if average trip lengths were the same. Boston haddock trawlers avera^d 27 trips in 1956, 26 in 1957, and 27 in 1958. One Nova Scotian trawler owner said his vessels averaged 32 trips a year. Another put it this way, "Our trips must be over 30 a year or else we fire the captain." The difference between the number of trips possible if New England ocean perch boats were not under a k day layover and what they do make is even more marked. One Gloucester owner asserts that his vessel could make 25 to 28 trips per year instead of only 17 to 20 made under the layover requirements. This much shorter "down'.' time enables the Canadian's vessels to achieve higher annual capacity utilization with fixed overhead thus being spread proportionally over more units of production. This lowers the cost of fish per pound to the Canadian processor-vessel owner. A sample of over 30 percent of the deep-sea trawlerraen in Newfoundland shows annual berth earnings to be $2,300 in 1956, $2,100 in 1957, and $1,850 in 1958. Presented on a weekly basis, this is much below the average weekly earnings in all industries in the provijice, as shown in table II-II4. All of the trawlermen sur- veyed, however, lived on the South Coast of Newfoundland. This is an area of few alternative occupations, and one in which the average income from all sources in 1956 was $1,237. Zl/Hence the trawler earnings compare advantageously with others in the immediate area. There is not sufficient evidence to estimate precisely the earnings of crewmen on Nova Scotia trawlers. The Nova Scotia Fish P-ackers Association in 1957 estimated that "the average earnings of a deep-sea trawler fisherman based on a 12-month operation is presently about $3,000." 58/ There was no reason for these trawler owners to overstate the earnings, as the occasion for the statement was a hearing to determine among other things if the deemed earnings of fishermen were to be raised for the purpose of computing work- men's compensation benefits. The higher the income was raised, the higher the cost of insurance to the vessel owners. The $3,000 per year earnings figure is roughly in line with field data collected in this stuc^r. In any event, it would seem to be comparable with earnings in other Nova Scotian industries , but not signifi- cantly higher. This may be due to the fact that the unionized iron and steel workers and coal miners in Nova Scotia pull up the base used for comparison. Trawler earnings are, of course, much higher and more stable (less seasonal) than in the inshore fisheries. 57/ Report, of the South Coast Commission, op. cit., p. 9li. 5S/ Report of the Workmen's Compensation ComoTiission, Halifax, Nova Scotia, De cember 18, 1958. pp. lUU-lIi5. 28 Labor earnings on the subsidized long- liners and draggers are not readily com- parable to those derived from other occu- pations due to the seasonal nature of fish- ing operations. As shown in table Il-lli, on a per week worked basis, such fisher- men's earnings are much better than those in other jobs. On an overall basis, if fishermen were dependent on fisheries in- come alone, they would in most cases be wo]rs3 off. Their actual incomes, however, from all sources cannot be determined. It would appear, then, that deep-sea fishermen in Nova Scotia neither earn significantly more than workers in alter- native jobs, nor do their incomes reflect appreciably the hazardous nature of their duties. This is not surprising in view of the large reserve fishing labor force, the centuries-old tradition of going to sea, the lack of readily available alternative jobs, the strong bargaining power of vessel owners , the numbers of Newfoundlanders from low income backgrounds manning the tratrlers in both their own province and in Nova Scotia, and the only recent positive en- couragement given by the government to in- creasing fishermen productivity through capital investment. The low incomes of fishermen in thp Atlantic Provinces finds a parallel in the New England area where in several areas, real incomes have begun to lag behind those in other jobs. Whei^as in Canada much of the reason for the relatively low incomes lies in the fishery labor surplus, in New England the attractiveness of better jobs combined with lowered landings arid catch values offer approximate explanations. Of particular importance, however, is the fact that the earnings of fishermen in Canada are on an upward trend whereas in New Eng- land the long-nm trend, in real terms, has been a declining one. The Market for Groundf ish For centuries Canadian groundfish was processed and marketed only as salted or dried codfish. Principal markets were in the low-income, warm-climated Mediterra- nean- and Caribbean countries. Other spe- cies were not exploited since they could not be preserved as well as cod. The fresh fish market was local in character and therefore limited in size. The development in New England of filleting and quick-freezing techniques made it possible for Canadians to take advantage of the growing United States market for frozen groundfish fillets. The demand during World War II for fishery products facilitated large-scale expansion of Canadian frozen fillet production. Dur- ing this period a filleting and freezing industry was first establish^ed in Newfound- land. While a considerable amount of the Atlantic Coast production of fillets dur- ing World War*ri was marketed in the Brit- ish Isles, the principal sales area has al- ways been the United States. Canadian ■shipments of fillets to the United States went up U33 percent between 1939 and 19U5 and have increased over 1,000 percent from 1939 to 1958. The Canadian Atlantic pro- ducticnof fillets and blocks increased by 125 percent from 65 million pounds in I9U9 to lh7 million in 1957. The salt fish market was prosperous during World War II. Since then, there has been a clear shift from fish curing to processing in other forms. The salt fish market would have been less attractive even without the burgeoning frozen market. Canadian saltf ish jLs produced in an area with muah higher costs and living standards than the underdeveloped countries that form its market. There are also retail ceiling prices in the major Caribbean market, and exchange barriers which set a limit on the prices the saltf ish producers can obtain. Table 11-13 indicates the decline of salted codfish production in Newfoundland in re- cent years. Newfoundland production in 1957 was half of what it was in 1935, and 1958 saw a drop of 35 percent from 1957 figures . The development of the frozen fillet market meant more than a shift from dressed and salted codfish production to processing in other forms. It involved also exploita- tion of haddock and ocean perch in increas- ing quantities. This is seen in the growth of landings of these species in recent years J over the period 19U8-1957, haddock landings in the Atlantic Provinces more than doubled, going from 57 million pounds to 132 million pounds; ocean perch landings showed a phenomenal increase, going from 29 1.3 million pounds to U5.7 million pounds. I2/ Of these landings, it is estimated that some 80 percent of the haddock is processed into fresh and frozen fillets, and that practically all of the ocean perch becomes frozen fillets for the export market. There has likewise been a marked growth in fresh and frozen cod fillet processing in com- parison with the pre-war years. About one- third of Atlantic cod landings is processed into fresh and frozen fillets and frozen blocks or slabs. Salted cod production is still impor- tant. Over 70 percent of Newfoundland's cod landings are destined for the salted market and most of the Province's fishing population are dependent on it for their livelihood. The Federal and Provincial governments have recognized that the re- turns of the salt-cod fishery are marginal and are trying to modernize the industry. Attempts are being made to shift the proc- essing operation from small-boat crews, using manual methods, to centralized curing stations equipped with mechanical dryers and other modem processing implements. The Federal CSovemment also subsidizes the industry by paying half the cost of the salt used. Although there are many isolated out- ports, particularly in Newfoundland, where, local production of fresh and frozen prod- ucts is not practicable in the immediate future, landings for saltfish, in general, represent a buffer supply to which fresh and frozen processors have turned as de- mand has warranted. Several Newfoundland firms processing fresh and frozen fish were forced out of business due to over- expansion and consequent price cutting. One industry leader in Nova Scotia com- mented that these plants could be brought back into production, sending another 3,000,000 pounds of fillets into Boston but it would break the New England market. Landings for saltfish therefore represent additional sources of supply for frozen fillets, but are sources which major pro- ducers use with restraint in times of normal abundance. The development of a large market for fresh and frozen groundfish fillets has had several significant effects. Consumer demand during World V/ar II led to a less- ening of restrictions on deep-sea trawlers and draggers. The need to obtain a year- round supply of fresh fish for filleting and freezing to meet market needs occa- sioned further growth in the large number of offshore trawlers. Productivity of labor in the fishery was increased, par- ticularly on Newfoundland's South Coast, by divorcing processing from procurement of the raw material, ^/lOiere formerly fish- ermen in inshore vessels caught and cured their own fish, many now are employed only as deckhands on trawlers, and specialized shore labor handles the processing opera- tions. There has been a greatsr geograph- ical concentration of fishing activities. "Because mechanized processing methods require plants of comparatively large size and a concentration of fishing activities - to insure some stability of supply - a movement from smaller to larger fishing ports, notably Halifax and Lunenberg was also involved." 60/ The expanding United States market for frozen groundfish fillets and frozen blocks or slabs enabled the Canadian in- dustry to emerge from stagnacy and to be- come a groTrth factor in the provincial economies. VJithout this new market the softening in the Caribbean and Mediterra- nean saltfish markets might have led to severe economic dislocation. The possi- bilities of growth, much of it in terms of United States' consumption, have impelled governmental bodies to aid the industry to expand its capacity and productivity by means of subsidies, loans, and educational services. Finally, of course, it has made the Canadian groundfish industry directly competitive with that of New England's in the inland markets of the United States . This competition is largely in the frozen fillet and block market. Canadian exports of fresh fish to the United States are not a significant competitive factor. In fact, the fresh fish market, although confined to the northeastern United States, is one in which foreign competition as yet poses no serious threat. Although many New England producers lay the blame for their economic distress on Canadian competition, almost all admit g9/ Canadian Fisheries Annual, 1959. PP. 71-72. So/ The Commercial Fisheries~of Canada, op. cit.. p. 7. 30 the need for Canadians to supply at least some of the United States demand. Canadians would not be in a position to furnish such supplies were not the American market large enough and free enough to justify their in- vestment in vessels and processing plants. Thus the growth in United States consumer demand for frozen groundfish fillets has made a vigorous Canadian industry possible and has enabled it to become a source of strength to the economies of the Atlantic Provinces. In looking to the future it appears that the trend in the diversion of ground- fish landings from saltfish processing to quick-freezing will continue. Mediterranean and Caribbean countries will supply more and more of their saltfish requirements through the further development of their own fleets. Moreover, higher incomes and living standards in these countries may also mean less consumer demand for such low income staples . Canadians expect that their groundfish market will be more arid more based on the United States and on their own domestic consuiT^jtion. They believe that New England production will continue to decline rela- tive to American demand and that there will be a corresponding need for increased im- ports. The Royal Commission on Canada's Economic Prospects postulated a h3 percent increase in the United States market for Canadian groundfish fillets by I98O. 61/ Therefore, they reason, production can be expanded and sold, and governmental aid has a rational basis. 1. The Primary Market And Price In an earlier section certain hypoth- eses were made concerning the bargaining position of Canadian fishermen and the effect of this on price and the determina- tion of "the lay. It is well to focus attention explicitly on the subject of Canadian primary market prices, as here is an area in which there are significant con- trasts with the price mechanisms found in New England. In all the major New England ground- fish ports with the exception of so..a9 in Maine, there exists an auction system whereby the daily ex-vessel price of fish is set by the interplay of free competition or the semi-free forces of supply and de- mand. This is most evident in Boston where the existence of a vigorous fresh fish mar- ket keeps daily prices sensitive to changes in supply and demand and especially vola- tile in periods of short supply. Daily prices fluctuate less in ports such as Gloucester where ocean perch landings axe destined primarily for frozen fillet con- sumption. In 1958, the United States De- partment of Justice attempted, although unsuccessfully, to secure indictments alleging price-fixing in Gloucester. In the principal Canadian ports, there are no auctions or exchanges and no fluctu- ations in daily prices. One reason, of course, is the absence of a fresh fish mar- ket similar to the Boston market. Daily prices to the fishermen remain unchanged for months in Canada and are usually ex- pressed in quarter-cent multiples. In New England ports, it is a rare occasion when the day's prices are the same as yesterday's prices. Moreover, because of the vitality of the auction system, prices are often ex- pressed in such odd multiples as 11 35/100 cents per pound. Table 11-19 contrasts monthly prices of cod, haddock, and ocean perch at major Canadian and New England ports. It is seen that in both areas there is a tendency for the price to rise in the winter months when supplies tighten. While in New England there is considerable month-to-month price variation, there is little such variation in Canada. The Canadian fresh fish trade establishes a winter and a summer price. The difference is from one-half to three- quarters of a cent per pound and is intend- ed to encourage winter production. This differential is larger, or as large, as any changes which have appeared in the secular trend in prices since World War II. A number of factors ultimately set Canadian primary prices. It is important to note the following factors: Canadian groundfish fishermen are not organized as bargaining units; they have more lijtiited knowledge of their market than do the buyers J there is no fresh fish market of any significance where independent 61/ Ibid., p. 76. 31 ijiunediate demand could raise prices when supplies tighten; there is considerable concentration of ownership in the process- ing end with price leadership a natural consequence. 62/ As noted earlier, the Royal Commission on Price Spreads of Food Products in a report issued in September of 19^9 recommended legislation to enable fishermen to bargain more effectively over prices . Price movements in Canadian groundfish are fundamentally influenced by the United States market for frozen fillets and blocks. Prices paid Canadian fishermen are there- fore to some extent influenced by present wholesale prices in the United States. New England producers assert that the price of Canadian imports has brought economic disaster to the New England industry. Cana- dian processors, on the other hand, claim that the prices they receive for their fish are the result of international marketing factors, which are reflected in the United States price. °^l Canadian ex-vessel prices for cod, haddock, and ocean perch at key ports have shown greater stability over the years. Based on 19li9=100, the index numbers of prices for cod, haddock and ocean perch to fishermen in the Maritimes and Quebec were: Year 1956 1957 1958 Cod 98.3 87.3 99.0 Haddock 75.6 80.3 101.8 Ocean perch 72.2 75.5 87.7 Source: Economics Service, Department of Fisheries, Quebec. Prices paid at the leading New England haddock and ocean perch ports in the same three years show the following relationship to 19U9. Year Cod 105 loU 137 Haddock 90 110 135 Ocean perch 87 90 98 In 1957 in both countries prices showed little or no advance over 19ii9 levels. Cod and haddock prices were up somewhat in New England although ocean perch prices were 10 percent lower. In Canada, 1957 groundfish prices were well below 191*9 levels. There were shortages of haddock in 1958 and this resulted in general price advances in both New England and Canada. Canadian prices for haddock and cod were still barely at 19l;9 levels and ocean perch prices were well below them. One explanation for the sharp price rise for haddock and cod in New England is the effect of a daily fresh fish demand re- acting to lower supplies. The fresh fish market is not as important in Canada, where most fresh landings are destined for quick- freezing. In contrast with haddock, ocean perch prices are comparatively stable. In both countries ocean perch landings are sold as frozen fillets in the interior United States market. The general stability of New England ex- vessel prices up to 1958 in the face of declining landings of major groundfish species meant depression in the industry. It adversely affected both fishermen and boat owners . Fishermen often had to be content with the minimum broker payment in Boston and with a stable share of declin- ing catch values in other ports. Labor costs to the owner in Boston rose to the extent that "broker" trips raised labor's proportionate share of catch values. The situation was somewhat different for the Canadian vessel operator. He saw his labor force take a stable per unit share of the catch value but did not have to contend with guaranteed minimum pay- ments. More importantly, the fishermen's gross share and his own gross revenues ad- vanced in spite of stable or even declining unit prices as total landings by deep-sea craft increased substantially. Canadian Atlantic Coast haddock landings nearly doubled between 19U9 and 1957 while ocean perch landings rose from 2 million to 35.5 million pounds between 19li9 and 1958. Clearly, the ex-vessel price system is 62/ Ibid., p. U9. 53/ One Canadian processor stated that, because of the existence of these factors, the Canadians could lose the United States market if they were to raise their prices. 32 markedly different in New England and in Canada. Price leadership (by annual nego- tiation in the saltfish industry), buyer concentration, absence of fresh -fish market leverage , vertical integration, are all significant differences characterizing the Canadian market. The American vessel owner, faced with stable ex-vessel prices over the long-term and production records, which show a decline over the last several dec- ades, and lacking processing possibilities, has been hurt. The Canadian vessel owner has had an expanding catch to offset lower prices over the long-term. Moreover, by combining fishing with fillet processing, lower prices have meant a lovrer labor share and, consequently, lower costs of procuring the raw fish for the processing plants. This sitaation gives the Canadian processor an opportunity to compete successfully in the United States market despite transpor- tation and tariff costs. Despite the apparently one-sided bargaining position, the Royal Commission on Price Spreads found that the profits of vertically integrated processing firms were not excessive , or were the salaries paid their key employees excessive. This find- ing supported the industry's contention that it is difficult to attract new capital investment in the industiy. Despite appar- ently substantial price control, profits have not been high because of the number of old plants in operation and competition in the United States market for frozen fillets from northwestern European countries . One other important conclusion that emerges, however, is that the New England ex-vessel price in fresh fish ports, nota- bly Boston, is very dependent on fresh fish demand. To the extent that supplies and the number of vessels operating are adjusted to this demand, profitable vessel operations ensue. As a corollary, this adjustment creates difficulties for New England processors. High prices caused by fresh fish demand either force them to cease operations or to work at a high cost disadvantage with Canadian competitors. Un- less New England landings increase substan- tially -and this is not foreseen In the relatively near future-this competitive dilemma between sales to the fresh and frozen market will remain and will be mitigated only by an expanding fresh fish demand occasioned by population growth in the Northeastern United States , Governmental Aid to the Fisheries There is a common conception among New England vessel owners that their Cana- dian competitors have unfair advantages resulting from allegedly substantial sub- sidization schemes on the part of the Dominion and Provincial Governments. In- deed it is no wonder that such a view is held, for the Federal Government alone programmed about $1.9 million for direct subsidies to the fishing industry in the fiscal year 1957-58 and budgeted another $9^ million for research and market, serv- ices . 6U/ In addition the Newfoundland government had liberal subsidy .provisions for construction and repair of vessels. There are, of course, Canadian sub- sidies directed at smaller vessel operators, some of whom do represent a source of com- petitive groundfish supplies. Yet, with the possible exception of some rather generous Provincial loans made to establish large processing "plants, there has been no direct subsidy aid to operators of the Canadian large-trawler fleet; and the landings of these large trawlers are the main source of competition for the New England groundfish catch. In addition, in February of 1958, the Province of Newfoundland enacted "The Fish- ing and Coasting Vessels Rebuilding and Repairs (Bounties) Act" to give subsidies for the reconstruction and/or repair of wooden vessels over 15 years old. Re- building bounties range from $100 a ton on small vessels to $250 a ton on vessels from 100-)400 tons, or 50 percent of the cost, whichever is' smaller. On a 200 ton vessel this could amount to $50,000, a considerable sum. Repair subsidies are $100 a ton or 25 percent of cost, which- ever is less, on vessels under 100 tons; on vessels from 100-iiOO tons, the bounty 61^/ Hearings before the Subcommittee on Fisheries and Wildlife Conservation of the Committee on Merchant Marine and Fisheries. House of Representatives, 86th Congress. April 28, 29, 30, June h and 11, 1959, p. 169. Assistance to Depressed Segments of the Fishing Industries . 33 is $100 a ton or 35 percent of cost, which- ever is less. Up until April 1959 bounty payments had been made on 19 vessels. These generous provisions could be of substantial aid to an owner of a large-sized wooden vessel. Their significance as a competi- tive advantage viz-a-viz New England is, however, limited. VJooden vessels over fifteen years of age are near the end of their useful life and subsidies merely pro- long this a few years more. Progressive management would dictate replacement rather than reconstruction of such types. An important Federal Canadian subsidy to a large segment of the groundfish indus- try consists in rebating about half of the cost of salt used in saltfish production. In the fiscal year 1958 budget, $550,000 was requested for this purpose. §2/ In the past the Fisheries Prices Support Board has also made substantial deficiency payments to saltfish producers and firemen in New- foundland and Quebec. No such subsidy pay- ments have been made on fresh and frozen groundfish, although it would be within the power of the Board to do so should this market become demoralized. There is no present likelihood of such action occur- ring. Another Dominion subsidy of particular significance to the saltfish industry is the construction of bait freezing and stor- age facilities and the providing of live bait to fishermen in isolated areas. Total net cost of these two programs in fiscal 1956-57 was about $225,000. The subsidies paid to saltfish pro- ducers have no readily apparent short-run effect on the fresh and frozen groundfish primary market. Without such subsidies, however, there might well be severe eco- nomic dislocation and privation in isolated ports without facilities for other than saltfish processing. In such a depressed situation, there would be even greater fishing labor surpluses and more downward pressure on labor's return from both salt fish and fresh fish sales. This could re- sult in lower prices for fresh fish and would give processors a greater price leverage in the export market. The mainte- nance of a saltfish industry by the use of subsidy helps to insure a continued supply of fishermen, albeit not trawler men. It also represents potential additional fresh fish supplies for the processing Lndustry should rising consumer demand induce processors to establish the expensive collecting stations necessary to obtain supplies from the outports. Canadian federal law has made some exemption in its domestic tariff structure which benefit the Canadian trawler owner. Certain items such as cottonseed oil, pea- nut and olive oil, and various fishhooks, lines , and cordage enter duty free . En- gines and engine parts enter at one-half the regular duty rate. It is difficult to weigh the effect of these exemptions in terms of competitive advantage. Much de- pends on whether the vessel is of American or European origin. When a Canadian trawler owner has to buy parts from a united States or a Canadian concern, he probably has to pay more than his New Eng- land coiinterpart because of transportation and/or tariff costs . When he obtains parts from Europe, particularly England, he can buy them at substantially lower unit costs. The so-called Halifax award, which annually amounts to $160, 000, provides a small direct subsidy to deep-sea fisher- men and vessel oi^mers. These bounties have been paid since the l880*s and repre- sent interest on an indemnity paid to Canada by the United States as the excess value of the Canadian inshore fisheries over those of the United States and as compensation for the loss of the United States market at that time by Canada. The actual awards per fishermen are about $10j each vessel owner gets $1 per registered ton up to $80, so that the largest owner with a 23 vessel fleet received about $830. 66/ In addition to the direct subsidies there are many Jtederal and Provincial services to the Canadian fishing industry, the results of which cannot be measured in terms of vessel operating costs but which in aggregate are significant. Foremost is 65/ Ibid., p. 170. "^Z Hearings before the Subcommittee on Fisheries and Wildlife Conservation, April and June, 1959. op. cit. p. 180. 31. the Dominion program for fisheries research and services which in fiscal 1957-1958 ex- pended $9,250,000 against a total expendi- ture by the United States Fish and Wildlife Service of $9,6tiii,000 for similar activi- ties . There is no substantial difference in dollar amounts, but there is in terms of the relative size of the United States and Canadian fisheries . The United States catch of fish and shellfish is about 2.5 times annual Canadian production. Of substantial aid in the post-war growth of the Canadian groundfish industry- have been the provincial loan funds for vessel and plant construction. Plant con- struction loans have usually been made tlirough industrial development loan agen- cies, vjhile vessel construction loans have been made through specialized fishery loan boards. The vessel loans have been directed toward the construction of the smaller long- liners and draggers for which subsidy aid is also available. The larger trawlers have been built with private financing with one exception. In Newfoundland, from its inception in 1951 through 1958, $1,050,000 has been loaned to fishermen at 3i percent interest. Of the total, $580,000 was for vessel construction and $1j70,000 for pur- chase of used Vessels, engines, mechanical gear, etc. The low interest rate of ^z percent indicates some subsidy in recent years, since it costs the Province more than that to borrow the loan funds. Loan rates in Nova Scotia are a more realistic ii|-5 percent, and over $li, 000,000 has been loaned since 19^4 with a loss ratio of 2 percent. On the federally, sub- sidized vessels, the Nova Scotia Fisheries Loan Board will loaxi up to 70 percent of the balance on a 5-year loan. In the United States, Federal loans for vessel construction are also available but at higher interest rates which, when set against the generally poor economic outlook in the groundfisheries, have not acted to revitalize the industry. The loans have been of substantial aid, however, in preventing further deterioration. The Dominion Government in Canada also insures loans to fishermen up to $U,000, and thus guarantees repayment to private lenders who make funds available under sound criteria for repayment. Unlike any United States government program, the Dominion will furnish hull insurance for certain fishing vessels at a cost of 1 percent of appraised value. The plan, however, covers only small vessels valued between $250 and $10,000, and hence is not of direct competitive significance. Further, this is not particularly low cost hull insurance when compared with rates, paid by large trawlers. No private under- writer, however, could probably offer such rates because of the administrative costs involved in serving such small units. One form of Federal and Provincial aid to the fisheries, which might well be pursued in New England, is a fairly ex- tensive school program to trajn fishermen in navigation, engine maintenance, and the operation of the latest m.echanical and electronic equipment now available to the medium-sized fishing vessel. Costs of such programs are usually shared by both the Dominion and the Provinces, although the latter may often finance it alone. Since I9I46, in Nova Scotia, over 1,200 men have received this specialized training and have been paid a modest per diem allowance while attending such schools. Although New England fishermen have been able to collect unemployment compen- sation for some time, this was extended to Canadian fishermen only on January 1, 1958. The Act is designed particularly to cover seasonal unemployment between January 1 and April 15 and will pay up to $30 a week for this period, the amount and extent of benefits depending on the quantities of fish landed in the previous season. Al- though benefits are considerably lower than in New England, they may reflect the dif- ference in living standards . It is only recently that anything has been done to relieve the spectre of vrinter unemployment in the fisheries. Summary and Conclusions New England's greatest competitors in the groundfish industry are the Atlantic Provinces of Canada. The economy of the Provinces is a resource-based one in which the fishing industry is significant and substantially of greater relative impor- tance than is the case in New England. Historically, fishermen and fishing inter- ests in Canada have been able to influence 35 govemnent policy and to obtain government aid. The prosperity of the major indus- tries of the provinces, and especially of the fishing industry, is basically depend- ent on export sales. The Atlantic Provinces have lagged be- hind New England and the rest of Canada in economic development. There have long been conditions of surplus labor, underemploy- ment, and low living standards. These have been particularly marked in the fishing in- dustry, especially in the inshore segment, which is characterized by small operations of one or two man boats . The Government , recognizing these social conditions, has initiated and will continue schemes to raise incomes by increasing labor productivity. The most significant policies aijned at achieving this objective have been the sub- sidization of small (3 to 5 nien) modem long-liners and draggers, loan funds for vessel construction, and rescission of a long-time ban against trawler use , The sub- sidy and loan plans, while not completely successful, have accomplished the limited immediate objectives set out for them and will continue in the future. A large trawl- er fleet has grovm due to the needs of an expanding post-war market in the United States for frozen groundf ish fillets . No significant increase in the number of such trawlers is expected in the next decade. The industry is prosperous enough, however, to replace the present fleet. The Canadian groundf ish industry proc- esses and sells two basic products: salt- fish and frozen fillets. The latter market has been a growth one and the former a de- clining one. Saltfish still takes about 70 percent of the large -cod landings in Newfoundland. Haddock and ocean perch landings in all Provinces, and the bulk of cod landings in Nova Scotia, are processed in fresh and frozen forms. Canadian fishermen eire legally unable to organize and bargain collectively. They face greater ovmership interest concentra- tion than is the case in New England, and work in an area where there is surplus labor and fevJer alternative job opportuni- ties . The Canadian trawler-owner has a stronger bargaining position with fisher- men than his New England counterpart. A governmental commission feels legislation is needed to equalize the price bargaining processes. Barriers to this labor exploi- tation are the relatively limited number of experienced traviler crewmen and the jo^ opportunities available on the increasing number of subsidized vessels. More flexi- ble layover practices permit Canadian owners to obtain greater vessel usage annually. Prices paid to Canadian fishermen for their catch show both short- and long-run stability. Prices are established by the policies of the leading firms, allow only for seasonal supply variation, and are generally based on the expected United States market price for groundf ish fillets. Canadian processors assert that the United States price is the result of the inter- action of international forces of supply and demand. Direct government subsidy to the Canadian fishery has not been significant, except in the cases of the modem draggers and long-liner building programs. The Dominion, however, spends in relation to annual catches about 2.5 times the United States budget for research and allied services. 36 37 An Equal Area Map of the ICNAF Convention Area 38 CHAPTER III THE HADDOCK RESOURCE Introduction The New England groundflsh fleet obtains its catch principally from a 260,000 square mile continental shelf ex- tending from Long Island to Newfoundland, Recently some New England ocean perch vessels have ranged north of the Newfound- land banks* Fishing on the offshore banks in the North Atlantic is subject to regulation by the International Commission for the North- west Atlantic Fisheries (ICNAF). This Conmission classifies the fishing grounds as follows: New Qigland grounds. Nova Scotia and Gulf of St. Lawrence grounds, and Newfoundland grounds, (map on p. 38). Ihe United States accounts for nearly all groundfish caught in New Qigland waters. Canadian fishermen land about two-thirds of the groundfish caught in the Nova Scotia- Gulf of St, Lawrence area, (table III-l) . Less than 20 percent of landings in the latter area were by American vessels, primarily ocean perch boats, Americans account for only 3 percent of the catch taken in Newfoundland waters, The major part of the analysis of New England's groundfish resource poten- tial and the effects of this on fishing costs will be devoted to two species, haddock and ocean perch, Ihese accounted in 19^7 for approximately 83 percent of the value of all the region' s groundfish landings. Furthermore, the available biological evidence indicates that while other groundfish species could be utilized more than they are at present, they still must be considered of minor importance with respect to the staples of haddock and ocean perch. The haddock fleet is centered in Boston and fishes principally on the grounds off New England and on the more southerly Nova Scotian banks. A study of the period from 1938-ij9 reveals that 82 percent of the total fishing effort was concentrated on Georges Bank off New England and the remainder on the Canadian banks. °I' Analysis of 19$ 7 haddock landings at Massachusetts ports indicates that Georges Bank continued to furnish the bulk of the catch (78.9 percent) with other New Ehgland waters siqDplying 6,7 percent and Canadian waters lU,U percent, (table III-2). Trips from Massachusetts ports to Canadian waters are, also, mainly short runs, since the greater part of the catch ft:om Cana- dian waters comes from Brown's Bank. The latter is separated from tiie most heavily fished area of Georges Bank, the Northern Edge, by but a 30-mile channel, 68/ Both banks, are from 1 to 1^ days steaming time from Boston, and together in 1956 account- ed for 87 .ii percent of all haddock landed in Boston, The Economic Implications of the Haddock {fesource Available to the New England Groundfish Fleet One of the determinants of the cost of any good is its relative scarcity or abundance. Only a few goods such as sun- shine, air, and water are so plentiful as to be of little or no cost. Indeed, economics has been defined as "the admin- istration or use of scarce resources." 69/ Much of the cost of production difficulties that have plagued the New England ground- fishery may be attributed to the adjust- ments that have been necessitated by the relative abundance or scarcity of the raw product, the fish. 67/ Schuck, Howard A. Offshore Grounds Important to the United States Haddock Fishe^, Research Report 32, United States Department of the Interior, Fish and Wildlife Service, Washington, D. C, 1952, 68/ Until 1932 the Bureau of ELshories classified Brown's Bank as being in New Qigland waters, instead of Canadian, 69/ Harriffs, C. Lowell, The American Econony, 1956, Irwin, Homewood, Illinois, p. 3, 39 The economic implications of the re- soxirce potential available to the fishery must be appreciated clearly if sagacious action is to be taken to aid the industry. An exsimination of the history and present status of the haddock resource may con- tribute to an understanding of this basic problem. Haddock, as indicated previously, is New England's most valuable groundfish. For nearly thirty years, it has been the subject of Intense biological investiga- tion by United States Fish and Wildlife Service specialists. Today, it is possible to predict the following year«s catch with substantial accuracy. While much remains to be studied, enough has been done to make possible a cost of production analyses based upon biological fact. There are two varieties of marketable haddock in the fishery. One is large haddock or haddock weighing over 2§ povuids* The other is small haddock, more commonly known as "scrod," which weighs from 1^ to 2j pounds. 1, History Of The Resoxiree Utilization During the nineteenth century the New England fisherman always found haddock in abundance on Georges Bank. His interest was, however, primarily to seek cod. Had- dock was not as well suited to preserving methods as cod, and the haddock fresh-fish market was limited to seacoast areas. The introduction of the filleting process in 1921 and of the quidc-freezing techniques in 1925 occasioned a tremendous increase in the market demand for haddock. 12/ From 1891 to 1903 annual United States haddock landings averaged about 55 million pounds annually, (table ni-3)» Ihese increased to an annual average of about 77 million pounds in the 1901^ to 1918 period. The growth of a national market for haddock fillets led to greater fishing intensity, and landings in New QigLand juroped from 93.5 raLllion pounds in 192li to nearly 256 million pounds in 1929. 3/ Landings at the principal haddock port, Boston, in- creased from 7^^ million pounds in 1920 to 190 million pounds in 1930. The fishery, however, could not sustain the increased catch, and since 1931 landings from the base resource area, Georges Bank, have stabilized between 85 and 96 million pounds annually. Striking changes have occurred in the Georges Bank haddock fishery since 191^* The history of the fishery may be divided into three periods r 191U-26; 1927-30; 1931 to the present. The first and last are relatively stable periods in terms of annual landings, catch per day in pounds, in numbers of fish caught and in effort e3?)ended. The 1927-30 fishery, however, witnessed significant and short-lived changes in both catch and effort. The catch reached an all-time high in 1929, vhen 223 million pounds were landed, and the effort reached an all-time high in 1930 when 16,000 days were used. The modern fishery is substantially different from that of the two earlier periods in terms of annual landings, catch per day, effort expended, and size of fish caught, (tables Ill-li and III-5). In the 1917-26 period annual landings averaged {u*ound 66,130,000 pounds, catch per day fished was around 30,000 pounds, fishing effort averaged 2,200 days, and the great proportion of fish landed was large haddock. In the 1927-30 expansion of the fishery, annual landings from Georges Bank averaged about 185 million pounds, catch per day declined precipitously from Ui,000 pounds in 1927 to 11,500 po\inds in 1930, while fishing effort increased sharply from 2,lj00 days in 1926 to 16,000 days in 1930. Scrod haddock was still an insig- nificant segment of total landings, as the effort spent was reducing a more adult stock. Since 1931> annual landings f^om 70/ Harrington, William C. Decline in Haddock Abundance on Georges Bank and a Practical Remedy. United States Department of the interior. Fish and Wildlife Service, Washington, D. C.,1936. p. 2. 71/ Fishery Statistics of the United States, 1956. p. 95. Uo Georges Bank have averaged approximately 91 million poiinds, catch per day has averaged 13,1jOO po^iods while effort has been at an annual level of 6,96U days. A comparison of the 1917-26 and 1931-57 eras shows that in the latter period total annual landings are 35 percent higher but at a cost of 212 percent more effort and a reduction of $7 percent in the catch per day. Here, then, is a fact of basic im- portances the present fishery is a much hi^er cost one. The modem fishery, wLth stabilized landings, entails a much greater depend- ence on scrod haddock than in earlier years. Plsheiy Research Biologist John R. Clark declares that Georges Bank has become a scrod haddock fishing ground during re- cent years, 72/ With the exception of the World War II years, there had been from 1931 to 19 5U a continued decline in the proportion of large haddock in the catch, (table III-5). In 1931, about 85 percent of the landings were large j in 195Ii only about a third were. Only 11.5 percent of Boston landings were scrod in the 191U-30 period, fron 1950-57 over half were scrod, and in 1958 the proportion was about even, (table III-6), Another indication of the dependence on scrod is the annual catch in nuniiers (not pounds) of fLsh. In the 1931-iiO years this averaged 35,li77,000 annually. In the 19h7-57 period there was an actual increase in the nui?4)er of fish taken com- pared to the former period. The fact that poundage did not increase in a correspond- ing manner was not due to a scarcity of haddock in general, but to a decline in the relative numbers of large haddock. This is also clear from consideration of the average weight per fish caught in the 1931-57 period, (cf. table Ill-li). Again, if the influence of the World War II fishery is discounted, the average weight dropped fairly steadily from 1931 until 1955. Before 195ii, the age of first cap- ture of haddock was 1^ years, A new mesh net ruling, adopted in 1953 has had the effect of raising this minimum to 2^ years. IJie net regulation has resulted in a re- versal of the average weight trend, and in 1958, for the first time since 19h9, more large haddock than scrod were caught on Georges Bank. Despite the larger unit weight of the fish landed, however, the success of the fishery is still largely dependent upon the success of scrod re- production. "Ihe stocks of Georges Bank haddock have been fished down to the point where the catches depend upon large numbers of comparatively small fish. ...In terras of age, the fishery was once supported in large part by fish 5-9 years old but in recent years 2-k year old fish have domi- nated the catches. The depletion of the large fish has placed the fishery in a precarious position." 73/ As fillets of scrod have less con- sumer demand and involve a higher labor cost, scrod visually sells ex-vessel at a discount from the price for large haddock. Analysis of the differentials gives a 10- year average discount of $2.28 per hundred weight in the 19l;8-57 period, (table III- 7), The narrowing of the differential since 195U can be attributed to the effects of the 1953 mesh regulation. The larger mesh has not only increased the proportion of large haddock in the catch but has also increased the average size of the scrod caught. If the 1957 Boston landings of 9h million pounds had been 88,5 percent large haddock (as in the 191ii-26 period) instead of only 1(9.5 percent, as was the case, the additional revenue at 1957 price differen- tial for large and scrod haddock would have amounted to over a half million dollars ($551,000) to the primary industry. This 72/ Sep No. L50, "Georges Bank Haddock Fishery - Changes in Scrod Abimdance in Recent Years." United States Fish and Wildlife Service, October, 1956. 73/ Commercial Fisheries Review, October, 1958. p. 29 (quoting recent release from Wooais Hole Laboratory, United States Fish and Wildlife Service ) . Ul is an amovint equivalent to 6,$ percent of the value of 1957 haddock landings in Boston, Zi*/ The point Is that the striking increase in effort since 192? has increas- ed catch values even less than the 36 per- cent poundage increase would indicate because scrod comprised a large part of the catch, the actual decrease in the abundance of larger sizes of haddock may in part be attributed to the situation obtaining in recent years: small scrod haddock were caught before they reached fuller growth. Since 1931 abvmdance of total haddock has tended to follow abundance of scrod with little time lag. Moreover, there has not been the reserve stock of large haddock to fall back on as in the 1920' s. Most biologists believe that the abundance of haddock depends principally upon recruitanent, which varies greatly with changes in environmental conditions. The effects of changes in the enviroment upon abundance in any one year are probably much more important than is fishing effort. It is impossible at present, however, to predict the co\irse of such environmental changes , In a long-term analysis of the re- sources, it is necessary that averages based on experience be used, and in the case of numbers of fish caught there is no substantial sustained deviation from the 38 million average obtaining since 1931, (cf. table Ill-li), With a series of favor- able brood years, biologists feel that the stock might yield 20 to 80 percent more poundage with the same effort per vessel. Since 1935, however, the poundage caught by five year periods has varied by only lj6 percent. In the 19l*8-57 decade, maxi- mum deviation in any one year from average landings for the period was only 11 per- cent. Hence, in looking to the future, it is possible vith successively favorable brood years, that landings at present effort co\iLd increase substantially above the 91 million pounds averaged since 1931* From 19lt8 to 1958 there was a pattern of alternating good and bad brood years rather than a sustained trend in either direction. The stocks resulting from the good years were large enough to sustain landings over the poorer years. It had long been feared, however, that two or three ccwisecutively poor brood years (biological recruitment) would seriously reduce the catch, Ihis dire result occurred in the latter half of 1958 and was expected to continue into early I960, Such failures in scrod abundance are due to short-nm and still unpredictable environmental factors. The dependence on a scrod fishery is dangerous for the fishing industry because of its marginal operating position since World War II, Should successive brood failures occur again the effect will be to widen the existing gap between effort and catch per day and to increase per pound costs further. Whether this event VTill act to drive additional marginal operators out of business will depend on whether prices can increase proportional to costs. The 1958 haddock landings were down sharply, yet prices advanced, alleviating much of the higher costs of fishing effort, 'Vhether prices would have advanced as much, were there not an international scarcity of North Atlantic groundfish, is a matter for conjecture. Table III-7, a review of haddock prices paid ex-vessel in Boston since World War II, gives little basis for optimism concerning the possi- bilities of higher prices covering the increased costs of fishing in years when the catch is reduced because of successive failures in scrod abundance. Given brood recruitment similar to that experienced in the years prior to 7ii/ Preliminary figures for 1958 indicate that the high prices resulting from a condition of fish scarcity reduced the differential to 00,83 per hundred weight. In this case, the increased revenue from landings of 88.5 percent large haddock instead of 50,5 percent would have been {179,000 or 1,9 percent of the value of haddock landings. It would not be prudent, however, to call 1958 a "normal" year. U2 the adoption of the wider mesh in 1953, the annual catch uould increase 25 to 30 percent over the average yield before adoption of the new mesh. This has not in fact yet taken place. The reason has been a poorer brood recruitment following the adoption of the mesh. No definitive reasons have been advanced for the lower broods. Biologists have no reason to ex- pect that environinantal conditions will return to a more favorable situation idiich would provide average or above average recruitment, 2. Maximum Annual Yield On Georges Bank And Its Effect On Fishing Costa Basic to an understanding of the cost of fishing in terms of effort and produc- tion, is appreciation of a principle well accepted by fishery biologists. This principle is that there is a maximum sustained annual yield (catch) in any fish- ery, such as the Georges Bank haddock £Lsh- ery. Further, this total equilibrium or sustaiiied yield in any year can be taken within a wide range of fishing effort, ^If tne average annual elfort expended for haddock on Georges Bank between 1931 and 1958 is called normal or 100 percent^ then total fleet landings in normal brood years will not vary significantly between a fishing effort level ranging between 75 and 200 percent of normal. That is, the maximum annual sustained yield can be ex- pected whether fishing effort is 5,000 or 15,000 t"rawler days. The catch per vessel may, of course, vary substantially. Ahy effort by the fleet, however, above the minim\m necessary to obtain the equilibrium yield becomes siirplus higher cost fishing. In the case in point, biologists have determined that with brood years similar to those experienced between 1931 and 19li8, the equilibrium yield of Georges Bank haddock should be about 120 million pounds. Before adoption of the mesh regulation the eq\illibrium yield was about 9li million pounds, again based on the average brood recruitment between 1931 and 19li8, It must be kept In mind that the principle of a siistained yield over a wide range of effort is based upon an average yield which assumes a given or "normal" level of recruitment and normal brood years. The declining yields in recent years do not weaken this principle. The poor catch has been due to successive- ly poor brood years resulting from as yet unknown environmental factors. If the decline in brood recruitment continues, there will still be an equilibrium yield attainable over a wide range of effort. The maximum yield will, however, be at a lower figure than that formulated on the basis of the "normal" 19 JL-IS brood years. !nie Idea of a maximum annual yield may be clearer if one considers that "the numbers of fish added to the stock set a limit to the total landings which can be taken from the banks. As soon as enough days are put in to catch this limit, any additional fishing effort does not increase landings...." 12/ The total merely must be shared by more units. The principle is formulated by Dr. William F. Thon^json in the following excerpt from "The Effect of Fishing on Stocks of Halibut in the Pacific ." "The evidence of the halibut fishery is strongly supported by the history of fisheries in general. Those of such areas as the North Sea have shown a tendency toward relative constancy in total yield throughout the period of great technolog- ical in^irovement and expansion of the fishery. It Is a tendency shared by the fisheries of the North Atlantic as a whole and of other regions. "It has given rise to prolonged argument as to whether production has fallen as a resiiLt of heavy fishing. It was, indeed, assumed that this iroiild be the case by those who in early times urged conservation. This decline, if existent, has not been of a magnitude to be obvious without careful analysis of extensive statistics covering many years. 75/ Statement of Robert A, Nesbitt before the United States Tariff Commission. 19^, pp. 12-13, U3 It has bean confused with changes in the accumulated stock* "But the opposite side of the picture -that production has failed to rise proportionately to the increased intensity of fishing has not been given the atten- tion it deseiTves. Tran this failure to rise, it has become obvious that produc- tion has a ceiling or limit that is ap- proached during the relatively early stages of increase in fishing. TTie only argument has been whether this limit has fallen, not as to its reality. "The existence of this limit means that when a fishery esq^ands its effort the annual catch is divided among more units of effort. That is simply another way of saying that as the limit is approached the relationship between number of units of effort (f) and catch per imit (c) approach- es a reciprocal one (f x c " constant). This is the basic relationship shown by the history af the halibut fishery in this report." li/ Ihe same conclusions have been drawn by European biologists studying the North Sea groundfisheries. Reference is made to Special Scientific Report - Fisheries, No. 13, 1950, ttiited States Fish and "Wild- life Service, entitled The Rational Exploitation of the Sea fisheries With Particular Reference to the Fish Stock of the North Sea. This is a translation of a paper published by the Netherlands Directorate of Fisheries. The principle of a maximum sustained yield as substantially independent of fishing effort is accepted by ICNAF advi- sors. In his report to ICNAF on United States research in 1952, Dr. Herbert ¥. Graham, Director of the United States Fish and Wildlife Service laboratory at Woods Hole, Massachusetts, in specific reference to the Georges Bank haddock fishery declares: "The yield curve for the Georges Bank fishery, based on l5 percent annual natu- ral mortality, indicates that at the present level of fishing intensity the optimum age of first capture lies between 3 and 3z years. The first step in mesh regulation will make the age of first cap- tvire about 2^ years, so that a maximum equilibrium yield would reqtdre about 50 percent increase in fishing effort. The con5)utations further show that at any age of first capture lying between 3 and h years, the yield will be fairly close to maximum over* a range of fishing efforts varying from 73 to 200 percent of tl^e present aYerage~annual effort." /// A distinction must be made between the maximim sustained physical yield and the maximum net economic yield of a fishery. The maximum net econocdc yield is the maxi- mum difference between the total value of landings and the total cost of fishing^ It is unxisuaL for the. maximum sustained physical yield of a fishery to coincide with the maximum net economic yield. The Georges Bank haddock resource, however, was overfished in both a biological and an economic sense prior to mesh regulation. After mesh adoption the resource is still overfished in economic terms. Ihe problem of achieving the maximam net economic yield of a fishery must in- volve consideration of the law of dimin- ishing unit returns. H. Scott Gordon notes in this context that "There are seme fisheries in which the expansion of fishing effort will, after a point, reduce the total landing of fish. .. .Ohis is the case especially where the average size of the „o / fish is substantially reduced by fishing.!-/ Some biologists believe that the latter postulate is an explanation of the decline in the Georges Bank haddock fishery from the 1927-30 landings, peak. 12/ It is felt by many, too, that greatly expanding effort could substantially lower the yield to be expected at present fishing levels. 76/ Thonpson, William F. "The Effect of Fishing on Stocks of Halibut in the Pacific." FlsHeries Research Institute, University of Washington, p, 58. 77/ International Commission for the Northwest Atlantic Fisheries, Annual Proceedings, Halifax, Nova Scotia, 1953, Vol, 3. for the year 1952-1953. p. 50 78/ Gordon, H, Scott. "An Economic Approach to the Optimum Utilization of Fishery Reso\irces.n Journal Fisheries Research Board of Canada, 10 (7), 1953. 79/ Herrington, William C, Op. cit. p. J.U. hh It is beyond the sc»pe of this report to comment on the social implicationa of a production system which can involve extra unneeded men and vessels in achiev- ing maximum sustained landings* This is not a situation peculiar to the fisheries alone. The phenomenon may be viewed, also, in agriculture, transportation, printing and publishing, and in other industries too numerous to note. It is necessary, however, to point out the cost implications of the funda- mental relationship between effort, catch per day per vessel, and annual sustained yield. If an average annual effort of 2,200 days was sufficient to land 75 million pounds of haddock in the pre-1927 period, it should not, even at a liberal estimate, have taken over 5,000 days to catch the modern day yield of around 91 million pounds. §0/ Yet the average number of days fished annually on Georges Bank since 1931 has been about 7,000, In other words, the catch covild have been secured with approximately 29 percent lower physical costs. In such a situation, if revenues do not advance relative to the hi^er real physical and financial costs of fishing, the industry has to make fundamental ad- justments for survival, in addition to the industry's burden of the excess costs of fishing, the cost of fishing is in- creasing because of the upward trend in such elements of costs such as labor, insurance, and repairs. In^jort competi- tion is pertinent to this aspect of the profitability of the domestic industry only to the extent it keeps ex-vessel prices from rising to levels that would cover more, if not all, of increased fish- ing costs and excess costs of fishing. The New England industry has over the years accommodated itself partially and often painfully to the resulting lower catch per day situatioft. From 1931 to 1936 many of the trawlers deserted Georges Bank for the more distant Nova Scotian banks. During the period 1926-30, New England vessels caught an average of 130 million poTinds annually from Georges Bank and only 13 million pounds from the Nova Scotian banks. By 193ii the fleet was catching 88 million pounds annually on the Nova Sco- tian banks versus only 1^0 million pounds on overexploited Georges, ^1/ other trawlers deserted the haddock fishery to engage in other ground fishing, particular- ly the new ocean perch fishery which devel- oped after 1935 in Gloucester, let the 1930's were fairly good years for the haddock fleet. The adjust- ments mentioned, plus the fact that in constant dollars both the ex-vessel price of haddock and scrod and the total value of Boston landings remained reasonably stable, permitted some replacement and investment in haddock otter trawlers in the late 1930's. Since World War U, however, with the exceptions of 1958 and 1959, both ex- vessel prices and total value in con- stant dollars have declined and have not reflected the higher costs of fishing. The Boston catch in 1957 in constant dollars was worth almost 20 percent less than that of 19 U7 and on a par with 193ij» Ex-vessel prices for haddock and scrod in 1958 and 1959 were the highest in history because of the severe scarcity. Landings were so light, however, that in constant dollars, values were 13 percent under the 19li7-l49 average. Ihe inexorable economic consequences have been severe: there has been a marked reduction in the Boston haddock CLeet as vessels have been transferred to other ports for ocean perch fishing or sent to Canada; many operators have left the business; no large otter trawler has been built or replaced in Boston since 1952. Consciously or not, the industry has been forced to reduce its effort expenditures in terms of fishing days. This reduction 80/ Nesbitt before the United States Tariff Commission, op, cit. 81/ Herrington, op, cit. p. 9. Also ICNAF, Document 9, April 3, 1951, H^Tfax, Nova Scotia. Ii5 in effort has been the result of fewer large trawlers fishirig and of less trips by some of the older trawlers still in operation. Ihere is a body of opinion in the industry which holds that the reduced effort in recent years has caused lighter landings. Analysis of the catch and effort data in table III-8 seems to contradict this view. Substantially reduced fishing tine during World War II resulted in dramatically higher catch per day, higher annual fleet landings and a lesser depend- ence on the scrod contribution. It may be argued that it is not fair to base too many conclusions on the war years because of the effect of many external factors present, such as the favorable O.P.A. ceiling prices, the submarine menace, and the acquisition of fishing vessels by the United States Navy, It is perhaps better to be conservative and omit the evidence of the war years not because of the ex- ternal factors but because of the shortness of the period. Moreover, catches may have been influenced by a very good brood year in 1939, the results of which were felt throughout the period. It may be instructive, however, to compare the prewar (1931-39) and postwar (19U7-56) years in terms of effort and catch. An effort reduction in recent years of about 10 percent has not resulted in lower total annual landings, but rattier in an increase of nearly 7 percent. Nor are more fish escaping the fishermen. There has been an increase of 27,3 percent in the average annual catch in numbers of fish. What is perhaps even more significant, however, is the fact that the lower effort has resulted in a 31 percent increase in the average catch per day. Since most fishing costs remain the same on a per day basis whether a trawler catches 10,000 or 20,000 pounds, the higher landings per day since 19li7 have acted as a deterrent to further increases in the costs per pound of securing the fish. This means that in comparing per pound costs in recent years with those of the prewar decade, it is necessary to consider factors other than effort as the determinants of cost ad- vances. This means, too, that >rfiile the decrease in the numbers of large haddock otter trawlers operating in the last ten years might have brought personal problems for the owners involved, it has redounded to the benefit of remaining vessel owners by reducing the fleet's fishing effort and thereby increasing the catch per day of the vessels still in operation. The effect of effort on catch and cost must be illustrated further. The following economic analysis is based upon a biological foundation provided by fish- ery research biologists, notably Mr. Clyde C. Taylor, vrtio studied the rates of growth, recruitment, and natural and fishing mor- tality for Georges Bank haddock. By the use of technical yield - isopleth diagrams the biologists were able to show the annual fleet catch and the catch per day to be e^tpected at various levels of fish- ing effort before adoption of the 1953 mesh regulation. Based on the brood yields prevailing in the I93I-I48 period, pre- dictions were also made of the increased landings at each level of effort to be expected after mesh adoption. Table III-9 summarized the findings. As noted earlier brood recruitment in recent years has for unknown reasons dropped below the average prevailing in the 1931-U8 period. As a consequence, the expected annual catches did not materialize. Without the raesh change, however, landings would have drop- ped much more. Yield per recruit has in- creased as predicted; total landings have not increased because there have been fewer recruits, A few words of explanation are nec- essary for an understanding of table II 1-9, Average annual fishing effort on Georges Bank from 1931-U8 was computed in terms of days fished by standard large otter trawl- ers. IMs was termed "normal" or 100 per- cent effort and was related to average anniial or "normal" landings for the period. Then the annual landings, before raesh regulation, that could be ejqpected at effort levels at increments of 25 percent above and below the norm were calculated. Of immediate interest is the conclusion that at fishing effort levels ranging flrom bO percent to 150 percent of "normal", total landings would vary only slightly while the average catch per day could fall as much as 70 percent. It is seen, too, that an effort level nearer 75 percent of normal would have provided the maximum sustained annual yield. Table III-9 also indicates the expected effects of the 1953 U6 mesh regulation on the effort-yield relationship. At normal effort levels a 28 percent increase in annual landings is expected. Ihe point of maximum sustained yield is advanced from 75 percent to 125 peroait of normal. The 125 percent level would not be the point of maximum net economic yield, however, since a 25 percent increase in effort results only in an in- crease of 1 percent in fleet landings. Between 75 percent and 200 percent of effort the range in landings is only a little over 3 percent. Although the data developed in table III-9 is based on the 1931-h8 period, it need not be revised for purposes of cost analysis of the effort-yield relationship. This period may be taken as typical of pr»- mesh regulation fishing. Were the base period to be 1931-52, average annual land- ings would be 2 percent less and fishing effort 2,5 percent less. Any bias, there- fore, in using table II 1-9 is on the side of liberality in yield "estimate. " Still, it will be found that there is overfishing in an economic sense. The effort-catch analysis serves as a foundation on which to estimate the number of large otter trawlers to be ex- pected at each level of fishing effort. 82/ This is done by making certain assumptions based on actual practice and on average per vessel fishing effort. These assun?)- tions concern the amount of fishing versxis non-fLshing time per trip out of port, the minimum and maximum length of each trip, the minimum and maximum number of pounds landed per trip, and the total number of days a boat would be out of port annually. Specifically these assumptions are: (1) Ihat on the average each vessel will , have 2,5 days non-fishing time per trip.22' Non-fishing time is time spent sailing to or from the fishing banks or in sailing ftrom one part of the fishing grounds to another. (2) That a vessel captain will attempt to land at lP4st 65,500 pounds per average trip. 2h/ (3) When catch per day is above 11,900 pounds, a vessel's operations will be limited (on an annual average) to an 8-day roiond trip. When the catch per day is under 11,900 pounds, a vessel's captain will try to Ush long enough to land 65,500 potmds but not be- yond the point where total trip time is over 10 days. The upper limit is nec- essary to prevent spoilage of the first caught fish, (h) The total number of days a vessel will be away from port, annually, will be approximately 2ljO, Table III-IO incorporates the fore- going assumptions with the effort-catch relationship of table III-9 and thereby gives an estimate of the number of large otter-trawlers to be ejqsected at the various levels of fishing effort. The situation portrayed is one in which brood recruitment has retximed to what was con- sidered normal in the 1931-ii8 period. Thus landings are at the level predicted at the time the mesh regialation was adopted. There is increasing evidence that thla assumption errs on the side of liberal landings. Brood recruitment has been at such a low level for such a long time as to make it impossible to predict when it will return to the higher levels which obtained in earlier years. This bias toward more liberal landings than are more likely to occur is explicitly recognized. It can be shown, however, that even with the more liberal yield assumption there is uneconomic overfish- ing. If such is the case, then there would be even greater overfishing if yields were to remain as they are at present. Columns I, n. III and IV, on effort, catch per day, and total fleet landings are derived from table III-9, Columns V, VI, and VIII, on days actually fished per trip, trip lengths, and total days absent 82/ Based largely upon unpublished manuscript of Mr. Clyde C. Taylor, Fishery Research Biologist, Woods Hole Laboratory, United States Fish and Wildlife Service, Woods Hole, Massachusetts. 83/ Source! Data submitted by United States Fish and Wildlife Seirvice to In^rnational Commission Northwest Atlantic Fisheries, 1955-1956, 6h/ Source: Historical Data from United States Pish and Wildlife Service. li? annually' per vessel are based on the assumptions given above. Column VII, the number of trips per year for the fleet, is derived by dividing the number of days fished annually (colxunn n) by the fleet by the average number of days fished per trip by each vessel (column V). Coluinn IX, the annual nvnnber of trips per vessel, is the result of dividing the number of days it will be absent from port (coluitm VIII) by the length of its trips (column VI). Column X, the number of vessels in oper- ation at the fishing effort postulated, is obtained by dividing the fleet's total annual trips (column VII) by the individ- ual vessel's total trips (column IX). Naturally it would be possible to construct infinite variations on this basic table by varying the assun^itions on the number of days fished per trip and the number of days fished annually. It is believed, however, that the assunqjtions cited previously are the closest to re- ality and will serve the general illustra- tive purpose of this section. Attention is invited to table III-ll, which shows the number of otter trawlers by size in the Boston haddock fleet. On the average, it has been found that the mediiTO vessels have about kh percent of the capacity of the larger trawlers. Thus, the 36 medium trawlers in Boston in 1957 would be equivalent to 16 large trawlers* In terms of standard large otter- trawlers, then, the Boston fleet in 1957 was can- posed of about hh vessels. This figure would be in line with the numbers project- ed in table III-IO for normal effort. If a backward glance is taken, it will be seen that there has been a considerable lessening of excess capacity in the Boston industry. The 19li7 fleet was conposed of the equivalent of 71 large trawlers, an amount I60 percent of "normal" and far in excess of need, 2^/ Tables m-12 and 111-13 develop some of the cost implications of the effort- catch relationship in terms of individual vessels and crewman. A constant price of 8|^. per pound for haddock at all fishing levels is assumed in the calc\iLation8 . Thia is close to the undeflated ex-vessel price of the species in the 19U8-57 decade. A constant price is assumed because total fleet landings are relatively stable over a wide range of fishing effort. Frcm 75 percent of fishing effort to 200 per- cent of effort, landings vary only 5 per- cent. Hence, even without considering the ceiling put on price by foreign competi- tion, it seems reasonable to assume price stability if total landings remain fairly constant. (At an effort level of 25 per- cent, revenues may in fact be understated, as it is reasonable to assume a higher price to compensate for the somewhat lower landings at this point. ) Also, analyses of landings and prices in the 19ii8-57 period reveal that the ex-vessel price re- mained relatively inflexible on a year to year tasia. Ex-vessel prices showed no statistically significant correlation with landings even ^en landings varied sub- stantially. Ihe mechanics of table III-12 are as follows: Columns I through V, on the number of vessels and the catch to be ex- pected at various levels of fishing effort are derived from table m-lO. Column VI, the annual gross jrevenue per vessel, is obtained by multiplying the anniial poxmd- age landed by the vessel by 8^i per pound. Column VII represents the trip ex- penses incurred by each vessel. Detailed analysis of vessel settlement sheets reveals that trip expenses account for about. 65 , I4 percent of the gross revenue per trip, (coliunn VII), Itip e^ipeoises are the out-of-pocket costs of each voyage. They constitute principally the gross share of the crew (57.8 percent of gross revenues) the bonus to the captain (3«8 percent of gross revenues) and certain items of expenae shared Jointly by owner and crew. The contribution to overhead figure in column VHI is the sum that remains for the vessel owner after deducting the trip expenses from the gross revenues, Ihe remainder must cover his overhead costs if he is to make a profit. 85/ In terms of the lower landings level in 19li7, a pre-raesh reg\iLation year, there was 175 percent excess capacity. U8 Column IX, the average overhead per vessel is based on data submitted by vessel owners for the years 1953-57. This vas a period vAien effort was 75 percent to 100 percent of "normal". It is likely that the $65,000 figure is understated for lower levels of fleet effort and over- stated for higher levels of fleet effort. For instance, the cost of hull and pro- tection and indemnity insurance is likely to be higher per vessel at lower levels and less expensive at higher levels due to the law of large numbers in spreading risk. 86/ Column X, per vessel profit or loss at each level of fishing effort, is the result of subtracting overhead expenses from overhead contribution. Table III-13 considers liie cost effort relationship in its effect on crew earnings. Column II, the gross crew share was foiind to be 57.8 percent of gross revenues . Out of the gross crew share are paid various expenses charged to the fishermen. Food, fuel, and ice (nine months of the year) are the principal items paid for by the crew. On an average basis, it was found that at current 1956-58 prices, the expenses incurred by the crew of a stand- ard otter- trawler would be about $l63 per day out of port, column III. Since these costs are nearly directly variable with fishing time, they are assumed to be pro- portional in totcQ. to the changes in fish- ing effort. The amount then remaining is known as the net crew share, (column IV). (Present fishermen contracts with Boston vessel owners provide for a minimum net crew share per man equivalent to 512 per day out of port, /column "TjJ . Vfhen the net crew share per man is less than this minimum, the owner has to make up the deficiencies.) Table III-IO made it clear that in- creases in effort do not provide propor- tional increases in landings. Examination of table III-12 and III-13 reveals the effect of the dindnishing unit returns inherent in this inJustry, A word of caution is necessary con- cerning these tables. This analysis is for illustrative purposes only and is based on a situation in which average large otter trawlers fish only on Georges Bank and only for haddock. In reality, they also fish the western Nova Scotian banks in the spring. These travders also catch other species such as cod and pollock when fishing Georges Bank. Revenues per vessel and net crew shares are higher than shown when weight is given to these factors. Nevertheless, iiiese figures are valu- able in developing valid conclusions about the relative position of the industry at present. If one were a monopolist and had sole control over all vessels that could possibly fish for Georges Bank haddock, the point of maximum profit would be at a level 50 percent or less of the recent average." Not only would per vessel profit be highest at this point, but the combined profit to the owner of all the vessels fishing would be at its height here rather than at a level where more vessels were used, (table UI-lu) . If one owner were to gain control over all vessels in the fleet, it would be to his interest to reduce, in due time, the number of vessels operating for haddock. The reason is again basically that over a wide range of effort total landings will not vaiy significantly. Stable landings mean stable prices and, therefore, as effort increases a stable revenue is shared among more vinits. Further, the increase in the number of vessels with their attend- ant overhead (fixed) costs means not only 86/ All data were submitted by operators of large otter trawlers. The $65,000 figure is an average, however, and may run about f75-90,000 for the bigger OTL's and $30-60,000 for the smaller. Another variable is managements' decisions on planned refitting. This figure can vary greatly among similar-sized vessels. Ii9 more shares to be taken out of a fairly constant gross revenue, but also more shares from a lower net revenue. The ad- ditional vessels represent not only added shares but added costs to be distributed before sharing. This is the reason why not only per vessel profit, but also fleet profit diminishes -with higher effort. It is vital to realize, also, that this analysis is valid whether the price of haddock is stable at 8 cents per poiond or 28 cents per pound. Profits at all levels may be elevated to a higher plateau but the law of diminishing returns and diminishing net revenues will still oper- ate with equal vigor as long as landings remain stable while effort varies. Some may feel that the analysis pre- sented leads to a conclusion that the fishery, because of its connon property nature, has some aspects of a public utility and that to prevent econanically and socially wastefiG. duplication of ef- fort (vessel and manpower) some form of public control such as licensing or profit reg\ilation is desirable. It is not the purpose of this study to enter such an area of controversy but merely to iH\uni- nate the present cost-catch-effort relation. It is seen from table III-12 that, with more brood years approaching the 1931-ii3 average, the mesh regulation would make possible break-even operations at about 125 percent of normal effort and that at normal effort, profits would be possible although toe fishery would still be wasteful in a social and an economic sense* Even if the number of ve£;sels pro- jected for 100 percent or normal fishing were to remain in service, but were to cut their fishing activity in half, substan- tial savings would result. TMs wotild be equivalent to an effort level of SO percent with double the number of vessels needed at that plateau. Because of the relative stability of total fleet yields at the two levels, however, the vessels would get only a slightly lovrer contribution to over- head {Ik percent or $ll,ljOO less). Over- head costs should, however, be cut more than enough to offset the lower contribu- tion. The costs of hull and protection and indemnity insurance, gear, siqjply and repair, and maintenance costs would be significantly less with the halved running time* Alternatively, the reduced effort in the Georges Bank haddock fishery would provide additional income opportunities for owner and crew through diversificatLon to other species and other banks. It must be strongly emphasized again that the profit and loss situation por- trayed in table III-12 does not correspond with present conditions in the fLsheiy due to the currently poor abundance. If the table were constructed on the basis of yields prevailing in recent years, the average vessel owner would lose money at nonaal effort levels and with normal prices, that this does happen can be seen in the actual earnings data reported in Chapter V. Profitable operations would not be possible until fleet effort was cut at least 2$ per- cent below normal. The fact that break- even points and profit operations are so related to abundance of the species, high- lights the dangerous dependence of this fishesry on scrod haddock. Successively poor scrod years will mean financial disaster to many operators. The continued present dependence on scrod abxmdance emphasizes the modem uneconomic overfLslk- ing and points to the wisdom of reducing fishing effort. It is not to be argued that Boston's aging fleet needs extensive replacement. It is difficult, however, to be convinced, even under the most sanguine assun^jtions concerning effort and catch, that this Heet needs to be expanded. Reference to table III-l^ will show that in recent years, with the exception of 1957, there has been a tendency to reduce the annual effort on Georges Bank, Part of this reduced effort has been in- voluntary, as older vessels became unsuit- able for heavy weather, or as owners of lost vessels lacked funds to replace them. Part of the reduction has been voluntary, with vessels being transferred to other ports and other fisheries. For a fishery to have economic vitality, it is necessary that in the long run something more than a break-evoi oper- ation be realized. What level of effort 50 to build a trawler typical of the large ones now operating, Oi/ Local industry would provide enough profits to attract the investment required for continuance of the industry? It is difficult to estimate the cost of buHding a typical large otter- trawler today, partly because such a vessel has not been built for many years. Best estimates are that it would entail an in- vestment of at least $2^50,000 to $500,000 leaders believe that this is too big a vessel for cvirrently projected yields. They feel that a vessel about 100 feet long (versus the 106-foot vessels now typical) would be of optimum economic size, since capacity utilization on present trawlers is at a low rate. The nature of the risk for fishing vessel operations requires a return on investment of from 10 to 12 percent in order to retain capital in the industry, and a return of 20 percent to attract new investment into the fishery. To realize a 10 percent return on average investment even before taxes, a vessel would have to earn $22,500-$25,000 if it were of the present-day large size, and $lli,500 if it were of the smaller-size class now under consideration. It was stated earlier that the average annual overhead (not including bonuses to officers) of a large otter- trawler was about 565,000. It is estimated that the overhead on a new vessel of the same size would be from $71,000 to $80,500, provided no subsidy were granted and no loan re- course taken. ££/ Possible increased catch- ing efficiency and lower maintenance costs would be offset by higher depreciation and hull insurance charges. It is anticipated that the overhead on the smaller trawlers now being designed would be about |6l,000. About $Lli,500 would be depreciation at 5 percent of orig- inal cost J $16,200 for minimum insurance (hull at 3 percent of vessel cost and P & I at tSOO per man for a l5 man crew)j $L0,000 for gear and supplies, $10,000 for repair and maintenance; $5,000 for payroll taxes and other vessel expense; and $5,000 for administration. If abundance returned to the higher levels e^qserienced before mesh adoption, and if the new vessels had the same rela- tive catching efficiency as the old, then new large-vessels of the size now op)erating could attain their profit objective at the long-run price of 8^^ only if fleet effort were cut back to nearly 75 percent of that earlier termed normal, (table III-15, Part A, and table III-16, Part I). The smaller sized vessels now under consideration could attain their desired return on in- vestment if effort were to remain normal. In both cases, however, profit maximization for both the fleet and the individual vessel would be at the much lower effort levels indicated previously. It may be argued that these figures, even as approximate as they are, are mis- leading in the case of possible new ves- sels as large as those now typical of the fleet. While their overhead costs woiJ-d likely be in the $70,000 to $80,000 range, it is contended that their revenues would be increased due to the incorporation of inproved technology designed to increase catch efficiency. United States Fish and Wildlife Service experts foresee a 1$ per- cent increase in ef ficienqr if such vessels are built, £9/ if this should be the case, such vessels could attain their desired investment earnings return at a level of fleet effort just under 100 percent of normal. Ihese vessels would show this level of earnings only if they did not constitute a significant portion of the total fleet. The increased catching efficiency of these vessels would result in increasing the efficiency of each day's fishing effort and woiild mean that the fishery could support fewer vessels were the fleet gradu- ally to be composed of such craft. In other words, if forty- four vessels fishing in total 7,300 days now constitutes 100 percent or normal effort, the same niiraber of newer, more technically efficient 87/ Cf . Hearings before the Subcommittee on Fisheries and Wildlife Conservation on HT!?. 5ii21, 86th Congress, 1st Session, April 28, 29, 30, June h and 11, 1959. (Material submitted by U. S. Department of the Interior), pp. l5l and l52. 88/ Ibid. B9/ Ibid. $1 vessels fisliing the sane number of days vjowld represent ll5 percent of nornal effort. It must be continually kept in mind that the retvirn on investment analysis made in tables II1-16 and III-l? concerning possible new trawlers, rests on the tenuous ass\ii;5)tion of more liberal brood years in- creasing annual fleet landings ftrora about 90 million to 120 million pounds. If these newer vessels entered the fishery with yields still approximating those now being realized, their investment attrac- tiveness would altar considerably. Vessels of a size similar to the class now typical, even with a iS percent increase in catch- ing efficiency, could attain a 10-12 per- cent investment return only if fleet effort were cut to less than 75 percent of normal, (table III-17, part B-II). Even smaller vessels of the class now being designed would attain a desirable return on investnent only if fleet effort were cut to about 87.$ percent of normal, (table III-17, part C). fishery biologists are less and less optimistic about the return of brood re- cruitment to the higher levels sustained before 1953. If the currently poor yields are considered in relation to the low capacity utilization of the present large trawlers, the wisdom of replacing these with smaller sized trawlers is evident. Ibis is not to say that these vessels will necessarily be profitable. They can be if they are \ised to replace present vessels in the haddock fishery or if they are used to exploit other species. If, however, the new vessels are considered only "as an addition to the present haddock fleet, the effegt of the increased annual fleet~fish- ing effort on the old vessels would be ruinous » The process of bankruptcy^ distress sales, and disclocation could begin all over again. It is recognized that break-even or profit calculations are dependent upon the prevailing price level and the relation of this to changes in costs. It has been repeatedly emphasized that per povind prices have- remained relatively inflexible over the years. Yet there are long-term con- sumption factors generating a stronger de- mand which shovild produce some price relief even without Governmental action. It may, therefore, be instructive to examine table III-I6 in >rtiich the ex-vessel prices per pound necessary to break-even, and to obtain a minimum profit, are calcu- lated. This is done on the basis of new vessels replacing those in the present large otter trawler fleet. In one case, the replacement vessel is a trawler of a similar size; in the other it is one of the more compact draggers now in design. For a large trawler of a size typical of that now in the fleet to gain its prof- it objectLvB at normal fleet effort, the ex-vessel pric« would have to be 10,1,'^ per pound. The only years in history vrtien such a price was achieved were in 19l46, 1958, and 1959, The latter two were years of international scarcity of haddock, A price of 8^ per pound which would permit profit goals being realized at 75 percent of normal effort reflects the weighted average price received in Boston in the 19li7-57 period. Again it is shown that profit objectives on new trawlers of a size simi- lar to those now operative can be attained under recent year price trends only if fleet effort is substantially cut. If, however, the 1958 and 1959 price plateau were to remain, new vessels could achieve profit aims even if fleet effort remains at normal levels. Again, the analysis is based on more norflal brood years increas- ing landings about 30 percent. If abun- dance were to remain at present yields fleet effort woiild have to be out to less than 75 percent to attain a minimum return on investment. If the "smaller" large-trawlers now under design can cut overhead to a $61,000 annual average, and can through better capacity utilization retain present catch per day relationships, then table III-I6 shows that the profit goals can be achiev- ed with an &|# price at presently prevail- ing or "normal" levels of effort, Suimmry and Qonclusions It may be well at this point to summarize and to make certain con- clusions on the economic implications of the Georges Bank haddock resoiurce. First, the present fishery is uneconomic. Even if abundance increases, due to more normal brood years, fleet fishing effort could be cut 25 percent. Consumer supplies would not be seriously affected and there would 52 be less social waste of men and vessels plus more profitable operations for remain- ing interests. Utider presently poor yield conditions, fleet effort could be cut 50 percent without in^salrlng supplies but making profitable operations possible. Secondly, it Is seen that, conversely, there is no justification for fleet expan- sion if the expansion be directed toward exploitation of Georges Bank haddock. Thirdly, until more normal brood years return, present fishing operations will remain financially hazardous and unattrac- tive to new investment. Fburth, there is a continuing need for fxirther research on the causes of the fluctuations in ab\m- dance and on the possibilities of further mesh changes designed to postpone the age of first capture and thus ultimately to increase poundage landed. 53 5U CHAPTER IV OTHER aiOUITOFTSH RESOURCES Introduction In addition to haddock, the ground- fish industry in New England comprises ocean perch, cod, pollock, cusk, and hake. Of these species, the most important, in terms of demand, landings and value, is ocean perch. This chapter will be devoted to a brief analysis of the past and current status of these species. Ocean Perch Resource 1. History Ocean perch (or redfish) are small, slow- growing fish which inhabit the open ocean and the deep coastal waters frcan Cape Cod to the islands north of Norway, They average around one po\jnd in round weight, and require 10 or 11 years to mature, growing at the rate of about two centimeters in length and tv/o ounces in weight per .year. Ocean perch are non- migratory, and some biologists believe that large populations of the fish exist in areas not yet exploited, and that from these areas some ocean perch continually move onto the fishing grounds and replace those removed by the fishing fleet, "However, off New Sngland and eastern Nova Scotia, where prevailing water temperatures restrict the ocean perch to the deep coast- al waters along the inner sides of the fishing banks, the earlier catches of large fish have been replaced mainly by relative- ly small young fish which now predominate in the landings. On the other hand, in the productive ocean perch grounds vrtiich are on the outer sides of the Grand Bank the catches are replaced by ocean perch of all sizes moving in from the open ocean. "22/ Until the middle 1930* s, ocean perch was discarded as trash. In 1933> however, it was discovered that ocean perch could be filleted and frozen successfully, V/hen a heavy demand for the fillets sprung up in the Midwest, the impetus was provided for a phenomenal growth in the ocean perch fishery. Chief beneficiary of this new fishery was the port of Gloucester, ^rfiich took principal advantage of the develop- ment of a growing market for ocean perch fillets for a number of reasons. It was closer than Boston to the Gulf of Maine grounds. It had unused buildings, vessels, and manpower which could be quickly con- verted to their exploitation. Its gear and fishermen were traditionally employed for short trips and the daytime operations required in ocean perch fishing operations. Landings of ocean perch at Gloucester grew from 262,000 pounds in 1933 to more than 100 million pounds in 19U2, (table IV-1), In the latter year, the Maine ports of Rockland and Portland began landing sub- stantial amounts of ocean perch as they, too, began prosecuting the nearby grounds in the Gulf of Maine, With the exception of negligible amounts landed at Boston, these three ports have accounted for all New England landings of ocean perch down to the present. In 1959, for example, some 13i| million pounds of ocean perch were landed in New England ports, Glouces- ter accounted for 58 million pounds, Port- land for 35 million pounds, and Rockland for 38 million pounds. The remaining 3 million pounds were landed at Boston, 2i.' 2, The Ocean Perch Grounds Ihe original grounds for ocean perch were in the Gu3f of Maine, These grounds were close at hand, necessitating only a two-day trip, and the stock was abundant. As the fishery was prosecuted more vigor- ously, however, catch per day levels began to decline, making trips by the larger trawlers longer and less profitable, since 90/ United States Tariff Commission, GroundfLsht Fishing and Filleting. May, 1957. p. 35. 91/ New England Fisheries - Annual Sunmary, Bureau of Conmercial Fisheries, 1959, p,3. 55 they had to spend more days on the grounds. The decline in productivity resulted mainly from two factors; (1) increased fishing effort; and, (2) slow replacement of stock due to the long period of matirrity for ocean perch. Reference to table IV-2 shows a sharp decline in productivity in 19h9, such that prior levels have never been regained. In the period 19h2-lS, average annual productivity in the G\alf of Maine was about 12,000 pounds per day. ££/ From I9I49 to 1957, the annual average has been only about 8,ljOO pounds per day. Consequently, fishing in the Gulf of Maine is now done almost exclusively by small and medium trawlers, while the larger vessels go to the more productive distant banks seeking better catches. This has meant a corresponding decline in fishing effort in the Gulf of Maine, with the re- sult that this fishery has stabilized at a level of about 9>000 pounds per day's fishing. This is believed by some to be at a rate very close to that required to obtain the maximum sustained yield. lA' As the catch ftom the New England grounds declined, the large trawlers went farther to increase their landings. Ex- ploitation of the Nova Scotia banks began in 1936 when nearly I6 million pounds of ocean perch, representing ?3 percent of the total landings from all banks, were caught there. Landings from these banks, however, followed the pattern of those from the New England banks; early large catches were followed by declines both in catch per unit of effort and in average size of fish caught. In the early 195o«s, the fishery on the Nova Scotia banks began leveling off at an average catch per day of some 20,000 pounds. As this latter stabilization was taking place, the New England fleet moved still farther out to the highly productive Grand Banks, and to the Gulf of St. Law- rence. Here again, however, the same pattern occurred. The average catch per day from 1951 to 1957 dropped from 2lj,000 to 20,000 pounds in the Gulf of St, Law- rence, and from 67,000 to 37,000 pounds on the Grand Bank, (table IV-2). It cannot be said that the fishery has stabilized on the latter two fishing grounds, since fish- ing on them commenced only in 1951. How- ever, biologists feel that the more distant grounds, when they do stabilize, will do so at higher levels of abundance, just as the New England grounds are now stabilized at their levels of abundance. 3, The Ocean Perch Ports As noted above, virtually all ocean perch landed in New England are landed at Gloucester, Portland, and Rockland. The distribution of the landings among the three ports has changed substantially, however, over the years. The share of the catch landed in Gloucester has declined from almost 100 percent in 1935 to only ii5.5 percent in 1959. This decrease in landings in Gloucester has also been an absolute decrease, since the total New England catch of ocean perch has been de- creasing since the early 1950' s» Although Gloucester continues to be the country's leading ocean perch port, the landings of this species have been declining continually. In 1959, ocean perch landings were the lowest since 19iiO, vrhen the fishery was still very young. The decline in landings of ocean perch at Gloucester is attributatle to many factors, chief among >rtiich is the in- creased foreign competition for the market. Unlike the haddock market, which is partial- ly insulated from competitive effects by the existence of a fresh-fish market, practically all ocean perch go into the frozen market, in which, as we have seen, the Canadians hold a decided edge. Thus, it is more profitable for American proc- essors to import frozen fillets rather than to buy ocean perch from New England fishermen since the ex-vessel price for these fish is if to 2^ cents higher per pound than in Canada, The reasons for this ex-vessel price spread are enumerated in Chapter V. Suf- fice it to say here that, in general, the 92/ Catch, per day is based on a 12-hour day, 53/ "An Appraisal of the New England Fisheries," by Clyde C. Taylor, Ftffliing Gazette, January -February, 1958. 56 changing structiire of the fishery has meant increased costs to the New England fleet. Large trawlers, which account for the bulk of ocean perch landings, (table lV-3), cannot land sufficiently large quantities by short trips to local grounds. Consequently, trips must be made to the more productive distant banks: the Grand Bank and the Gulf of St, Lairrence. These longer trips in large trawlers increase almost every cost involved in fishing; increased labor costs; increased food and fuel costs; increased repair and mainte- nar.ne ccstc; increased insurance costs. CoTipcunding these increased costs is the declining rate of catch per day on these distant banks. When the rate of produc- tivity reaches a point of stabilization then, costs and prices may also stabilize but the likelihood is that this will occur at higher levels of cost. Little wonder that, faced with the prospect of a high- cost fishery, Gloucester has been gradu- ally shifting to alternate species, prin- cipally v±Liting. In contrast with Gloucester, landings of ocean perch have been increasing stead- ily in the Maine ports of Portland and Rockland, (cf. table IV-1). These two ports are heavily dependent on the ocean perch fishery. Ocean perch landings in Portland account for sone two- thirds of all food fish landed; in Rockland, ocean perch accounts for more than 90 percent of all food fish landed. As a result, both ports are very sensitive to any price decline or increase in cost, God Resource In the 19th century, when NevT England salted much of its fish, cod was the most important fishery of the region. With the introduction of quick-freezing and fillet- ing, however, the salt cod trade declined as the market for other species developed. As a result of this contraction of the market for cod there has been a gradual decrease in cod landings in New England ports. At the t\irn of the century, annual landings of cod in New Ehgland averaged some 200 ndllion pounds. In recent years, arihual landings have fluctuated about 30 ndllion pounds. Currently, about half the cod catch is taken by large otter trawlers in con- Junction with the haddock fishery; the remainder is taken by small-boat operators >rtio fish profitably with various gears at appropriate seasons. Thus, about half the New aigland landings since 1931 have come from Georges Bank and the Gulf of Maine; but fisherman primarily in search of cod generally go to the Nova Scotia banks or beyond, where cod occur in greater abun- dance and are larger in size. The bulk of the cod catch is landed at Boston, and the greater part of the remainder is landed at the ports of Gloucester and New Bedford, Without a rejuvenation of the market for cod - which is unlikely in the fore- seeable future - it is most probable that the cod fishery will retain its present statxis: an incidental fishery for the larger trawlers fishing primarily for haddock and ocean perch, and a primary fishery for small boats f lahing prihcipally for cod. Pollock There is no "fishery" for pollock in New England, such as there is for haddock or ocean perch. Pollock is landed inci- dentally by trawlers fishing for the latter two species. Some 90 percent of all pollock taken by the New En^and fleet is landed at the ports of Boston and Gloucester, In the period from 1939 to 19ii8, annual landings of pollock in New England averaged some 33 million poimds. Since that time, how- ever, landings have declined to an annual average of 22 million pounds. The species is popular in fresh fish markets, and is sold also as frozen fillets. It has a good flavor, white meat, and a firm texture. In addition, it has been canned as fish flakes. There is no great demand for the fish, however, and as a result, the reso\a:ce is probably under- exploited. Cuak Little is known of the ctisk resource except that it has never been very abun- dant. Landings have never been iji5)ortant in New England, and have declined sharply from 8 million pounds in 19ljiO to 1,3 million pounds in 1959. 57 Cusk is taken incidentally to the catch of haddock or ocean perch, Thris, three- fourths of the entire New England catch is landed at the ports of Boston and Gloucester J the remainder is landed at Portland, Cusk is marketed largely as fresh and frozen f illets, or is \ised to make fish sticks* Very little is knovn about the biology of the cusk on the New England coast and practically nothing about the size and extent of the cusk popvilations and potential catch* Hake Hake is a name applied to several species of closely related fishes found from Newfoundland to Cape Hatteras. Two types of hake are taken commercially by New England fishermen: white hake and red hake* Vlhite hake is the principal food fish in this group and is landed incidentally >rith catches of haddock and ocean perch, mainly by large and medium otter- trawlers* Consequently, the principal ports of Massachusetts and Maine account for practi- cally all the landings of \rfiite hake. In the past decade, landings have dwindled from III million pounds to slightly over 2 million pounds. Whether this decrease is due to scarcity or merely underutilization is undetermined since little is known of the biology of hakes or the extent to >rtiich the supply is being utilized. It is be- lieved, however, that, if the market warranted, this fishery could probably be expanded. Red hake is utilized principally by the industrial fishery of southern New England. Although it is a good-flavored species and, until recently, had been land- ed as food fish, it is so soft-bodied that it does not keep well fresh or frozen, Ihe negligible quantities landed for food fish arie also landed incidentally to the major groimdfish species. It is not ejqsected that red hake will assume any importance as a food fish, but will remain of major importance to the industrial fishery* Whiting Altho\igh vJiiting (silver hake) is not included in our definition of groundfish, the tremendous growth in landings of this species in New England commands attention* Landings in New England have increased from some 7 miU.ion pounds in 1932 to 126 million pounds in 1957, the peak year, (table IV-ii). The rapid growth of the fishery is attributable to an increased demand for the fish as human food, animal food, and industrial products* The major source of demand comes from the Midwest, where whiting is popular in fried-fish sandwiches . Gloucester and Portland are the prin- cipal whitdng ports, accounting for well over 90 percent of all New England landings. In fact, whiting is gaining in importance in Gloucester where, in the past few years, landings of this species have been almost equal to landings of ocean perch. Indeed, in 1957 and 1959, -vrfiiting landings actually exceeded those of ocean perch. In terms of value, however, the ocean perch, with an ex-vessel price roughly twice that of whit- ing, remained predominant, Ifliiting is a summer fishery, the great bulk of the catch being landed froir. April to September. Practically all whiting are landed by medium and small trawlers oper- ating on the inshore grounds. In recent years, however, there has been some fish- ing on northwest Georges Bank which result- ed in tremendous catches. There is no in- dication that this caused any decline in the whiting population on the Georges Bank, ^fliether the current high levels of landings can be sustained is xindetermined* Though \riuting is a fast-growing fish - maturing in fovtr years - not too much is known of the existence of populations other than those in the Giilf of Maine and on Georges Bank. The decline in landings in 1956 and 1959 are attributed to biological factors, since the level of fishing effort did not decline substantially. Biologists do feel, however, that it is possible that tliere are offshore areas, other than those presently being exploited, irfiere comnercial quantities of whiting are available. This can be determined only by further surveys* 58 CHAPTER V COSTS AND EARNINGS OF NEW ENGLAND TRAWLERS Introduction While the groundfish industry of New England has been referred to as a unit in this study, it is in reality a group of "industries" which differ from one another according to the principal species landed at each port. For this reason it was nec- essary to discuss separately each of the groundfish resources. Likewise for this reason, it was necessary to analyze costs and earnings by ports. Thus, Boston — pri- marily a haddock port — was the subject of one analysis. SimiJarly, Gloucester, Port- land, and Rockland — the major ocean perch ports — were grouped together in a separate analysis. An;;- analjrsis of the New England trawl- er fleet must take note of certain impor- tant factors. Perhaps the most important are the substantial differences in vessel landings, receipts and activities. This in turn points up the absence of homogeneity in the productive units which make up the large trawler fleet. The vessels diff'er one from another in almost every respect: size, horsepower, gear, and managerial skill. And it is these factors which de- termine the performance and profitability (or lack of it) of the individual vessels. In addition, these factors are neither independent nor divisible. They are both interdependent and mutually interrelated: "The properties of the hall. . ..partly determine the effect of the engine and the reverse. The properties of the vessel determine for a considerable part the ef- fect of the gear, and the properties of the gear partially determine the behavior of the vessel when fishing, .. .The properties of the skipper - his capacity to serve or quality - largely determine the results of a given outfit, but the properties of the vessel, gear, and other factors influence ths skipper's decision." 9J4/ In view of the foregoing, it would be well to examine briefly the effects of differences in size, activity, and manage- rial skill on the performance of Boston large trawlers. For purposes of analysis, the large-trawler fleet has been divided into two classes: those 150 to I99 gross- tons, and those 200 gross-tons and over. Admittedly, this is an arbitrary classi- fication. It was necessitated, however, by the fact that a more definitive classi- fication would restrict the number of ves- sels within any given class, and might also tend to reveal the individual perform- ances of specific vessels. 1. Size As A Factor It was found that, generally, vessels 200 gross -tons and over are more active and productive than vessels of the 150-I99 gross -ton class. In each of the three years for which comparable data was avail- able, 1956-5^8, the average 200. gross-ton vessel had greater landings and receipts and made more trips than the average 150- 199 gross-ton vessel, (table V-1). V.fhile at first glance it seems only natural that the larger vessels should have higher landings and receipts, the experience has been that the additional receipts are gen- erally greater than the additional costs incurred, so that the relative performance of the larger vessel results in a greater net return than does that of the smaller vessel. Another indication of the superiority of the 200 gross-ton and over trawler is the stability of its year-to-year perform- ance-. For the years 1956, 1957, and I958 , the fifteen 200 gross-ton trawlers for which information was available were ranked according to total receipts, (table V-2). Over the 3 -year period there was very little change in the relative positions of these trawlers. In a similar' ranking for the 150-199 gross-ton trawlers, however, this con- sistency was lacking. The performance of individual vessels was, in some instances, most erratic, (table V-3). 9I1/ Bottomanne, C. J. Principles of Fisheries Development. Publishing Company, 1959. p. 73. Amsterdam: North-Holland $^ That size alone does not determine performance , hov;ever, can be seen from a comparison of the average landings and ac- tivities of the best and worst of both trawler classes, (table V-U) . The top six vessels of the 200 gross-ton class had av- erage landings of 3.9, 3.7, and 3.3 million pounds in the years 1956, 19?7, and 1958, respectively. The bottom six, on the other hand, had average landings of 2.5, 2.2, and 1.9 million pounds in these years. Simi- larly, in each of the three years, the top six trawlers averaged 5 more trips per year than the bottom six. Yet these two groups are of practically the same tonnage . The same held true for the best and worst of the 150-199 gross-ton travflers. Yet these, too, were of the same tonnage. Further- more, individual vessels of the 150-199 gross-ton class do out-perform the larger vessels in certain instances, and within the two vessel classes there are substan- tial variations in vessel landings, re- ceipts, and activity, (table V-5). Thus size, although an important con- sideration in the analysis of the Boston trawler fleet, should not be overeirjihasized, and must be viewed in relation to other factors . 2. Trip Activity As A Factor The disparity in trip activity between the best and worst of the trawler clsisses points up a further source of the wide variation in vessel performance. It has been held that vessel profitability de- pends to a large degree on trip activity: "....Profitability of individual ves- sels depends to a large extent on (the trawlers' ) ability to spend a large number of days at sea." 95/ However, with refer- ence to the best and worst of the 200 gross- ton trawler class, for the worst trawlers to appix)ach or equal the landings of the best vessels, their landings would have to be in excess of 200,000 pounds per trip for the added six trips. This would entail a most substantial improvement over their average per trip landings of 100,000, 85,000, and 76,000 pounds in the years 1956, 1957, and 1958, respectively. Vessel size and trip activity are, then, two factors which influence vessel receipts and landings. Hovjever, the con- sistent year to year performance of indi- vidual vessels, and the substantial dif- ferences in per trip landings of the best and worst of the large trawlers, illus- trate the importance of a third factor: the human element. 3. Managerial Skill As A Factor That the capabilities of a captain are a major factor influencing the per- formance of individual vessels, has long been recognized by those in the Boston trawler fleet and by fishery students the world over. One of the latter notes that "A good skipper with an old-fashioned out- fit may be fairly successful, but a bad skipper with a good outfit will have little results 5 even if a good skipper has a bad outfit he will see his way to improve it." 96/ He also notes that "the choice of the skipper - when the vessel is a given factor - is the most decisive choice with a view to making the fishing unit pay." 97/ Although the importance of the captain as a factor influencing the performance of a given fishing vessel is well accepted, some effort was directed toward obtaining a quantitative illustration of his influ- ence. To do this, the perfonnances of two vessels were compared for the years 1956 and 1958 in terns of receipts per day absent from port, crew earnings per day absent from port, and vessel share per day absent from port. The two vessels are sister-ships. They are under the same management, have the sane gross tonnage and horsepower, and are similar in all essential respects. Each vessel was skippered by the same individual in both years, and information was included 95/ Miemyk, W. K., and Sumner Rosen. The Economics of Freezing Fish At Sea, North- east'ern University, 1957, unpublished report prepared for United States Fish and Wildlife Service, 1956. p. 30. This report further states that "....earnings (do) not depend pri- marily on total or average catchesj the significant factor is total number of trips." p. 32. 96/ Bottomanne, op. cit., p. 79. W/ Ibid., p. 97. 60 for only those trips made by the respec- tive captains which had the same or similar landing dates. Thus, except for the skill of the captains, "all other things were equal." The results of this comparison are shown in table V-6. For both years, the performance of Vessel A in all three cate- gories was superior to that of Vessel B. Ii/hile this is not conclusive of the propo- sition, it is at least a partial indication of the importance of the human element in vessel performance. 98/ The foregoing observations have been intended to point up the hazards of over- simplification and generalization in any analysis of the complex New England ground- fish industry. It is also intended to show the futility of any unilateral solution to the industry's internal problems. Costs .and Earnings in the Boston Industry; 200 •*• Gross-Ton Trawlers 1. Methodology Cost and earnings data was furnished to the authors by various owners of large trawlers operating out of Boston. The in- formation furnished covered the years 1953 to 1957, but its use is severely restricted by the fact that not all vessels are in- cluded in every year, and also by the fact that accounting procedures differ from one operator to another, so that cost cate- gories may not, therefore, be strictly com- parable. Furthermore, because the data ex- tends only over a five-year period, it was not possible to extract any statistically valid trends. Aware of these limitations, and in an attempt to introduce some uniformity, it was decided to group the data in three ways. First, the vessels were grouped by size: those 200 gross-tons and over are considered separately from those 150 to 199 gross-tons. Secondly, those vessels 200 gross -tons and over which were con- tinually among the top ten vessels (in terms of receipts) during the period 1956-58 were considered separately from those which were never among the top ten. The basis for the latter distinction is the consistent behavior of vessels 200 gross-tons and over. These vessels, if profitable in one year, tend to be profit- able in all years. Conversely, those un- profitable iJi one year tend to be unprofit- able in all years. Thirdly, because of variations in the vessels included in the two periods, the data of 1953-55 was dis- tinguished from that of 1956-57. 2. Landings i>nd Receipts A comparison of the operating results of the average Boston trawler 200 gross- tons and over for the years from 1953 to 1957 is given in tables V-7 and V-8. Table V-7 contains data which pertains to the average performance of those vessels of this size class which were "successful" (profitable) in each of the years. Con- versely, table V-8 gives the average per- formance of simlar sized vessels which were "unsuccessful" (unprofitable) in each of the years. The ensuing discussion re- lates to these two tables. The differences in landings and re- ceipts of the more successful and less successful Boston trawlers, 200 gross-tons and over, are substantial in either period. In 1953 through 1955 the average annual landings per vessel of the more successful trawlers rose from 3.2 to li.l million pounds; average receipts increased from $266,800 to $28U,200. During the same period annual landings of the less suc- cessful trawlers increased from only 2.3 million pounds to 2.U million pounds and average annual receipts fell from $183,600 to $llll,700 per vessel. Although the average landings per vessel on both the more and less successful trawlers were lower in 1957 than in 1956, the average receipts per vessel of the more successful trawlers increased from $255,200 in 1956 to $27l,600 in 1957; the less suc- cessful trawlers saw their average receipts 98/ Other comparisons involving pairs of sister-ships were attempted but proved to be cf no value since the rapid turnover of captains on these vessels made it impossible to assign the captaincy with any degree of certainty. 61 per vessel fall from $155,900 in 1956 to only $125,800 in 1957. Differences in trip activity are re- sponsible to a degree for the differences in landings and receipts between the more and less successful trawlers. In 1956 and 1957 the more successful trawlers made 30 trips and 28 trips per year and the less successful trawlers only 2I4 trips and I9 trips per year in the respective years. However, differences in per trip activity are far from the principal source of the great differences in landings and receipts. In the years 1953 and I95I4 the disparity in the tri.p activity between the more and less successful trawlers was slight. In 1953 and I95I4 the less successful trav/ler made 27 trips per year while the more successful trawlers made 30 and 28 trips in the respec- tive years. Yet in both years the more successful trawlers reported profits while the less successful incurred losses. This reflects the operation of factors other than trip activity. than $7,100 (in I95I4) and Were as low as $5,900 in 1955. In 1956 and 1957 per- trip receipts were only $6,500 and $6,600 respectively. The average annual landings per-trip of these least successful trai;lers has never been higher than 99,000 pounds (in 1955). 3. Productivity And Earnings Trawler per trip productivity has a profound effect on the earnings of ground- fish travflers: first, because each trip is a separate venture and at the conclu- sion of each trip the receipts are shared between vessel and crev;; but most impor- tant, because of the minimum guarantee of $12 per day per man for dectiiands and $13 per day per man for officers, exclusive of the captain, which prevails on the Boston large travjler fleet. The existence of a minimum guarantee severely restricts the earning ability of large trawler fleets at low levels of per Exhibit A Per Trip Performance of Specific : Vessels, 1956 Vessels 200 gross -tons and Over Vessel Operator's Share If he Value Trip Expenses Net Grew Bonus Actual received 3'^ percent Dollars Dollars Percent Dollars Percent Dollars Percent Dollars Percent Dollar's $10,1400 8,3149 8,215 8,153 7,012 $1,961 1,929 1,926 1,967 1,889 18.9 23.1 23.I4 2I4.I 26.9 $l4,l407 142.3 3,352 I4O.I 3,306 [40.2 3,2514 39.9 2,881 I4I.I $1403 320 317 313 269 3.9 3.8 3.8 3.8 3.8 $3,623 3I4.9 2,7148 32.9 2,665 32.I4 2,620 32.1 1,901 27.1 $3,623 2,922 2,875 2,853 2,i451i Equally as important is the signifi- cant difference in per trip productivity of the more and least successful of the trawl- ers which furnished detailed operating re- sults. The average annual per-trip land- ings of the more successful 200 gross-ton trawlers were, in all years 1953-57, higher than 100,000 pounds per trip. Avei'age annual per-trip receipts of these trawlers Were never below $8,500 and were as high as $9,500 in 1957. On the other hand, the average annual per-trip receipts of the least successful trawlers were never higher trip productivity since, at levels of productivity which fail to allow the crew members to earn $12 or $13 per day per man after the paymant of crew expenses of food, fuel, ice,. etc., the vessel operator must in effect pay all joint and trip expendi- tures, including wages, before receiving any part of trip receipts. The effect of lovrer levels of per trip receipts or the vessel share of these receipts is illustrated in Exhibit A. A vessel operator with per trip receipts of 62 $10,U00 has as his share of receipts $3,623 or 35 percent after trip expenses, wages, and bonus are paici. On the other hand, a vessel operator with per trip receipts of $7,012 receives as his share only $1,901 or 27.1 percent. The cause of this drastic reduction in the vessel operator's share of receipts which accompanies lower levels of receipts is the existing minimum guarantee which makes total trip expenditures highly- inflexible . In the absence of a minimum guarantee a vessel operator's shcire would be approx- imately 35 percent at all levels of per trip receipts. In this event the dollar share available to a trawler owner with per trip receipts of $7,012 would be $2,Ii5U, an increase of $600 over the average ves- sel per trip share of $1,901 in 1957. The large differences in per trip pro- ductivity, and the effect of lower levels of productivity on the distribution of revenue, may well be the cause of the in- activity of the less successful trawlers. Exhibit B Comparison of Per Trip Performance of "More Successful" and "Less Successful" "Large Trawlers, 1956 Vassel A January - April Total Per Trip Percent of Total Revenue May - August Total Per Trip Percent of Total Flevenue September - December Total Per Trip Percent of Total Revenue Number of Trip and Net Captain and Vessel Operator's Trips Value Joint Crew $37,6lli 3,761 i;0.7 Bonus Share 10 $92,lj60 9,2U6 $19,U86 l,9i49 21.1 $3,606 361 3.9 $31,75U 3,175 3U.3 6 $29,97li U,996 $10,850 1,808 36.2 $12,738 2,123 U2.5; $1,095 182 3.7 $5,291 882 17.6 6 $32,332 5,389 $ii,56U 1,927 35.8 $13,812 2,303 U2.7 $1,661 277 5.1 $5,295 882 16. ii Vessel B January - April Total 11 Per Trip Percent of Receipts May - August Total 10 Per Trip Percent of fleceipts September - December Total 11 PeE Trip Percent of Receipts $130,882 11,898 $19,896 1,809 15.2 $59,755 5,li32 U5.7 $5,123 ii66 3.9 $U6,108 11,192 35.2 $73,003 7,300 $17,813 1,781 2U.I4 $28,61i9 2,865 39.2 $2,765 277 3.8 $23,776 2,378 32.6 $96,835 8,803 $21,14 11 1,916 22.1 $38,709 3,519 liO.O $3,673 33ii 3.8 $33,092 3,OOl4 3U.1 Source: Settlement Sheets of Atlantic Fishermen's Union. 63 Exhibit B compares the per trip per- fomiance of one of the less successful trawlers (Vessel A) and one of the more successful trawlers (Vessel B) during the year 1956. Vessel A is equally as active as Vessel B during the January to April period v/hen its per trip productivity ap- proaches that of Vessel 3. In the January to April period the percentage share of receipts obtained by Vessel A is about equal to that obtained by Vessel B. Only in the May and August and Septem- ber through December period, when the per trip productivity of the Vessel A is much below that of Vessel B, is the former much less active than the latter. It is during these two periods that the percentage share of receipts obtained by Vessel A is much below the percentage share obtained by Vessel B. In both the May to August and Septem- ber through Decerriber periods more than 35 percent of the per trip receipts of the less successful traviler were used to defray trip and joint expenses, more than )il per- cent of per trip receipts went to cover net crew earnings and 3.8 percent of per trip receipts were paid to the captain as a bonus. The tra>;ler operator received less than 20 percent of the per trip receipts. The less successful trawler operator re- ceived less than $900 per trip during these latter two periods with which he must pay gear, repair and maintenance expenses, and other vessel expenses. 22/ A comparison of the less successful trawler and the more successful trawler of Exhibit B also illustrates the effects of broker payments and minimum guarantees at low levels of production. Despite the vast differences in per trip receipts and the percentage share of receipts devoted to trip and joint expenses of the two trawlers, there is little difference in the percent- age share devoted to crew earnings . In the September through December period, trip and joint expenses accounted for 36 percent of Vessel A«s per trip receipts, and only 22 percent of Vessel B«s per trip receipts. Yet k3 percent of Vessel A's per trip receipts were devoted to wages and only I4O percent of Vessel B's receipts vjere devoted to wages. Thus, while approx- imately 80 percent of Vessel A's receipts were devoted to trip and wage expenses, only 62 percent of Vessel B's receipts were devoted to trip and wage expenses. The existence of rigid trip and wage expenses makes it mandatory that consider- ation be giv^n to the expected level of landings and receipts from any increased activity. Thus, while it is true that trip activity influences travrler landings and receipts, it is equally true that the level of traveler landings and receipts influence trip activity. h. Vessel Expenditures The year to year behavior of gear, repair, and maintenance expenditures, the substantial differences in the level of these expenditures, and the contrasting behavior of insurance expenditures are other illustrations of the interdependence of the factors of a fishing unit. a. Gear, Repair, and Maintenance Yearly variations in gear, repair, and majjitenance expenditures do not of themselves reflect the interdependence of the factors of a fishing unit, for such variations are expected by New England vessel owners . These variations have also been discovered in other vessel investi- gations: "Individual items of cost, hox^- ever, such as fishing gear and repair ex- penses, shovj wide fluctuations". 100/ The influence, however, of other factors of a fishing unit on gear, repair, and main- tenance expenditures is indicated by a 99/ Vessel A of Exhibit B as of July 20, 1956 had accumulated $37,000 as its share of the receipts produced up until this time. On August 31, 1956, its share of receipts was still $37,000 despite the fact that ih the interim it had made h trips which added $l)i,000 to total receipts. The vessel received no part of this added revenue. 100/ Hildebrandt A. G. U. Statistical Analysis of Cost and Earnings in the Fishing Industry. Technical Meeting on Cost and Earnings in the Fishing Enterprise, p. 120. F'.A.G. London, 1958. 6k number of things: the difference in the level of these expenditures as between the more and less efficient trawlers; the tend- ency for these expenditures to be higher in years of high receipts and lower in years of low receipts; and, the degree of association between individual vessel re- ceipts and expenditure for gear, repair, and maintenance. 101/ A direct relationship of vessel re- ceipts and vessel expenditures for gear, repair, and maintenance offers a plausible explanation for the lack of any substantial year to year variation in the relative per- formances of individual vessels of this class, 200 gross-tons and over, (table V-9). The more efficient trawlers, by reason of the level of earnings, are adequately re- paired and properly maintained, and proper maintenance reinforces other factors in- suring a continuation of their performance or at least diminishes the risk of a sharp decline in receipts due to physical fail- ures of the vessel. In a like manner the less efficient vessels, with substantially lower receipts, are inadequately repaired and maintained, and improper maintenance compounds other deficiencies, human or mechanical, further diminishing the possi- bility of improved future performance and increasing the risk of a further decline in receipts due to the physical failure of the vessels. b. Insurance The possibility that differences in vessel receipts, their impact on vessel maintenance, and probable influence on fu- ture performance , may explain the contrast- ing behavior in insurance expenditures of the more and less efficient trawlers, can- not be overlooked. In the years 1953-1955, all but one of the more efficient trawlers experienced a slight decline in the cost of their insurance. Again in 1956 and 1957 all of the more efficient trawlers, with one exception, had a slight decline in the cost of insurance. All the less efficient trawlers 200 gross-tons and over, which furnished data for either period, ex- perienced substantial increases in the cost of insurance for the years 1953-55 and again for the years 1956 and 1957. Initially in our investigation no attempt was made at segregating the cost of hull insurance from the cost of protection and indemnity insurance. Later, efforts were made at obtaining the specific cost of hull insurance and protection and indemnity'' insurance. Such efforts met with little success. Published material and the com- ments of individual insurance brokers, how- ever, did provide data and insight for a discussion of the insurance question. A recent analysis, of the problems of the commercial fishing industry with marine insurance, discovered that there is a high inverse association of receipts and hull insurance losses. 102/ The report noted that "The possibility that a vessel owner may consider the hull insurance contract as a means of overcoming impending financial difficulties either partially or wholly cannot be overlooked," and "At times of falling receipts and mounting bills, the tenptation to take advantage of the pro- visions of the insurance contract may be very strong." 103/ Although the probable presence of moral hazard is not to be denied, it is felt that with regard to vessels included in this investigation of cost and earnings the major cause of any increase in the cost of hull insurance could be primarily attributed to a rise in accidents due to improper and inadequate repairs and maintenance. The investigation of Messrs. Danforth 101/ Boston owners generally agreed that in many instances repair and maintenance expenditures are influenced by monies available. Gear costs, however, should not vary greatly from year to year unless there are wide changes in vessel activity. 102/ Danforth, W. C. and Theodore, C. A., Hull Insurance and Protection and Indemnity Insurance of Ctommercial Fishing Vessels, Special Scientific Report Fisheries No. 2U1. Washington, D. C, 1957. p. 101. 103/ Ibid., p. 101. 65 and Theodore into protection and indemnity insurance expenditures revealed a direct oissociation betvjeen receipts and claim losses which "to some extent may be due to fishing operations requiring greater expo- sure of crews to risks involved in longer or more frequent trips for larger receipts." lOl/ They later note that the direct asso- ciation of yearly receipts and claim losses is largely spurious and further that "it may be possible to find a stronger argument for an inverse association between receipts and losses . " 105/ The high incidence of petty claims (no more than $200) under pro- tection and indemnity insurance, coupled with the share arrangement by which fisher- men are paid, tends to verify an argument for an inverse association between receipts and claim losses. Assuming the fishermen of the more efficient trawlers had average per trip net earnings of $250, while a fisher- man of the less efficient trawlers received substantially less than $120 per trip, that both suffered a minor injury, and that the filing of a claim necessitates a period of inactivity, one can speculate that the fisherman with net earnings of $250 per trip would be less willing to remain in- active and sacrifice his earnings than would the fisherman with net earnings of $120 per trip. "It would be more logical for a fall in receipts to be associated with a rise in claim losses inasmuch as fishermen might tiy to compensate losses in wages with larger insurance benefits." 106/ Numerous interviews with individual marine insurance brokers in the New England area again revealed the importance of ves- sel receipts as a major factor influencing insurance costs. The importance attached to vessel receipts in this respect is par- ticularly evident from brokers comments concerning factors which should be consid- ered when contemplating whether to insure individual vessels, and their reasons for the mounting insursince costs. Most brokers emphasized that in negotiating new insur- ance contracts special attention should be given to the caliber of management, the owner's financial position, past and pres- ent vessel and crew earnings, and the level of vessel maintenance. All agreed that the cost of insurance was increasing because of an increase in both the number of claims and the cost of settlement, and that lower rates can come only from lower loss ex- perience. 5. Grew Earnings Prior to 19ii6 the union-management share agreement provided that after certain deductions from gross receipts the remain- der was to be shared equally between the crew and vessel owner, the lay then being 50-50. The broker payment (minimum wage guarantee payable to the crew when a physi- cal break-down or low gross receipts im- pedes the earning capacity of the crew on any particular trip) in existence prior to I9li6 called for a payment of $25 per man per trip for a maximum of 10 menj if there were more than 10 men, the maximum amount payable ($250) was to be divided among the crew. The share agreement also provided for minimum per trip payments of $50 to the chief engineer, $kS to the mates, and $iiO to the second engineer and cook. In May 19146, the union negotiated a contract changing the lay arrangement from 50-50 to one giving the crew 60 percent and the owner 1;0 percent of gross receipts after the deductions of certain joint expenses. This contract also changed the broker pay- ment from $25 per trip per man with a max- imum of $250 to a guarantee of $6 per day per man for a maximum of 10 days. The amount payable to the chief engineer, mate, etc., was also changed from their per trip basis to one calling for a payment to each of $6 per day per man for a maximum of 10 days. This change, in effect, raised the minimum guarantee payable to the crew by the owner for a IQ-day trip from $li25 prior to I9U6 to $81iO thereafter. A further change in the broker agreement during the 1950«s raised the guarantee to $12 per day per man for deckhands and $13 per day per man for chief, mate, second engineer and cook. This change in the contract raised the minimum' guarantee for a lO-day trip from $8hO to $1,960. It also raised the maximum amount payable from $8U0 to an amount dependent upon the number of days a vessel is absent from port. Another change which took place after 19ii6 was the in- crease in the layover time between trips from what was termed a 2ii-hour layover to a 148-hour layovgr. Exhibit C was constructed to illus- lOV Ibid., p. 106. ToF/ Ibid., p. 106 IO6/ Ibid., p. 106. 66 trate the change in the vessel owner's profits brought about by the introduction of the 60-Uo lay. In examining the per trip performance of the large trawler oper- ating in 19ii2 and a large travxler operating in 1956, it is obvious that this develop- ment drastically reduced the vessel owner's earnings. In 19h2 the vessel owner real- ized approximately $3,300, after the payment of vessel expenses from gross receipts of $7,500. In 1956, however, the vessel owner realized only $2,950 from sales of $8,700. Thus, while per trip gross sales in 1956 were 16 percent above those of 19ii2, the vessel owner's earnings were actually 7 percent less than I9I42. On a yearly basis the vessel suffered a $15,800 decrease in earnings, before deductions for vessel ex- pense, despite a $21,000 increase in gross revenues. Furthermore, for a vessel oper- ating in 1956 under the "60-liO" to obtain yearly dollar earnings equal to those of 19li2 ($101,500), gross receipts would have to be $298,000 or 28 percent higher than those of 19ij2, and 18 percent higher than the gross receipts of 1956, $255,000. the fact that crew expenses in 1956 had increased by more than 100 percent over their 19ii2 level. Although it is true that the net real crew earnings of 1956 are perhaps substantially below their net real earnings of 19li2, it is also true that their net dollar earnings did not decrease. In fact, net dollar earnings per trip in 1956 were 20 percent above those of 191^2 ($3,518 versus $2,930), and the crew's net dollar earnings per year were 12 percent greater than those of 191^2. More precisely, per-trip gross re- ceipts in 1956 were $1,250 greater than 19ii2, yet crew expenses were approximately $81i0 greater in 1956 and net crew earnings were almost $600 larger. It is obvious then that as crew expenses and net earn- ings were higher by better than $l,liOO, although gross receipts were higher by only $1,250, no part of the higher gross receipts was obtained by the vessel owner, and the vessel owner actually received less in 1956 than he did in I9U2 despite the higher gross receipts of 1956. Exhibit C Average Trip Settlement of Large Ti ravrler 1956 Operating Out of Boston, L9li2 and l>9li2 1956 Value Percent Value Percent Value $7,U83 100.0 $8,729 100.0 Joint Expense 207 2.8 290 3.3 Crew Share 3,638 U8.6 5,063 58.0 Food 211 2.8 525 6.0 Fuel 331; i».5 739 8.5 Total 708 9.5 i,5U5 17.9 Net 2,930 39.2 3,518 liO.l Brokers 82 1.0 Total 2,930 39.2 3,600 Ui.o Per Man Share $175 $212 Ovmer's Share 3,638 li7.6 3,376 38.7 Brokers 82 -1.0 Bonus 361i h.8 338 3.9 New Owner 3,27U Ji3.8 2,956 33.8 Number of Trips 31 29 Source: New England Fish Exchange. The institution of the 6O-U0 lay has, on the other hand, enabled the crew to avoid any major loss in earnings, de.''pite Exhibit D is an attempt to illustrate the effect of the higher trdp expenses and minimum guarantee (broker payments) upon 67 the vessel's earning capacity, particularly at low levels of production. In construct- ing Exhibit D, deductions of joint expenses from gross receipts and the deduction of the captain's bonus from the vessel share Were ignored. produce $5,000 in gross receipts to obtain $1,500. The same earnings v;ere obtained while producing only $3,000 in gross re- ceipts in I9U2. The increase .in trip ex- penses and guarantee has then drastically raised the minimum level of per trip Exhibit D Effect of B: roker P ayments on Vessel Earning Capacity, 19h2 and 1956 Vessel Operating in I9U2 Value Crew Share Less Trip Net Crew Guarantee Owner's Share Less Amount to Net Vessel Meet Guarantee $2,000 1,000 700 300 180 1,000 -180 820 $3,000 1,500 700 800 1;80 1,500 1,500 $li,000 2,000 700 1,300 km 2,000 2,000 $5,000 2,500 700 1,800 USO 2,500 2,500 $6,000 3,000 700 2,300 ii80 3,000 3,000 $7,000 3,500 700 2,800 U80 3,500 3,500 Vessel Operating in 1956 Value Crew Share 60 percent Less Trip Net Crew $2,000 1,200 1,500 -300 $3,000 1,800 1,500 300 $U,ooo 2,iiOO 1,500 900 $5,000 3,000 1,500 1,500 $6,000 3,600 1,500 2,100 $7,000 li,200 1,500 2,700 Guarantee Vessel Share hO percent Less Amount to Meet Guarantee 1,960 800 2,260 1,960 1,200 1,660 1,960 1,600 1,060 1,960 2,000 1;60 1,960 2,U00 1,960 2,800 Vessel's Net -l,li60 -U60 51iO l,5i;0 2, boo 2,800 Vessel's Net (Assuming m2 lay) -l,liOO -liOO 5ao 2,5UO 3,500 Source: Adapted from data in Exhibit C. The effect of the increases in these items is obvious. It was possible for a vessel operating in 19^2 to realize gross earnings of $820 at per trip levels of only $2,0005 in 1956 this was impossible. In 1956, with trip and guarantee payments amounting to approximately $3,600, gross receipts must be approximately $it, 000" be- fore the vessel owner takes any part of the gross, and even at this level of produc- tivity the vessel owner would receive less dollars than he did at the $2,000 level in 19U2. Under the conditions governing its operations in 1956, a vessel would have to receipts necessary to allow a vessel owner to participate in the returns. At low levels of gross receipts the change in the lay arrangement produces no effect on the vessel's earnings. If the vessel in 1956 had per trip receipts of $ii,000, the vessel owner would have received only $5U0 whether under a 60-U0 or 50-50 lay. At trip receipt levels above $6,000 the vessel owner would be substantially better off if the lay were 50-50. The existence of a 50-50 lay in 1956 would, however, allow the crew to 68 realize net earnings of only $1,960 (the ininimurc) at all the revenue levels - ($2,000 through $7,000 per trip). A comparison of the net per trip crew earnings at various levels of ciollar pro- ductivity under the conditions which ex- isted prior to 19h6, with the per-trip crew earnings under present conditions, illustrates again the changes which took place in the fishery after World War II. Given I9I42 trip expenses, we find that under the pre-19ii6 arrangements the per trip crew earnings increased from $lj80 (the minimum) to approximately $1,800 as per trip value increased from $2,000 to $5,000. Under conditions as they exist to- day, however, crew earnings would be approx- imately $1,960 (the minimum) at all per trip values between $2,000 and $5,000. It The crew, by means of the increase in the broker payment has greatly added to its earnings at low levels of per trip productivity. Likeviise, with the institu- tion of the 60-liO lay, the crev: has in- creased its earning capacity at high levels of productivity. The crew has increased its earning capacity relative to that of I9U2 at all levels of productivity and has succeeded in passing on to the vessel owner the substantial rise in trip expen- ses. These changes have not only increased the element of risk faced by the vessel's owner at lovj levels of production but have also reduced the profit possibilities available to the vessel owner at high lev- els of production. Exhibit E illustrates a further dif- ference which exists between the Boston Exhibit E Comparison of T rip Activity of Boston Trawlers , Selected Ye ars Of Trips I9U2 I9U3 1914; Total 3 Years Percent of Distri- bution 1956 1957 1958 Total 3 Years Percent of Distri- bution 35 or more 30-3U 25-29 2ii or less 7 5 5 3 3 10 5 2 1 10 5 k 11 25 15 9 60 18 k2 25 15 100 9 Hi 7 5 15 8 7 18 3 21 1+7 18 86 2I1 55 21 100 Average Number of Trips Per Vessel 31 31 29 30 27 26 27 27 Source: New England Fish Exchange. appears, then, that between I9U2 and 1956 the crew has increased its earning capacity by approximately $1,500 per trip ($1,960- $li80) at per trip productivity levels of $2,000, and by about $200 ($1,960 - $1,800) at levels of $5,000, despite the fact that trip expenses In 1956 were more than 100 percent greater than the trip expenses of I9U2. At productivity levels of $6,000 and $7,000 per trip, the 1956 crew's earn- ings would be slightly below those of 19li2. At higher levels of per trip productivity, however, say $12,000, the 1956 net crew earnings would appixiach $5,700, while in I9I12 its net earnings would be approximately $5,300. Thus, 1956 earnings would be some $liOO larger despite the 100 percent in- crease in trip expenses. fleet of the middle 50's and the fleet as it was in the l9li2-l9l4U period. For the 3-year period, 19lj2-19iilt, 60 percent of the vessels made 30 or more trips and 18 percent made more than 35 trips per year. In the 3-year period 1956-58, however, only 2h percent of the vessels made more than 30 trips per year and none made 3$ or more. Information concerning the number of trips made during each year 1937-39 iSZ' was available for many of the 20 vessels which served as the basis for the 191+2-14; period. This data indicates that the 107/ The data furnished by the New England Fish Exchange . 69 activity of these vessels was even higher in the 1937-39 period than it had been dur- ing the war time period 19h2-14i. In each year, 1937-39 inclusive, it appears that approximate ily 70 percent of these vessels made more than 30 trips per year. This in- formation also indicates that the per ves- sel activity of the entire large trawler fleet - which was then approximately twice the size (nambers) of the existing fleet - was also substantially above present levels: 50 percent made 30 trips or more in each of the years 1937-39; and at least 11 vessels made 35 or more trips per year in any given year. In 19)40, despite a strike-caused work stoppage lasting 3 J months, the average large-trawler made 23 trips per year. There is then some justification for assuming that the present large -trawler fleet is not only smaller but much less active than the large trawler-fleet of I9U2-UU, and 1937-UO. Costs and Earnings in the Boston Indus- try;' 150-199 Gross-Ton Trawlers 1. Receipts And Productivity The operating results of the average 150-19? gross -ton trawler for the years 1953-57 ai"e shown in table V-10. A major difficulty faciag the operators of this size vessel is the same as that with which the operator of the 200+ gross-ton trawler must contend: the decreasing level of receipts . Per vessel receipts of the 150-199 gross-ton trawler fell continually over the period: from $173,000 in 1953 to $1^5,500 in 1957. During this same period total costs of vessel operation also declined steadily: from $170,700 in 1953 to$l53,900 in 1957t Receipts declined at a faster rate rate, hovfever, than costs, and the result has been operating losses in each of the years 19 5U to 1957. The extent of the gen- eral unprofitability of these vessels is further emphasized by the fact that all of the five travflers included in 1956 had operating losses and only one of the six vessels included in 1957 reported an oper- ating profit. The much lower receipts and larger losses of these trawlers during 1956 and 1957 are attributable to a decline in per trip productivity. In both of these years, per vessel receipts were approximately $5,800 per trip. In contrast, per vessel receipts averaged $6,li00 per trip over the previous three -year period. The additional fact that in every year only 32 percent or less of receipts was available as the ves- sel owner's share, leads to the conclusion that the productivity levels of vesse^ls of this size are such as to make profits highly vulnerable to the burdens of trip expenses and the minimum guarantee for crew wages . 2. Vessel Expenditures Vessel expenditures for the 150-199 ton trawlers followed a similar pattern as those for the 200+ ton trawlers, showing an inverse relation to receipts. a. Gear, Repair, and Maintenance In the years 1953, 1955, and 1957, expenditures for gear, repair, and main- tenance were- highest on trawlers with the highest receipts and lowest on those with the lowest receipts, (table V-11). At the same time, these expenditures of individual vessels ranged from $16,000 to $32,000 in 1953, and from $13,000 to $26,000 in 1957. Thus, these trawlers in 1957 were not only- less productive, but also were spending less for gear, repair, and maintenance than they were in 1953. Here, again, is evidence of the corroding effect of falling receipts: undermaintenance leading to reduced effi- ciency, which in turn leads to still lower receipts. b. Insurance The rise in insurance expenditures of the trawlers studied was substantial. Per vessel insurance expenditures rose steadily from $8,100 in 1953 to more than $11,500 in 1957. Here, again, however, the pattern is the same : increasing insurance expend- itures have accompanied decreasing receipts and decreasing gear, repair, and maintenance expenditures . Gloucester and Maine Trawlers The analysis of Gloucester and Maine groundfish trawling operations is based on the eight -year perfomance, 1950-57, of 10 vessels: 5 in Gloucester and 5 from the Maine ports. The choice of tliese vessels is not based on statistical procedure but rather on the simple fact that these ves- sels furnished information to all the 70 recent investigations into the problems of the New England groundfish industry, and thus operating statements were available for each year through 1957. The decision to investigate ths eight year period rests on the discovery of drastic changes vihich occurred in trawling operations some time during 1953. As a result of these changes, travrler operations of 1953 through 195? are vastly different from those of 1950-52. Therefore an analysis of the differences which exist in the trawler operations of 1950-52 and trawler operations in the years since 1953 is perhaps the best approach to a discussion of the current problems of trawlers engaged in groundfish operations from these ports. 1. Landings, Receipts And Productivity It was readily apparent from such a comparison that although in the years since 1953 operating losses or dwindling profits have become characteristics of the ground- fish operations of these trawlers, in the years immediately preceeding 1953 their groundfish operations were quite success- ful. In the years 1950-52 average annual operating profits per vessel of the larger 150-I99 gross-ton Gloucester and Maine trai'jlers represent an annual return of 7 percent and 9.6 percent respectively on the average original vessel cost, whi],e 50-75 gI^^ss-ton Maine trawlers returned 11 percent per year and Gloucester 125-1U9 gross -ton trawlers 9 percent per year on their average original vessel cost, (table V-12). Such a comparison further revealed that the principal reason for dwindling profits or mounting losses of present day trawler operations is the much lower dollar productivity of trawler operations in the years since 1953. Average landings per-vessel of the 150-I99 gross-ton Gloucester and Maine trawlers, during 1953 through 1957, were 10 to 30 percent under their average annual landings of 1950-52. At the same time the average prices received by trawler operators during these years were from 8 to 18 ipercent under the average prices of 1950-52, (table V-13). The smaller 50-75 gross-ton Maine trawlers suffered less from a decline in landings. The decline in average landings per vessel during 1953-1957 of these trawlers vjas in some years severe: in 195ii, average landings were 19 percent be- low those of 1950-52. Yet, in 1953 average landings were only 1.7 percent less than those of 1950-52, and in 1955 average landings were 3.8 percent higher than those of 1950-52. The average price received in 1955, however, was 28 percent lower than 1950-52, and in 1953 the average price was 17 percent lower than 1950-52. The largest decrease in landings occurred on 125-1U9 gross-ton Gloucester travjlers in 1957. Average landings per vessel were li2 percent under the average landings of 1950-52 and in all years, 1953 through 1957, average landings were at least 25 percent below the levels of 1950- 52. At the same time, however, during 1953-57 average prices were generally higher by 8 to 33 percent, and in only one year, 1953, was the average price received by 125-1^9 gross-ton Gloucester trawlers below that of 1950-52. Average receipts per vessel fell perceptibly in 1953 and have remained at levels substantially below the average annual receipts of 1950-52. From 1953 through 1957 average receipts per vessel of both the larger and smaller Gloucester and Maine trawlers were at least 18 per- cent below the level of 1950-52, and at various times during the 1953-57 period average receipts per vessel declined by as much as Uo percent from 1950-52 levels, (table V-lU). 2. Costs While certain costs of trawler oper- ations have increased appreciably in the years since 1953, the share system of wage determination and the discretionary ele- ment of incurring maintenance expenditures for trawler operations have greatly acted as a check upon mounting costs. In fact, the average total^costs per vessel of all classes of Gloucester and Maine tratflers wer^ lower in the years 1953 through 1957 than the average annual total costs per vessel of 1950-52. In some instances, the average total costs per vessels of certain classes of trawlers operating from the port of Gloucester declined by 30 percent from the levels of 1950-52, (table V-l5) . 71 a. Trip Expenditure Since 1953, rising trip expenditures have become characteristic of the opera- tions of the larger 150-199 gross -ton Gloucester and Maine trawlers and the smaller 50-75 gross-ton Maine trawlers. The average trip expenditures per vessel of the large Maine trawlers were only $1,300 per trip in 1950-52. Yet, from 1953 onward trip expenditures were never lower than $1,800 per trip, and were as high as $2,100 per trip in 1956. The experience of 150- 199 gross-ton Gloucester trawler paralleled that of the larger Maine trawler. Average trip-expenditures per vessel for 50-75 gross-ton Maine trawlers increased from $290 per trip in 1950-52 to $333 per trip in 1953 and $377 per trip in 1957, (table V-16). On the other hand, Gloucester vessels in the 125-1)^9 gross-ton class experienced a decrease in trip expenditures on a trip- by-trip basis from 1953 onward. A percent- age distribution of wage receipts per ves- sel, however, reveals that on all trawlers, trip-expenditures represented a much larger share of trawler receipts from 1953 to 1957 than they did during 1950-52, (table V-17). The distribution further reveals that the rising share of receipts now devoted to trip expenditures has meant a fall in the share of receipts available to the crew. This situation, however, has had little effect on the percentage share of receipts available to the vessel owner. In general, rising outlays for trip expenditures have then been offset by de- clining crew earnings. Since 1953 the average per man earnings, Cin all trawlers operating from Gloucester and Maine ports, remained at levels much below the average per man earnings of 1950-52, (table V-18). The adverse effects of falling re- ceipts and rising trip expenditures on crew earnings is perhaps the contributing factor to the continued decline in the manning re- quirements of these trawlers. The average crew size of the larger 150-199. gross-ton Gloucester and Maine trawlers shrank from 11 men and 9 iien respectively in 1950-52 to 9 and 7 men in 1956 and 1957. The crew size of the 50-75 gross-ton Maine trawler was rediiced from 5 i"en in 1950-52 to U men in 1956 and 1957 j that of 125-11(9 gross-ton Gloucester vessels from 10 men during 1950- 52 to 8 men in 1956 and 1957. The differing crew size of the larger Maine and Gloucester trawler may be attri- buted to the absence of an effective union organization in the Maine ports and the presence of a union organization, although becoming less and less effective, in Gloucester. The presence or absence of union organization perhaps may also explain why falling receipts and increasing trip expenditures have had no effect on the per- centage distribution of receipts in Maine ports. They have, however, slightly, in- fluenced the percentage distributions of receipts in Gloucester. In Gloucester there has been some allocation of trip expendi- tijires either by changing the lay entirely or by including more items under joint expenditures. In either event, the vessel operator assumes an added portion of trip expenditures . lOo/ b . Insurance Insurance expenditures have also in- creased in the years since 1953- It should be noted, however, that in Boston rising insurance expenditures were associated with falling receipts and crew earnings. and so, too, in Gloucester and Maine that this rise in insurance expenditures has accompanied falling receipts and decreasing wages. There is again evidence that falling receipts may well be the cause of an increasing loss experience and an increasing insurance rate. 109/ 108/ 125-lii9 gross-ton trawlers under examination changed successively from a straight "60-1^0" to a "broker UO" to an "Italian lay". The effect of these changes has been to gradually make all items of trip expenditures "joint expenses". 109/ Many insurance brokers who were interviewed noted that rates are higher in Gloucester than other New England ports due to the higher loss experience of these vessels. It was further asserted that it is extremely difficult to settle claims in Gloucester. 72 c. Gear, Repair, and Maintenance Average gear, repair, and maintenance expenditures per vessel show little change during the years 1953 through 1957 and are generally equal to or lov/er than the aver- age gear, repair, and maintenance expendi- tures per vessel of 1950-52, (table V-19) . The average gear, repair and maintenance expenditures of 12^-1^9 gross -ton Glouces- ter travilers during 1953-57 are equal to that of 1950-52 despite an increase in activity of some 6 trips per year during this period. In the years since 1953 the average gear, repair, and maintenance ex- penditures per vessel of Gloucester and I'aine 150-199 gross -ton trawlers were lower than the gear, repair, and maintenance ex- penditures of 1950-52. The absences of any increase in gear, repair, and maintenance expenditures at a time of rising costs in Gloucester and Maine repair yards is evidence that trawler operations suffer from undermaintenance which may lead to poor traviling perform- ance, falling receipts, and further under- maintenance. It may also lead to increasiTg insurance expenditures through inadequate safety standards or the terptation to insti- tute insurance claims for repair work which ife a result of normal wear and tear. Either eventuality would result in an increasing loss experience and rising expenditures. Summary The New England groundfish fleet -is comprised of a heterogeneous group of ves- sels operating from different ports, en- gaging in distinct fisheries, and differ- ing in size, construction, gear, and mana- gerial skills. These and many other fac- tors contribute to a vessel's performance. Moreover, these factors are interrelated and interdependent so that it is difficult to develop generalizations applicable to the entire New England groundfish fleet, despite the fact that certain developments may affect them all. Trawler operations in the New England area have been generally highly unprofit- able in the years since 1953. The chief reason for this unprofitability was the level of receipts which prevailed during this tijne . Although certain items of ex- penditui'es were steadily increasing, total expenditures changed very little. Falling receipts were met with decreasing total expenditures . The much higher level of receipts on the more successful Boston trawler and the low level of receipts of the less successful trawler, 200 gross-tons and larger, were responsible for the profitable operations of the former and the unprofit- able operations of the latter. The total expenditures of the more successful traveler were substantially higher than those of the less successful. The low level of receipts of the less successful trawler was a result of its inactivity, its lower per trip pixDductivity, and its lighter landings. Admittedly, trawler operations in most instances have also been adversely affected by rising trip expenditures, which are up substantially. The combination of inade- quate receipts and rising trip expendi- tures has had a profound effect on trawler operations in Boston, whore the existence of the broker payment ($12 per day per man) makes all trip expenditures, including wages, highly inflexible at low levels of receipts. As a result, at low levels of receipts vessel owners may discover that after payment of all trip expenditures, including wages, they have little left with which to defray other expenses such as gear, repair, and maintenance. In Gloucester and Maine ports, trav/ler operations vere most effected by the sub- stantial reduction in receipts which occurred in 1953 and the low level of re- ceipts which prevailed in the years since 1953. Total expenditui'es changed very little during these years. Lighter landings and lower prices were responsible for the sharp reduction in receipts. Even in Gloucester, where there is no broker payment, vessel owners found them- selves faced with a reallocation of trip expenditures between crew and vessel, or an entirely new sharing arrangement as a result of falling receipts and rising trip expenditures. They, too, now bear a heavier portion of trip expenditures. Insurance expenditures were generally higher in all ports. Rising insurance 73 expenditures were generally associated with decreasing receipts and falling gear, re- pair, and maintenance expenditures. This was particularly evident from the contrast- ing behavior of insurance expenditures of the more and Isss successful Boston trawl- ers, 200 gross-tons and larger. Insurance expenditures were not increasing on the more successful trawlers . There was also a higher degree of association betvreen receipts and gear, re- pair, and maintenance expenditures within any given year: high receipts meant high expenditures. The level of receipts in a particular year affects not only the pres- ent profitability of travjlers but may also affect their future profitability. 7U CHAPTER VI COMPARATIVE COSTS IN THE CANADIAN AND NEW ENGLAND GROUNDFISH INDUSIRIES Introduction In this ch^ter, costs and earnings in New England groundflsh ports - indi- vidually and collectively - will be com- pared with those of the Canadian ground- fish industry in an attempt to discover the underlying differences in the two fisheries. Soorces of Advantage of the Canadian Groundf ishery The data supplied to us from New Eng- land and the Atlantic Provinces of Canada indicates that the principal sources of the advantages of the Canadian industry and the problems of the New England industry are the geographic, historical, and organiza- tional differences which exist in fisheries of the two regions. 1, Geographic Factors The Canadian groundflsh industry, centered in the Atlantic Provinces, is adjacent to almost all of the major fish- ing grounds of the Northwest Atlantic, grovmds »rtiich abound with heavy concentra- tions of the many species of groundflsh. New England, on the other hand, is in close proximity only to the Gulf of Maine, Georges Bank and Browns Bank, and is far removed from the more productive fishing grounds; the Grand Bank, the Gulf of St. Lawrence, and the coast of Labrador, New England's location relative to the more proximate fishing grounds is one of the major factors nBking for the highly specialized fisheries characteristic of the respective ports, Ihe dangers of too great dependence on one species has been demonstrated by the effect on the Boston fleet of the decline in the abundance of haddock on Georges Bank, and by the effect of the fall in the abundance level of ocean perch in the Gulf of Maine on the Gloucester and Maine port vessels. These two developments have caused both of these fisheries to becane higher-cost enterprises. In sharp contrast to his New England counterpart, the Canadian trawler operator, because of his proximity to the prolific adjacent banks, can engage in a diversified groundfish fishery. Data furnished by Canadian trawler-owners reveals that, for the average Canadian trawler, haddock ac- counts for I4O percent of annual landings, ocean perch for 25 percent, cod for 10 per- cent, and flounder for 20 percent, Conpare this to the average large trawler in New Bigland, the great bulk of whose annual landings is either haddock or ocean perch, and the remainder are species caught inci- dentally to these. Not only does the advantageous lo- cation allow Canadian traviLers to engage in a diversified fishery. They also are engaged in a more productive fishery, both in terms of catch per day and annual land- ings, relative to New England trawlers. In both 1956 and 1957 the average large Canadian travder landed about twice the poundage of groundfish as did the average New England trawler, (table VI -1). Similar- ly, Canadian trawlers, because they are closer to the grounds, can make more trips than can New England vessels. In 1956 and 1957, Canadian trawlers of the 200 gross- ton class averaged 3 to 5 more trips than did comparable Boston vessels. The dif- ferences in activity of the l50-199 ton vessels was even greater, Canadian vessels made l5 more trips than did Boston vessels, 20 more than Gloucester vessels, and 25 more than Maine vessels, (table VI-2), Not all of the relative inactivity of New England trawlers, however, can be attrib- uted to their locational disadvantcige. Trawler activity on many vessels in Glouces- ter, and on all the large vessels in Boston, is to a degree controlled by the layover requirements of the union. This is dis- c\issed below, 2, Historical Factors The differences in the historical development of the New England and Atlantic Provinces groundfisherias have also had their effects on costs. The groTindfish trawling industry of New England is much older than that of Canada, Its development has been sporadic, conditioned by precedent. The large trawler was first introduced in Boston in 75 190$, and Boston soon became the major groundfLsh port. The development of quick freezing and filleting in the 1920 's great- ly increased the market for Boston ground- fish. Not until 1935, when the Midwestern market for ocesui perch developed, did Gloucester and Maine vessels enter the groundfish fillet industry. Precedent thus established, the Boston large trawler today is exclusively concern- ed wLth haddock, and those of Gloucester and Maine ports vd.th ocean perch. It is not likely that this specialization will be dlminj-shed, since a number of factors tend to sustain it: the proximity of Boston to Georges Bankj the proximity of Maine ports to the Gulf of Maine; market prefer- ences; the large fresh-market for haddock; and the transportation facilities available in Boston, IW The development of the large- trawler fleet and the groundfish indiistry of Canada, on the other hand, is a postwar phenomenon based principally on the rising acceptance of frozen groundfish fillets in the Mid- western markets of the United States and the market growth of the pre-cooked fish stick (processed by United States firms from inqjorted fish blocks) in all areas of the United States, The Canadian industry is based on export and a frozen product. The growth and development of the Canadian large- trawler fleet was occasioned by the realization among processors of the need for large supplies of groundfish and their desire for control of both the supply and cost of the raw product, ^^/ Other factors also tend to reinforce the diversified groundfishery in the Canadian industry. Chief among these is the fact that, far removed from the major markets of Canada and the United States, it must deal in a frozen product. Con- sequently, the Canadian industry is pri- marily concerned with the production of frozen fillets and fish blocks. Particu- larly for the latter product there is little consumer preference for one species over another. In addition, the concentra- tion of ownership in the Canadian industry and the facilities available at major Canadian portis also argue well for diversi- fied fishing. 3. structural Differences Of Ihe Canadian And New England Industries Perhaps the greatest and most impor- tant difference between the fisheries of the two areas lies in thei-T respective structures. In general, the New England industry is composed of a large number of small firms solely engaged in either operation of vessels or in processing. Although a few firms are engaged in both functions, they are nonetheless not vertically in- tegrated, 112/ Thus the vessel owner sells to an independent processor; the price, in large measvire, being determined by the forces of supply and demand. The industry in the Atlantic ProTr- inces, however, is characterized by a few large vertically-integrated firms which are able to exert a great deal of influence on price. In effect, the processor is "buying" from himself. When he buys the catch of vessels other than his own, he also can exert a downward pressure on the price paid because of his concentrated btiying power, -^-3/ 110/ See White, Donald J. The New England fishing Industry, Harvard University Press, Cambridge, 19'^h» (Especially Chapter III), 111/ The nature of the econoiry of the Atlantic Provinces has also been a factor in the development of the Canadian fishing and processing industry. For a detailed discussion of this developrrent, see Chapter II, 112/ \Jhile vertical integration of vessel owner and processor has been successfully cxiFEailed in the port of Boston by virtue of a federal court decision rendered in 1918, there is evidence that in the Maine ports, particularly in the port of Rockland, where one large firm owns and operates vessels and a freezing and filleting plant, because of buyer concentrations and in the absence of a selling room, (auction system) groundfish operations .are becoming more and more integrated. Even the Gloucester industry may eventually tend toward integrated operations as a result of the waning union strength and the continued decline in the number of both vessels and processing firms, 113/ Report of the Royal Commission on Price Spreads of Food Products. Vol. I, Queen's Printer and Controller of Stationery, Ottawa, 1959, P» 76. 76 A further major difference between the two industries lies in the organization of :iew England fishermen and the complete lack of organization in the Atlantic Prov- inces. Union requirements as to lay arrangements, layovers, and broker paj'Tronts tend to make costs on Ifew England trawlers more inflexible. Furthermore, labor is the largest item of cost in this region, and is not very amenable to wage reduction. The Canadian industry, however, insulated from labor organization by law and located in an area of labor surplus, is completely unfettered by such union requirep.ents. Thus, Ca-nadian firms have a great deal of discretion both in regard to prices paid and costs incurred. Effect on Costs of Geographic and Struct'xral Differences The factors outlined above all concur to give the Canadian industry a decided advantage over the New England industry. These advantages are reflected mainly in the much higher landings and lower trip and vessel expenditures of Canadian trawlers. 1 . Landings The greater landings of the Canadian trawler, relative to its New England counterpart, were discussed above. We have noted that the Canadian fleet js closer to the more productive grounds and can make more trips per year than can a New England trawler. It is able to do so not only because of proximity but also because of the absence of mandatory lay- ever requirements. In this connection, (TLoucester owners spec\J.ate that in the absence of the li-day layover requirement betveen trips on ocean perch vessels, they could increase their trip activity to 25 trips per year. This i^ould be a substan- tial improvement over their annual activity of 19 trips in each of the years 1956 and 1957. Since many large- traiders in Boston in the years 1937 to 19ltl averaged 35 or more trips per year, while today few make more than 30, there is evidence that the layover requirement (3 days on haddock vessels) has also substantially altered their trip activity, 2, Trip Expenditures Structxural differences in the indus- tries of Canada and New England may be credited with much of the lower per-trip expenditures of the Canadian trawler and the much higher expenditures of the New England-based trawler. A large part of trip ejq^enditures on New England trawlers represents cash outlays, payable at the conclusion of each trip, for commission fees, wages "of lun^jers," rent of scales, welfare fund contributions, etc. Such payments are avoided by Canadian trawler ovmers, since large integrated owners pay no one a commission fee and make no can- tribution tq a welfare fund. Furthermore, because of the natvire of the integrated operation, the Canadian owner can, and generally does, charge off certain trip expenditxxres to operations other than the trawler itself. Another facet of the structvir,al in- fluence on trip expenditures is indicated by the expenditures for fuel, ice, and food on Boston large trawlers and those of Canada, The large-trawlers operating out of Boston engaged exclusively in the Georges - Brovms Banks haddock fishery do not-at least in terms of "days absent per trip,"- suffer from any geographic dis- advantage. Both Boston and Canadian trawlers are absent from port for approxi- mately 9 days. Also, Boston-based large trawlers, of the 200 gross-tons and over class, are generally of smaller gross tonnage and lower engine horsepower than Canadian trawlers of the same classifi- cation. Despite the absence of a geo- graphic disadvantage and their smaller size and lower landings, fuel and ice expenditures of these Boston trawlers equal the fuel and ice expenditures of the irmch larger Canadian Vessels. The fuel and ice expenditures of Boston trawlers of the 150-199 gross tons class are substan- tially above those of Canadian trawlers of the like classification, (table VI-3). This is indicative of the fact that ecoiw omles of scale are available to the large Integrated firm. The substabtially lower per-man food expenditiires of the Canadian trawlers again indicate the advantages of concentrated buying power or the willing- ness of Canadian fishermen to be satisfied ^■dth less expensive food than fishermen of the New England area, (table VI-h)» The major cost advantage enjoyed by the Canadian trawler operators is their 77 much lower wage payments. The annual net earnings of Canadian trawler fishermen are substantially below those in the New Eng- land area. Newfoundland trawler fishermen earned approximately $2,300 in 1956 and $2,100 in 1957. Many trawler fishermen earned less. Annual net earnings on New- foundland trawlers ranged from a low of ;31,900 to a high of $3,000 in 1956, and from a, 600 to $2,600 in 1957. Nova Sco- tian trawler fishermen earned approximately $3,500 in 1956, and $2,500 in 1957; fisher- men earnings of individual travders ranged from $2,200 to $la,300 in both 1956 and 1957, (tables n-S and VI-6). In sharp contrast, Boston trawler fishermen earned .^,100 in 1956 and $5,200 in 1957 on trawlers larger than 200 gross- tons. On 150-199 gross-tons trawlers, fish- ermen earned approximately $li,000 in 1956 and 1957. The range in Boston trawler fishermen earnings for both 1956 and 1957 was $2,000 to more than $9,000, The aver- age earnings of large-trawler crewmen in Gloucester and Maine ports were also above crewmen earnings of Canadian large trawlers. Large- trawler average earnings in Glouces- ter were $1^,900 per man in 1956 and $li,300 in 1957j in Maine they were .1!:3,lO0 in 1956 and $ii,000 in 1957, (tables VI-5 and VI-6). 3. Vessel Expenditures a. Gear, Repair and Maintenance Although unit costs of geai-, repair, maintenance, insurance, and other vessel expenditiu-es of the Canadian trawler are significantly lower than that of the New England trawler due to superior produc- tivity, the actual dollar outlay of the Canadian trawler for these items is not necessarily lower than that of New England trawlers, (tables VI-7, VI-7a, and VI-7b). In fact, total vessel expenditures of the Canadian trawler are generally on a par with total vessel expenditures of the New England travrler, which again indicates that the major advantages of the Canadian trawl- er operator lie in the area of appreciably higher landings and much lower trip ex- penditures, including wage payments. It is difficult to conclude that the Canadian trawlers benefit from cost savings resulting from lower dollar outlays for gear, repair, and maintenance in view of the lack of any large differential in the expenditures for these items between the Canadian vessel and similar sized New England trawlers. Gear, repair, and maintenance expenditures of Canadian trawlers of 150-199 gross tons were, in fact, higher than similar sized New Eng- land vessels in both 1956 and 1957, (ta- bles VI-7a and VI-7b) . The activity and landings of the Canadian trawlers perhaps indicate that Canadian vessels are much more suscepti- ble to wear and tear. Canadian vessels are subject to rather rigid annual in- spections by the Canadian Steamship In- spectors. There are, then, upward influ- ences on gear, repair, ajid maiintenance expenditTH*e8 of Canadian trawlers which are not present on New England trawlers due to their relative inactivity, lower landings, and the absence of any rigid inspection. New England trawlers may actually be underspending, particularly on repair and maintenance, due to the lack of any rigid inspection system. This conclusion has been reached by many Canadian buyers of New England trawlers who contend that extensive repairs are necessary on these vessels before they conform to the accept- ance standards of the C.S.I. Many local insurers of New England vessels also feel that New England trawlers are undermain- tained and lack proper safety equipment. The economies of scale available to the large integrated operation throxjgh concentrated buying power, ability to carry large inventories and maintain its own repair crews, perhaps counteracts the upward influence of activity and inspec- tion on maintenance expenditures. I^ey also partially e?q)lain vtiy repair and maintenance expenditures of the Canadian vessel are not substantially higher than those expenditures on New Bigland trawlers which are relatively inactive and which 78 in the opinion of many are undermaintain- ed. Canadian trawlers benefit also from preferential treatjuent on supplies obtain- ed from other conmonwealth covintries - particularly gear from England - and by the fact that labor costs in Canadian yards are lower than those of New England yards. Despite the lower labor rates of Canadian yards and the absence of the advantages of concentration and integra- tion in New England, it is doubtful wheth- er an individual trawler operating from the Atlantic Provinces would benefit from any substantial cost advantage over conpa- rable New Englaixl trawlers fVom lovrar repair and maintenance expenses, since most repair parts are purchased from the United States. The costs of repajjr parts, after tariff and transportation charges, wovild necessarily be higher to the Cana- dian operator, b . Insurance The lower instirance expenditures of the Canadian vessel relative to New England vessels may be primarily attributed to the lower coverage limits and costs of pro- tection and indemnity insxirance of Cana- dian trawlers. Coverage limits of P and I insurance on trawlers operating from the Atlantic Provinces were between $100, OCX) and fl50,000 per vessel, ii^'while in New Eng- land the coverage limits of P and I insiu*- ance are between $300,000 and S?00,000 per vessel on both Boston and Gloucester ves- sels, and $200,000 to $350,000 per vessel on Maine trawlers, iiz.' The cost of such insurance was only 8l50 to $250 per man for Canadian trawlers j while in the New England area, the cost of P and I insurance ranged from $300 to over a $1,000 per man. The substantial difference in the coverage limits of protection and indemnity insurance between the two areas is due to the differing legal situations facing trawler operators, Canadian fishermen are covered by the Workmen's Compensation Act which expressly spells out the trawler operator's liability. On the other hand. New England fishermen are excluded from coverage under workmen's compensation but are included under the Jones Act, The New England trawler operator, operating within the confines of the Jones Act, is faced with an \inlimited liability as the Act fails to specifically state the limits of the owner's liability; and in reality the trawler operator's liability is often determined by jury trial. iiE' Whether New England trawler operators would benefit from lower insiirance costs by the inclusion of fisherman under a Workmen's Compensation Act is open to soma argument, since manj' insurance brokers agree with a statement by one of their number that "The Workmen's Compensation Act is a high-cost proposition in Massa- chusetts." Ihe cost to the owner might even be higher under the Act than it is at present, c. Other Vessel Expenditures Differences in accounting procediires are perhaps responsible for the variations in administrative and other expenditiires. Although nothing is known of the items in- cluded in this category on Canadian trawl- ers, a large portion of administrative and other expenditures of Boston-baeed trawlers consists of corporate officer's salaries. Such salaries amounted to approximately $11,000 in both 1956 and 1957 on the large (200 gross-ton) trawlers. This amount is exclusive of the wages paid to the shore captain, which averaged $1^,000 per year in both 1956 and 1957, Corporate officer's salaries are not generally included in the llV Information sv^splied by Canadian trawler owners, 115/ Information supplied by New Eligland insurance brokers, 116/ For a discussion of the Jones Act and its rand.fi cations, see Dan forth, Warner C. and Theodore, Chris A., Hull lasorance and Protection and Indemnity Insurance of Com- mercial Fishing Vessels, United States Department of the Interior, Special Scientific fieport— Fisheries No. 2iil. Washington, D.C., 1957, 79 operating expenses of Maine trawlers, and are much lower on Gloucester trawlers. In any event, the discretionary element in this cost item is large and the differences which exist may be best attributed to differences in accoiinting procedures. Summary Ihe coii5)arison of the financial experience of large groundfish trawlers operating from the Atlantic Provinces and the various New England ports quickly re- veals the much lower costs of Canadian groundfish operations. It further reveals the significant cost differentials even aittong trawler operations within the New England area. The costs of Maine and Gloucester trawlers are substantially less than those of Boston trawlers. The coats of trawler operations of the Atlantic Provinces and New England are influenced by many factors; the location of the centers of trawler operations rela- tive to the major fishing grounds; the type of fishery conducted; the structure of the groundfish industry of the respec- tive areas; and the economic climate of the region in which the industry is located. These factors, and their interdependence, are responsible for both the significantly lower costs of the Canadian vessel and the large differences in the costs of trawler operations within the New England area, Canadian trawler operators have large and very real advantages relative to the large-trawler operators of the New England area. The most notable are the higher landings, lower wage payments, and lower running costs of the Canadian trawler. The superior productivity and lower costs of the Canadian trawler are, however, reflect- ed neither in higher receipts nor more profitable operations. In fact, the fi- nancial experience of the Canadian trawler owner indicates that his vessel produces much less revenue and incurs much higher losses than its New England counterpart. This paradox, that New England large trawlers, landing less at higher costs, produce more revenue with smaller losses than Canadian large trawlers, is illustra- tive of the structural differences in the groundfish industries of the respective areas. The Hew England industry is made up of a series of ports, each specializing in a particular species of groundfish. It is also characterized by a large number of nonintegrated firms engaged solely in trawler operations or processing. The Canadian industrj' is made up of multi- species vessels ovmed by, and selling to, the vertically-integrated processor who produces for the frozen-export market and often "buys" raw material from himself. The historical development and ultimate ntructure of the Nev; England groundfish industry tends to sustaii: and inrnire the continuation of port specialization of the New England trawler, at least imder present conditions, while the development and ultimate structure of the Canadian industry would appear to insure the nonspecialiaa- tion of Canadian trawler operations. 80 CHAPTER VII RESOURCES AND PRODUCT IVITI Introdaction In examining the statiis of the fish- ery resources, present and future, two facts must constantly be kept in mind: (1) The deep-sea fisheries are a com- mon-property resource; that is, the grounds are owned by no one, but are there to be fished by all; and, (2) The practical policy of "fisheries management" is to benefit man, not fish. While these two propositions seem self- evident, their implications have at times been largely suppressed, if not ignored. As to the first, the common-property nature of the deep-sea fisheries is not unique and similar problems are encountered in other cases of common-property resource industries, such as petroieiim production, and hunting and trapping. The dissipation of the potential net yield of the resources is common to all such industries, and is usually guarded against by some form of regulatory action. This brings us to the second proposi- tion. What should be the objective of such regulation? For whose benefit should it be intended? What form should regvila- tion take? The answer to the second ques- tion posed is, of course, provided directly by the statement of the second proposition itself. The answers to the questions a- bout the objective and the form regulation should take are not so easily formulated. The great bulk of research on the prob- lem has centered on the question of "net yield," and, more specifically, net physi- cal yield. In other words, it has been largely biological research focused on the maximization of the catch. Such an ap- proach, however, is concerned mainly (if not solely) with output, and neglects the inputs of other factors of production which are used up in fishing and must be account- ed for as costs. The more critical factor, then, is "net economic yield," which equates pro- duction with cost of production and takes cognizance of the economics involved in the fishing industry. Only when the net economic yield is maximized will we attain the optimum degree of utilization of any particular fishing ground. It will be the purpose of this chapter to investigate the current and future state of the vario\is groundfish resources in the light of the foregoing discussion. The most recent productivity experiences on the princxpal banks fished will then be ana- lyzed; Current and Future Groundfish Resouress The current rate of utilization of groundfish and the long-term prospects for groundfish stocks were estimated by the Gordon Commission in its recent report on the Canadian fisheries. iiZ/ The report indicates that in the future, prospective stocks will be below current levels (1955), but that catches will increase due to "i??® efficient utilization of the resources. iii/ The rationale of the future catch estimates will be s-'^'^n as the major species are dis- cussed. 1. Cod Cod is the mainstay of the Newfound- land fishery. In 195^, Newfoundland landed 301 million pounds of cod II9/ or 66 percent of all cod landings in the Atlantic Prov- inces of Canada. Cod con^^rised 6h percent of all groundfish landings in Newfoundland. The bulk of these landings came from ICNAF Subarea 3> which comprises both the inshore fishing grounds and the offshore Grand Banks grounds. An increasing proportion of 117/ The Commercial fisheries of Canada, prepared by the Department of Fisheries of Canada and Fisheries Research Board, for the Royal Commission on Canada's iiconomic Pros- pects, Ottawa, 1956. IIB/ Ibid., p. 12 119/ Monthly Review of Candian Fisheries Statistics, December 1958, Dominion Bureau of Statistics. Queen's Printer, Ottawa, 1959, 81 the Canadian production of cod has been landed from Subarea 3, and Canadian fish- ermen are now abandoning Subarea 2 as a fishing ground, as other countries have been moving in, (table VII-1) . Participa- tion by Euix)pean countries in the Subarea 3 fishery has increased rapidly since World War II, so that they now take about half the catch. The Royal Comraission estimated that the stock of Subareas 2 and 3, based on 195l-5h average landings, was some 5.6 bil- lion pounds, of vrtiich Canada utilized ^UO million pounds and other countries utilized 300 million poxinds. It is expected that by 1980 the stock will decline to 5 billion pounds, but that utilization will increase to 600 million pounds by Canada and hOO million pounds by other countries. Such an estimate takes cognizance of two trends. First, the recent decline of the Canadian catch is due to a fall in production of salt cod. The wet fish fishery has in- creased, but not as rapidly as the salt fish industry has declined. It is expected that salt fish production will continue to decline in the immediate future, since its production by present methods is only pos- sible on the basis of a very low landed value for the raw material. As production of wet fish increases, however, and mechani- cal drying methods are utilized, the catch of cod will rise above present levels. Second, since salt fish is a very important part of the protein diet of the European nations which fish the Subareas, they will undoubtedly subsidize their fishermen and ships, and regulate their imports and the price of salt fish to the advantage of their own salt fish producers and consumers, and to the disadvantage of other producing countries. Hence, the European nations will in future take a larger proportion of the cod landed in the Subareas. Because of the foregoing and the fact that the present stocks of Subarea 3 are probably only moderately exploited, the Royal Comraission expects that total Cana- dian catch could be doubled if markets were available, if landed prices were a lit- tle higher, if the Labrador stocks were used fully, and if Canadians prosecuted the offshore fishery vigorously. The more re- alistic prediction, however, is that the Canadian catch will at first decline some- >rtiat because of the reduction in fish salted, and then gradually come back and rise above present levels by I960 mainly because of increased use of cod for fillet- ing. This forecast assumes that European competition will not become milch greater than at present. Based on the latest available figures, the prediction of a short-term decline in cod landings from Subareas 2 and 3 is a valid one. Landings, based on 19^1-5^4 av- erages in the Royal Commission stxidy, were 500 million pounds by Canada and 3UU mil- lion pounds by other countries. Using av- erage landings for the period 195U-56, it is seen that utilization by Canada had fall- en to a level of UOO million pounds, and that of other countries had risen to hOO million pounds. Thus, vrtiile the total landings remained the same, Canadian land- ings made up a smaller part of tne total. It is not unreasonable then, to expect that the estimates for 1980 are on the conserva- tive side, and that landings might be high- er than expected, with European trawlers landing a higher proportion of the total than forecast. In Subarea U, cod are common at the mouth of the Bay of Funcfy, on inshore and offshore Nova Scotian grounds, and through- out the Gulf of St. Lawrence. It is esti- mated that the present stock is some 1.2 billion pounds and that this will increase to 1.5 billion pounds by 1980. Based on 1953-51i, utilization amounted to about 31U million pounds: 210 million by Canada and 100 million by other countries. It is ex- pected that this utilization will increase to 37U million pounds by 1980j 250 million pounds by Canada and 120 million pounds by other countries. The best available statistics of the Subarea h catch are given in table VII-2. The annual yield has varied from 32? to U37 million pounds (all countries), and the Canadian share of the catch has varied from Z6h to 291 million pounds during the period 1953-56. The catch taken by United States trawlers has fallen to a level where it is insignificant, but the European catch is becoming a larger and larger share of the total. By improving fishing methods and quality of products, however, Canada should continue to take the preatest share of the catch from this Subarea. Based on 1955-56 averap-es, the annual catch by Canada from Subarea h was in the 82 neighborhood of 2^0 million pounds, and that of other countries had already grown to lUO million pounds. If the rate of uti- lization remains the same as that of 195ii and the stock increases as expected, about liOO million pounds could be taken annually from Subarea U on a sustained yield basis, and Canada should continue to take the greatest share of the catch. 2. Haddock The center of abundance and of the commercial fishery for haddock in Canadian Atlantic waters is in the inshore and off- shore waters of Nova Scotia. Haddock are at the northern limit of their occurrence in commercial quantities in the southern part of Subarea 3 (the Grand Bank); conse- quently, in this area their abundance is largely at the mercy of climatic trends. The Royal Commission estimates the rate of removal in Subarea 3 at about iiO percent. On that basis, it estimated the stock in I95I4 to be about 2U0 million pounds. Average landings in 1953-51j a- mounted to some 100 million pounds; 50 million by Canada and 50 million by other countries. By the period 1955-56, however, these average landings had doubled, evi- dencing a large increase in the stock and an increase in fishing effort, (table VII- 3). It is likely, though not proven, that much of the increase in haddock stock in Subarea 3 was a result of warming of the ocean since the late 1920' s. However, the subsequent return to cooler temperatures, if it does occur and if it continues, could reduce the stock and catch considerably. It is expected, therefore, that by I98O the stock of Subarea 3 will be only 120 million pounds, and that landings will drop to some 50 million pounds, with Canada taking half of the harvest. The annual landings of haddock have re- mained fairly constant over the past 25 years, (table VII-U). The proportion landed by Canada, however, has been growing con- stantly. In the period 1931-35, Canada accounted for only 37 percent of total land- ings from the area; by 1956 this had grown to 70 percent. This increase by Canada, especially during the post-war years, is attributable to a growing fleet of Canadian otter-trawlers and to an increase in the size of the stocks resulting (probably) from more favorable water ten5)eratures. While it is expected that the stock of haddock in Subarea h will decline 10 percent to a level of about 220 million pounds by I98O, total landings should in- crease slightly due to the program of mesh regulation. Landings of about ll5 million pounds may be anticipated by I98O, with Canada landing 70 million pounds of the total, and United States' landings remain- ing about the same as in recent years, be- tween I4O and 1|5 million pounds. 3. Ocean Perch The fishery for ocean perch is a re- cent development in Canada. It was begun in the United States ty New England trawl- ers in the I930's in local waters, but as local supplies were reduced the fishery gradually extended northward. Canadian landings of ocean perch were not too sig- nificant until 1951, when 38 million pounds were landed from ICNAF Subarea 3, mostly from the eaistern slope of the Grand Bank. Since that year, however, Canadian landings from that Subarea have continually declined, reaching a low of 7.9 million pounds in 1956. The decline has been largely due to a concentration of the Canadian fleet on haddock, and some transfer of Newfoundland effort in ocean perch fishing to the more prolific grounds of the G\ilf of St. Law- rence, There has also been a drop in a- bundance of ocean perch on the Newfound- land fishing grounds on the eastern slope of the Grand Bank. The average Canadian catch of ocean perch from Subarea 3 has dropped considera- bly from the 1952-51* figure of 2li million pounds used by the Royal Commission. Based on the 1955-56 average, landings have fall- en to about 8 million pounds annually. The same is true of average landings by United States trawlers from the Subarea, which fell from 69 million pounds in the 1952-5ii period to 29 million pounds in 1955-56, (table VII-5). This reflects the fact that the fishery in the area is still in the stage of removal of accumulated stock. Because of the long period of growth required, there has not been time for the exploited stocks to respond to fishing by increased recinitment. It is expected, however, that total production will return to the 1952-5it level of 90 million pounds by I98O since the addition of new grounds- will condensate for the reduced yields on 83 the grounds presently fished. At that time, Canada's proximity to the more northern stocks, which will then be fished, will mean that Canada's share of the catch will be 50 percent rather than the present 22 percent. The Canadian catch of ocean perch from Subarea U has shown a steady increase since 1953, the first year of any significant landings by Canada in the area. Here again, however, it is a condition of removal of accumulated stock, and landings will soon depend on annual recruitment and growth. Since 1953 > Canadian landings have account- ed for 30 percent of total landings from the area, (table VII-6). If the cur- rent rate of fishing continues, it is ex- pected that by 19H0 the stock will fall to 350 million pounds, with average landings of about 50 million pounds. Of this, Cana- da will probably take 50 percent, or 25 million pounds, U. Pollock Pollock is common in the southern part of ICNAF Subarea h, and ranges north to the southern Grand Bank and St. Pierre Bank in Subarea 3, The largest catches are made at the mouth of the Bay of Fundy. The stock of pollock was estimated at about 200 mil- lion pounds in 1955. Canada lands 32 mil- lion of the liO million pounds annually caught . Spurred by increased marketability, increased utilization will likely increase the pollock catch in the immediate future possibly to 60 or 70 million pounds. If the cooler teirperatures predicted for I98O actually occur, however, there will be some restriction of range and abxindance, so that total production then is estimated as only 5U million pounds a year. At that time, the level of stock will be about I6O mil- lion pounds, 5. Whit lag (Silver Hake) Whiting is of no commercial importance to the Canadian fishery, or is it expected to become so in the future. Although it is abundant in the southern part of Subarea h, whiting has not been exploited by Canada or any other nation in these waters since it quickly becomes soft under ice. The re- cently increased landings of whitinp by United States trawlers has been from the 120/ Productivity figures will pertain only fieaby ICNAF in the l50-500 gross ton group. catch in Subarea 5} (cf.page 58, Chapter IV). At any rate, the 1955 stock of 100 million poxinds in Subarea k was, for all practical purposes, unutilized, and it is expected that the lower water temperatures predicted for the future will reduce this stock to about 60 million pounds by I98O. At that time, total landings from the area might be 10 million pounds annually, and half this amount might be landed ty Canada, 6. Cask Cusk is taken on all fishing banks incidentally to catches of other ground- fish species. It is of some commercial importance in Subarea ii, but is rarely en- countered farther north. Since the species tends to frequent rocky areas where drag- ging is difficult, the rate of exploitation is low, and it is expected that the stock in I98O will be at the same level as in the period 195l-5ii, 30 million pounds. Current landings of about 2 million pounds may in- crease to about h million pounds ty 1980, of which at least 3 million pounds may be expected to be taken by Canada. Sunnaaiy The current levels of stocks and catch trends, by species, and those of the future are summed up in table VII-7. With one ex- ception, the stocks of the major groundfish species are e::q)ected to decrease. It is anticipated that the stock of cusk will re- main at the current level due to its low level of exploitation. On the other hand, with the major exception of haddock, the probable catch trend of all species will increase. Productivity of the Principal Fishing Grounds If an intelligent comparison is to be made of the relative efficiencies of the groundfish industries of New England and the Atlantic Provinces, estimates must be made of the productivity of the banks fish- ed by each country. Chapter III attempted such an estimate for Georges Bank, the chief source of New England haddock re- source. It is the purpose of this section to investigate the productivity of the other major banks fished for haddock -1 Of)/ and ocean perch. ±tz/ to large otter trawlers; i.e., those classi- 8U 1. Grand Bank The Grand Bank (KMAF Subarea 3) is a major source of both haddock and ocean perch, and is of primary importance to the Newfoundland fishery. Virtually all the haddock landed in Newfoundland In 19^7 came from these grounds, (table VII -8). Simi- larly, almost half of all ocean perch land- ed in Newfoundland in 1957 was caught on the Grand Bank. Although these grounds are of much less importance to the Nova Scotia fleet, they do account for roughly one- fifth of all haddock landed at Nova Scotia ports. Although the data in table VII -9 are limited and extend back only a few ysars, they Indicate that these fishing grounds are among the most productive of the North- west Atlantic. In 1956 and 1957, for ex- ample, Nova Scotian large -trawlers averaged some 18,000 pounds of haddock per-day fished, and Newfoundland large -trawlers averaged about 3U,000 pounds per day. Ocean perch productivity is even higher. New Eng- land large -trawlers, which account for the heaviest landings of ocean perch from the Grand Bank, had average catches of 66,000 pounds per day in 1956 and 77,000 pounds per day in 1957. The major reason for such high figures for ocean perch seeiiis to be that the fishery is not based upon the re- moval of accumulated stock, as is the case in the Gulf of St. Lawrence and the Nova Scotia grounds. The belief is that there exist large pelagic stocks of ocean perch which coma onto the Bank from the ocean, replacing the fish removed. There is no scientific evidence, however, to confirm this belief. Besides Canada and the United States the fishery on the Grand Bank is also pros- •out«d vigorously by Spain and, in 1957, by the D. S. S. R. In 1957, Spanish trawl- ers landed over 61i million pounds of had- dock on the Grand Bank. The Russian fac- toiy ship, which made 65 trips into the grounds in 1957, fished principally the ocean perch stocks, landing 108 million pounds of that species. In terms of catch per day fished, the productivity experience of the Russian trawler was over U2,000 pounds per day of ocean perch. The Spanish fleet, consisting of trawlers in the 900 to 1,800 ton class, and fishing principally for cod, averaged a catch of 15,000 pounds of haddock per day fished on the Grand Bank in 1957. It is evident that competition for haddock and ocean perch on the Grand Bank among Canadian, United States, and Euro- pean trawlers is growing. As noted earli- er, the Mediterranean nations will subsi- dize their fleets and regulate their im- ports because of their dependence on salt fish as a protein food. Consequently, it may be expected that they will increase their efforts on the highly productive Grand Bank. It is not expected, however, that this will seriously decrease the Cana- dian rate of productivity in the immediate future. Whether such effect will ensue in later years will depend on a number of fac- tors, including the actual increase in fishing effort expended, and the rate of recruitment of the stock. 2. Nova Scotia Banks The Nova Scotia Banks (ICNAF Subdivi- sions liU, I4W, and liX) are fished princi- pally by Nova Scotia and the United States. Landings from these banks by Neswfoimdland trawlers are negligible, and Spain is the only other country to land any appreciable amount of groundfish (cod) from the area. These banks are the principal haddock grounds fished by Nova Scotia. Three- fourths of all haddock landed in the Prov- ince in 1957 came from the adjacent banks, (table VII-8). In fact. Nova Scotia has almost exclusive domain of the haddock fishery in the area. The only other country prosecuting the banks, the United States, fishes there principally for ocean perch and secondarily for haddock. In recent years, the haddock produc- tivity of the Nova Scotia Banks has been increasing. In 1953, catch per day fished amounted to 9,000 pounds. By 1957 this figure had increased to almost 16,000 pounds. This was accompanied by an in- crease in effort from 1.593 days fished ^21/ to 2,531 days fished. 2±£/ These figures are indicative of the efficacy of the proposition that the optimum amount of fishing effort will maintain and may in- crease the level or productivity. It must 121/ ICNAF Statistical Volume for the year 1953. 122/ ICNAF Statistical Volume for the year 1957. 85 be emphasize d, hcwever, that the data are very limited and are only indicative. De- finitive statements can be forthcoming only when the data are more extensive and more detailed. The Royal ComHiission study anticipates increased landings of haddock from these banks, and this increase will accrue to the Nova Scotia fleet. Productivity, likewise, should continue to increase, but If effort (days fished) should increase at a greater rate, then probably productivity will reach a maximum and would decline if the level of optimum effort were passed. Here again, however, the situation is dependent on a number of biological and climatic factors about which there is Insufficient knowledge to make any definite statements at this time. 3. Oulf Of St. Lawrence Hova Scotia, Newfoundland, and the United States all prosecute the ocean perch fisheiy of the Gulf of St. Lawrence (ICNAF Subdivisions Ur, hS, and hJ) . Each of the three depends on this source of ocean perch in varying degrees. 93 percent of all ocean perch landed In Nova Scotia in 19^7 came from these grounds. Newfoundland, on the other hand, landed only ^3 percent of its total catch of ocean perch in the Gulf of St. Lawrence, and less than 30 percent of all United States landings of the spe- cies came from the area, (table VII-8). This fishery did not become of impor- tance to Caniida until the post -World War II years. As noted previously, 123/ landings of ocean perch have increased rapidly since that time, but in recent years they have shown a downward trend. Newfoundland landings reached a peak of 38 million pounds in 19^1, but by 1958 they had de- clined to 25 million pounds. Nova Scotia did not prosecute the fishery vigorously until 1953, when almost 17 million pounds were landed. Landings increased to a peak of 32 million pounds in 1956, but have likewise begun to decline, receding to 2? million i>ounds in 1958. Productivity has also declined. Nova Scotia trawlers had a catch of 30,000 pounds per day fished in the area in 1953, but by 1957 this had fallen to 19,000 pounds per day fished. Newfoundland trawl- ers averaged 25,000 pounds per day in 1953. The catch reached a peak of 3^1,000 pounds per day in 1955 and declined to 21,000 pounds per day in 1957. The cause for these declining landings and productivity figures seems to stem from the fact that the fishery is based on an accumulated stock being subjected to in- creased effort. Chart VII-1 shows that ef- fort, in terms of days fished, increased from 1;90 to 1,062 days over the period 1953 to 1957 by Nova Scotia trawlers, with a corresponding decrease in productivity from 30,000 to 19,000 pounds per day. Simi- larly, in Newfoundland, effort increased from 177 to 391 days fished, while produc- tivity declined from 25,000 to 21,000 pounds per day fished. While these data cover only five years, they indicate clear- ly that the stock is declining since the stock removed is not being replaced. More- over, the present rate of fishing effort will inevitably mean further decreases in productivity until eventually fishing ef- fort will be transferred to more productive ocean perch grounds, probably the Grand Bank and more northern waters . When this occurs, the Gulf of St. Lawrence, like previous ocean perch grounds, should sta- bilize at these lower levels of produc- tivity. Summary In summary, it is anticipated that productivity of haddock on the Grand Bank and the Nova Scotia banks will not de- crease, and may possibly increase if cur- rent levels of effort are maintained or even if they increase somewhat. The Grand Bank, because of its more northerly loca- tion, will remain an area of higher pro- ductivity relative to the more southerly Nova Scotia Banks. If ocean perch productivity on the Nova Scotia Banks and in the Gulf of St. Lawrence continues to decline, then the fishery may shift to the Grand Banks where the New England fleet, and recently the Russian factory ship, have been ex- periencing high levels of productivity. 123/ caiapter II, p. 17, and table U-IO. 86 I o I o ^^ as o II 35 u a, 4» O O to MO O •H S ^4 s O O t & 5 O ^ . e 0) / 41 a< / s •s / s ■»; \ H \ 73 O o CM TrT lA \A 0\ OS XA \A o\ Os lA 0\ 0\ UN 0\ 87 88 1. CHAPTER VIII SUMMARY AND CONCLUSIONS Summary The Industries The New England groundfish industry has been of historic importance to the growth of this region. It was a major source of the capital which built the manufacturing economy which today charac- terizes the area. In recent years the fishing industry has declined in impor- tance to the area as a whole, although certain port cities are still dependent on the fishery for their continued economic health. New England's chief competitors in the groundfish market are the Atlantic Provinces of Canada, which account for more than two-thirds of the iirports of groundfish fillets into the major markets of this country. The industry in the At- lantic Provinces differs in a great many respects from that of New England. The Canadian industry is centered in relatively underdeveloped areas heavily dependent on primary industries. They are in an vinfortunate geographic location rela- tive to maricets. But they are very favora- bly located relative to the fishery re- soxirces, and have been able to overcome unfavorable market location by building an industry desiling in a frozen product. Thus the Canadian industry, unlike the New Eng- land industry, is dominated by the proces- sor rather than the trawler operator. Al- so, because of its location and structure the Canadian industry derives definite cost advantages. Since there is a great deal of underemployment, especially in the fishing industry, and the standard of living is lower than that of New England, the labor cost is much lower. Another factor working to keep costs low is the presence of a few large vertically-integrated firms which own the trawlers that catch the fish, own the processing plants, and maintain whole- sale and retail outlets where their prod- ucts are sold. Vertical-integration also enables the Canadian producer to achieve economies of scale which are unknown in the New England industry. A major characteristic of the New Eng- land industry is port specialization. Bos- ton is a haddock port; Gloucester and the Maine ports are ocean perch ports. Such specialization is unknown in the Atlantic Provinces, where diversification is the rule. Heavy dependence on one species can have disastrous effects when the resource declines in abundance. As evidence of this^ the direct relation between the decline in abundance of haddock on Georges Bank and the decline in the Boston haddock fishery may be noted. In an effort to raise living stand- ards in the Atlantic Provinces, the Cana- dian government has initiated and will continue schemes to raise incomes by in- creasing labor productivity. In the fish- ing industry this has taken the form of subsid for construction of small vessels, and loan funds for vessel construction. These plans, while not completely success- ful, have acconplished the immediate ob- jectives set out for them and will contin- ue in the foreseeable future. Although these subsidized vessels land groundfish which competes in the mar- ket with groundfish landed in New England, no direct cost comparisons can be made be- tween the subsidized vessels and New Eng- land trawlers because the former are too dissimilar in types and sizes, and in all cases are much smaller craft than those in the New England fleet. The processors to whom these subsidized vessels sell their catch do, however, derive an advantage in that -they can buy much of their require- ments from 'these boats and thereby save the overhead costs of additional trawlers of their own. To the extent, therefore, that the subsidy is used to cover costs \rtaich the processor would otherwise have to bear, and to the extent that the sub- sidy permits the independent fisherman to accept a price lower than would otherwise be possible without it, the Canadian proc- essor has a distinct and very real compet- itive cost advantage over his New England rival. 2, The Resources Biological studies of the haddock re- source on Georges Bank indicate that the yearly catch will stabilize at between 90 89 and 120 million potinds, depending on the effectiveness of the mesh regulation ^ich delays the age of first capture. This means that no matter what the level of ef- fort, in terms of days fished, the annual catch will remain the same, and any fish- ing effort in excess of that required to take this annuail amount will be uneconomic, high-cost fishing. Thus, not only is any fleet expansion not justified, but the pre- sent effort of the Boston fleet co\ild be cut substantially without impairing svp- plies, and more profitable operations would result. The ocean perch fishery in the Gulf of Maine has stabilized at a level of about 9,000 pounds per day fished, and is cjypable of supporting a fishery for medium and sireH trawlers. The large trawlers, however, must go to the more distant grounds, >*iere productivity levels are higher, in order to ins\ire heavy landings. These distant banks- the G\ilf of St. Lawrence, the Nova Scotia Banks, and the Grand B^nk - are also in the process of stabilization. It can be ex- pected that when they do stabilize, they will do so at a level of some 20,000 pounds per dsy fished, ^ich will be high enough to support a large trawler fishery. On these banks, however, the New England trawlers face competition with those of Canada and, more recently of Russian facto- ry ships. Thus, too intensive a fishery could lead to lower levels of productivity and consequent higher-cost operations. Without an expansion in the market for cod, particularly in fresh form, no in- crease in New England cod landings can be expected. Cod s\Q)ports a medium-sized trawler fishery which fishes primarily for the species and accounts for about hsdf the annual landings. The remainder is landed by large trawlers fishing primarily for haddock and ocean perch. Pollock, c\jsk and white hake are groundfish taken incidentally to the had- dock and ocean perch fisheries. The com- bined landings of the three are minor com- pared to those of the two major groundfish species and will remain so since the market for them is a restricted one. Red hake has been, and will continue to be, one of the major species of the industrial fishery of southern New England. The whiting fishery has, in recent years, grown in importence in New England. This is due chiefly to the opening up of a market in the Midwest amd to the increased use of whiting in the industrial fishery. Whether the recent substantial catches can be sustained depends upon biological s\ir- veys to determine if commercial quantities are available in offshore areas other than those currently being exploited, 3, Costs And Eamingb The New England groundfish "industry," is, in reality, a group of industries, each built v^Don a particular species. The had- dock industry is centered in Boston; the ocean perch industry' is centered in Gloucester and the Maine ports of Portland and Rockland. 12 tt/ For this reason, it is necessary to analyze each industry sepa- rately. The production units of the Boston haddock fleet - the trawlers - differ in almost every essential respect: size, horsepower, gear,ari particularly mana- gerial skill. These differences work to determine the profitability or lack of it for these vessels, but their effects are complex, interdependent, and mutually re- lated. Thus, the general proposition "the larger the vessel, the greater the likeli- hood of its being profitable" is subject to the exception of many Boston large- trawlers which are, in fact, very unprofit- able. The Boston trawlers examined generally face the prospects of falling receipts. Though expenditures have auLso been gener- ally decreasing, they are more rigid than receipts and hence have decreased at a slower rate. The biggest item of cost - labor - is fixed rigidly at 60 percent of vessel receipts less certain joint expenses. The "broker" arrangement, by which the crew is guaranteed $12 per man per day For exan^le. 12V This is true also in New England fisheries other than groundfish the scallop industry is centered in New Bedford, and the industrial fishery is the main industry of Southern New England ports. 90 regardless of the level of receipts, also operates to keep costs inflexible. At low levels of receipts, this guarantee is not covered and must be made up from vessel owner's share of receipts. The result is a loss to the vessel owner on the trip. Expenditures for gear, repair, and maintenance show a high degree of associ- ation with the level of efficiency of a trawler. Vessels with high levels of earnings almost invariably have greater ex- penditures for these items than do those with low levels of earnings. Thus it ap- pears that the less efficient trawlers suf- fer from undermaintenance because of their lower productivity. But this undermainte- nance makes the trawler less efficient and receipts continue to decline while other costs increase. The level of maintenance or under- maintenance shows its effects in the in- surance costs incurred ty efficient and in- efficient trawlers. The more efficient vessels are properly maintained and hence their accident rates are low. Consequently, they receive the benefit of lower insurance rates and decreased insurance costs. This was borne out 'qy the financial staten»nts of the efficient trawlers, all of which had no increase in this cost over the five year period 19^3 to 19?7. This inverse relation between receipts and insurance costs like- wise held true for the less efficient trawlers, again demonstrating the inter- relation of receipts, maintenance expendi- tures, and insurance costs. The experience of Gloucester and Maine trawlers has also been falling receipts and decreasing ejqpenditures. This situation is due mainly to the share arrangements in these ports, which differ from the Boston lay in that the crew takes a smaller share of receipts, and also to the large dis- cretionary element involved in incurring maintenance and repair expenditures for these trawlers. Although trip expenditures have been increasing on these vessels, they have had little effect on the percentage share of receipts available to the vessel owner because they have been offset by de- clining crew earnings. Expenditures for gear, repair, and maintenance on these vessels remained sta- ble over the eight-year period (1950-5?) studied. This fact is significant, since this was a time of rising qosts in Glouces- ter and Maine repair yards, and is evidence that these vessels, too, suffer from under- maintenance. Similarly, insurance costs on these trawlers have increased during these years - following the same pattern as on the less efficitint Boston trawlers - again giving weight to the agrument that there is a high degree of association be- tween receipts and vessel expenditures. Conclusions Based on the findings and analyses presented in this report, the following conclusions are submitted: (1) Basic differences between the New England and the Atlantic Provinces in- dustries in four respects account for the competitive advantages enjoyed by the latter: geographic location; struc- ture; organization; and, the economic framework within >*iich the two industHes operate. (a) Being closer to the more pro- ductive grounds of the Northwest At- lantic, the Canadian fleet can make more trips - and more productive trips - than the New England fleet, and at lower cost. (b) The vertical integration typi- cal of the Canadian industry allows the Canadian operator widespread discretion in controllijig costs and prices - a degree of control almost unknown in New England. (c) The unorganized trawler fisher- men of the Atlantic Provinces can exert little, if any, influence on wages and working conditions. Con- sequently, union requirements af- fecting costs are vinknown in the Canadian industry. (d) The lower standards of living and the degree of undereinployment in the Atlantic Provinces work to keep labor costs low for the Cana- dian operator. (2) The Canadian industry, ^riiich engages in a diversified fishery, is less af- fected by declines in abundance of a particular species than is the New Eng- land industry which is coinjosed of 91 groups of specialized fisheries, each heavily dependent on the abvindance of a particular species. (3) The Canadian subsidy program di- rectly benefits only the small trawler operators and not the large integrated firms which are the chief competitors of the New iingland industry. These firms benefit from the subsidy only to the extent that it enables them to buy the catch of the subsidized vessels and thus avoid incurring the overhead costs of large trawlers which they might add to their own fleets. (It) Foreign competition is an impor- tant source of the problems of the New England groundfish industry. Neverthe- less, the industry's lack of ability to adjust to diminished but relatively stable resources is also important. (5) To the extent practicable, the New England fleet should seek to diversify its catch and lessen trhe dangers of de- pendence on one species. Whether and how this diversification could be ac- cODq)lished will depend on a number of biological and economic factors. Its worth, however, has been demonstrated by the ocean perch and whiting fisher- ies in helping the port of Gloucester. (6) The Boston trawler fleet includes a number of marginal boats engaged in un- economic overfishing. Because of the limited resources which the Boston fleet can now effectively harvest, these ves- sels will be eliminated by the process of attrition which has been taking place since 19W. Thus, contraction rather than expansion is postulated for the Boston trawler fleet. (7) Not only contraction, but also con- centration is postulated for the Boston industry; i.e., the Boston fleet may eventvially be characterized by a small number of operators, each owning many boats. In any event, only in this way can the economies of scale necessary to efficient operation in this high-cost industry be accon^jlished. (8) The ocean perch fleet in Gloucester and Maine also faces contraction be- cause of the decline in productivity on the more distant ocean perch grounds. 92 Appendix 93 9U Tables for Chapter I Tables I-l through 1-16 95 .o 0) H r^ m ON t-t o> en o\ i-i ^ OT * ^ CO (« •w i-H u o 0) « a to 04 o >. Xi 01 T3 C i-i •o to c > 3 O •o P4 c CO <44 o v> oc (fl c T3 •rH c •o fl c CO CO 3 I-I O x: H • • JS la n H ■H >— ' -« »-l ^ CN4 >o »o CS CO 1 Omc^r-i fM-3'mi-iH'^''^ Oc^<^c^OOOaN4 ^ ON r^ cvj I-I o r-l t>- m m 00 <-! m ON lo CM -^ <}■ A M * A « A m ON O 1^ 00 oo r- .*co^fnmfO(Ocn-*>*-*mm>*m On *^ *^ CO '^ I— t <*> vO O NO r^ c*> •»^ en "^ C*> (*> O o u Pli o o o o cit ■p -p ^ ^ r*^»^f~u-(co(nfOOvOOO f-im\Ofif-iiHr^cNj^OON «*cNioomoooocnr-icscSr-i r-* CM vJ5CMO\vO-inOONvOeN4inCMCNeMrOinCMCMvOCNJ enONOONOOPOr^-Oi-tcMoovocovoONriiONOcM vOinin-*>3'-*NOvo-*«*cn<«ifO»*«o m^^ONr^p^OCMvOoocnoo cM-^.-i»Of^vo»*ONr^inr^poocMcofNJO\<*>f-i t«. fOi-iooOf^n-nOONfni-lvOi-irO p>.cOinc»ji-icMror^«3't*icnO'noo>noominfO ^^,-|,_|p^^,-|CMCM(M(M<-^r-lF^r-li-ll-l !>. 1^ I-I CO M !>■ I-I CM 1-1 I-I l*» «M CO CO O r^ CO ov 1-1 o o r» 00 n o r-i 00 00 in I-I iHCM<3Ni-l>-ICMOOOOONO O o ^ eMf>ONON\Oinino>cMr^inm i-iONOOi-iNOONtnoo^^ eoi-icM^CNJO'-ifn'-iNor^r* I-I I-I f'>t^r»cM>a-e<>r^(n»-iON»^incMPO in*vomcnmin>i>r*>incomf'i inenr^OOOv^voo^fONi-i r»or»>ini-iONiHinr^vo<*1CMCMCMrHi-liH t>.ON^-IC^IO^CMCOO'-llnoOO^I-IONO^C^Ol-l loo-jON^mr^m-jmoN^or^ooNcnvovOi-i ^cMOOmr^O'^OcMr*-*>*-*>*-»*>l'inininininininin ONOnOnOnOnOnOnOnONOnOnOnO\On<7nOnonC3nOn u o A 4 •i4 o u 4J -M CO rH ut M u 3 u a o o R o JS Q •o CO o c ^ 1-1 o (0 CO fa I-I c iM M >. -u OJ r*. V a> 0) m « 1^ 4J On U u CO r-l * 3 iJ vO ft, CU o m » a u ON -o (U 3 CO rH G z 1 CO -o CO CT\ r-l M a > en 00 o 4KoOvOi-iOir>Ocooco •*«*>*-*^-*covt•i-ONcoinvooNONO\o CM O vOoo\ovOi»»r»r««vnvOvocor-t koONvot*»mvo>^CNjiri m o\ W ( >^ ' >fc^ » ^ U I «fc,f -^j w»# W I - W I ^ > 0\O0Nf-l^rHOO00C0OvOcMONONCO\00<-l u HI (U C3ft« -o a c 3 9) U 0 > -r* 04 < U dt o <^ <-< r- >* ^ r-t O «r^vOvO'^vooo r>»oooNo<-icNifo^mvot^oo OnOxCvOnO^OnOnOnOnOnOnOn c o u CO o • m c O U 4J Q] to O *-v A U V U > « o /-nT3 (0 a •o « c 3 « O T3 O. 0 3 O O ^ a. o Jf 4J CNI >«/ >^ N 1-1 a> u N 1-1 (U s> 00 u u cd (0 o ^^ <4-l (A 0( 01 a C •M •H •o .a c m 10 •w ■-J b < u Ji u V (0 (0 01 3 c x: •r4 u ■o (8 c M 2 (0 <8 <^l O «) ■ M oa o ^-N •* 1-1 vO 00 4J & m »n 01 JfJ 4J 1H QOO CM 00 3 c 0) •H >. o u •o •o C 4J 3 c e (0 o to a i i-H r-t >j a N-' O J3 to m w 0) JJ •r* Li N (fl b U >t •H (U I-H cn n to (Q j: 0) 0) 3 u •o N u ■C s O •H et o o u (0 u CO S o OT CD to i-l 10 1 p-l "O 9 l^-i (0 0> S » 0 u « >«-l t4 •O -H J, CO l-i u c U U 01 -H CO (0 f-l 1-4 i-( 1-1 1-1 O V >• > > £ b [i] oa u S pLi -"l C\J S LA On H V 1 :S O LA Ov ■p H « m ig OS S ^ fH H 4 1 > t-- ^ TJ Os (D H -d ^ 5 O « t s- £ ^ o JS < -P ^ fe M m EQ t O CU ■p TJ § s o H u tto £ B I o s ^ >^ b B 3 s Vh Ti o n 1 1 o 3 s, O Xi n 5 m 1 a >^ •o B (0 J3 u x-i > ■H r-l -H C (U o CO J2 03 f-< Si > ■a i-i c c 3 o o o Si CO to r-l b 0) 1-4 M 1-1 < "O B P3 (!) U 0 o I-I g a e m 1-1 in m so 1^ ^ 1-1 <>j f^ •» M «t CSJ CSI P>) OO 00 rH O 00 fsl CM oo ro + o csi lA 00 (N lA r^ O o\ tn \o M M A * •* en r* •* r>- t7> vo >^ vO vO o\ >}• CM ON r«» + ON ON f«» m vo o CSl 1-1 o * M •« ON ON ON PL, i-l 1-4 I-l ON r^ CSl 1*. .. •i- tA 1 1 tA tA 1 1 v u > 01 4J G OJ o (U o c 3 01 o g <-l o « j: •o en c t-i n) to c (M o O 4J CO o 0( « vO c 1^ M r (0 u u 0) « 4J i-i w « J3 w < c a ig •a B c O CO 1-1 4J CO a C at o G H 4) a 4J B (U o z CJ CO (0 u 4J ;s > O CO O (0 ^ 0) O 0} T3 U) ho gJ »H .03 ^j fiivoi-4oooo>3'minvo m^jrHoofOirir-tinf^ fooop>Jvo*cnpnMcoocMcM CM -w Ot-4vocOCOf-) mojcMfncMcMCMCvies eo(»«)om-*=o-.inincM r*•>3■^0000<^eoo^c^«* CMCMCMf-icj\r-ioo or^«*vDOOr-ir<.fMu^.-i i-tooi~»i^\oioc»>fOfnco 4fMCMCN|CV)CM -p o u 0-, tS o o o • , H Ovomf^voocMoou^cn voocnirimcMosoovOo cx3r>.r^oot^vovovOt^r» en CM + ITl CM I I 8 m 1^ m u-i CM CTl vf r^ ^f 00 «a'inot«» CO 8- 101 1 TablB I -7 Age Composition of Atlantic : Fisheniien»s Union , 1958, Boston , Gloucester, ; and New Bedford Boston Qlouc ester Hew Bedford I Number Per- cent Per- cent Cumu- lative Number Per- cent Per- cent Cumu- lative Number Per- cent Per- cent CUBU- lative 71 and over 90 7.5 7.5 61i 5.7 5.7 27 1.9 1.9 61-70 273 22.8 30.3 160 llt.2 19.9 113 8,0 9.9 51-60 k6^ 38.9 69.2 267 23.7 U3.6 270 19.1 29.0 itl-50 260 21.8 91.0 316 28.1 71.7 kok 28.6 57.6 31-liO 9$ 8.0 99.0 2lt6 21.9 93.6 U20 29.7 87.3 21-30 12 1.0 100.0 72 6.1; 100.0 180 12.7 100.0 1,195 100.0 1,125 100.0 i,Uil4 100.0 Average Age 55 k9 hk Source: Membership files, Atlantic Fishermen's Union, 1958. 102 Table 1-8 Number and Net Tonnage of Otter Trawlers , New England Specified Years, 1947-1957 NEW ENGLAND MASSACHUSETTS MAINE RHODE ISLAND CONNECTICUT T( Dtal Year No. Tonnage No. Tonnage No. Tonnage No. Tonnage No. Tonnage 1947 565 24,628 52 1,295 55 638 70 1,041 742 27,602 1948 539 23,266 61 1,785 50 538 77 1,205 727 26,794 1949 538 23,041 55 1,817 63 824 63 975 719 26,657 1950 505 20,156 69 2,936 54 792 44 713 672 24,597 1951 525 20,422 103 4,364 104 2,091 63 1,343 795 28,220 1952 510 20,688 92 3,693 107 2,109 60 1,090 769 27,580 1953 482 20,466 128 5,480 107 2,045 59 1,037 776 29,028 1954 444 19,366 124 6,026 136 2,879 55 946 759 29,217 1955 412 17,173 94 4,643 120 2,541 58 971 684 25,328 1956 407 16,613 77 4,044 141 2,978 50 910 675 24,545 1957 407 16,747 70 3,458 129 2,720 43 801 649 23,726 Percent Changes 1957 From 19U7 -28 -32 +35 +167 +135 +326 -39 -23 -13 -14 Source : Fishery Statistics of the United States, 1947-: L957. 103 ON I H U T) CO •S-S • •••••••••• >*r^crioJCvjpot>.cOfO>-iiA • •••••••••• OOOOOOONO>OvO>ONOO>Os \DOOOOvOr-CTsCOOOOONsO • ••••••••»• iHiHCSCv|CVJCM4(Ticoco«o<>» «v|«vlCMP^IC>ICMi-li-tiH0>4c>icvJoovOi-i«;J'COOO irtinooc\vovooNO\o>vOi— I ooo^p>.l^|lnmme^JOt>l■-' cyvONt>.ft«^oONO iAcMcMtHi-iooc>jaNcnoocn .Hi-H(?\oor>.vo>^in fM(N^r-li-li-ll-trHi-HrHrH oooooovOvOvor>-voiOtrim 13 O 4J 0) 0) o • b (U eo u 1-1 o in 2 r-t (U w o 4J « ct-l r-t •H m t-< "O ^^ l-t 1-4 1-1 3 g •O •H c "O CO v Q £ c» 00 1-t to In • »\ CO U (U 0) 4J > CO o jj CO u o -o (U CO u c 1-4 o C u 1 s> 1 in u V) ja O u h 00 M u TJ V V u i-H CO •r4 a CO a M o J >M 1-1 o 1-1 g ^ •r4 > 0) CO o>3 a « •o c 3 o 1-4 J3 j3 (0 to 00 X 1-1 1-1 H tM b M CO 4> 3 0) ji O W 4J o CO 1-1 •o c 3 O l-i o hi to « r»OmWNr»oOi-*r>oo t»»*vOi-ic>ji-4tn 00 r» *vOP^i^ eno-sl"f>Jto-*r«.von»mo> C4CMP>JCMCMeM«Me>4C>JeMC<4 O m O 00 -rj J-O O 00 OS 00 tn CNJ cNj ooi-HtjNr^oooooo • ••«•••»••• IHc^lO^l-^\O0^o^O^00r-l 1-1 iHenfOinr>.i^ir>meMtnmo • ••fr«O*94«0 jcj>voc?>vomiHrgoAr-lOOOO^'-'t7>CN| lf\oo aooo''-'>-:Jr>^'Lr\i-l 0\0n OslXSvO 0\oovO>-ioo'Lr\oovO • •••••••••• CVIr-ll-lt^_d'^^CVIO\CVJC^r^ O1A0000n-\i-H0000NO0Oli> ^CM/-l\OOr^NOO^C--<*A OS ON Os ON Os On On On On On On vONOOPlC»»CMNO«M\Or<.ooOiHi-t • ••••••■••• vOvOmvOvOON00r»00ONO\ to (noo^^mcorocMCNivo iHi-ICM^inOOOOm ^^-p..<^oo^ooo^<^>*•t "f^CMi-Hr-lr-Ji-li-^i-tfMC* ^l^<'>i-IOOOr^«*)CnIi>^i-4i-Ii-»«nJ vOt^NOr-r-t>-lrviAvOir»vo ^nON<^vo^n\o■u^oo«*l-l(^^ •-li-Hi-lfHi-lr-li-l>~l<-li-l'~4 eM-*(Nj'moNir»oOr— ooco CN|C^r^CMCNlCMCMCMj-1,-)i-l i^oooNOi-4cN(n.*«ovOf>" On^ONOnOnOnOnOnOn On On ON i-H I ON ij to u CO •o «> 4.> 1-1 t! 3 4) 4J M-l O a o iH 4J CO u •g u l-l 3 o CO 106 Table 1-12 Value of Groundflsh Species Landed in New England, 1957 „ , , . ^1.000 Percent Haddock fotl86 55,3 Ocean Perch Cod Pollock Cusk Hake 5,088 1,941 775 105 318 18,413 ?.7.6 10.5 4.2 0.6 l._8 100.0 Source: New England Fisheries - 1957 Annual Survey - Fishery Statistics, Number 1909, United States Fish and Wildlife Service. Table 1-13 Value Distribution^ Haddock and Ocean Perch Landings, Ma^or New England Ports, 1957 Port Percent of Value of Total New England Haddock Landings Percent of Value of Total New England Ocean Perch Landings Boston 82.1 3.3 Gloucester 6.6 49.6 Portland 2.0 26.2 Rockland 20.8 New Bedford 6.8 - Other Ports 2.5 .1 Source : Fisherj r Statistics of the United States , 1957. 107 I M JO (U H CO m 0\ b O {It •c p 03 c CD OC c •o CO V ■J CO 0) u 0) a a o U U o •»- (0 0) 1-1 > •a c a m l-l b a) c 3 O o 00 fO •tf f^ t-i >ri p>4 o in vO vO O •4' vO ON ON f-t >J l-l * fn ^a- in ON 00 •* m A •« (« n >-i NO CN) r^ fO -=f l-l o» o r^ tn •* <»■ CN4 CO V /^ •o 0] c m iH O 00 )^ l-l CO ^ p* CM m ON CM to -* n m -* o NO ON ON O f— i l-l l-l CO NO 04 M «» A A l-l 0t I* sv eg _) vO M (0 l-l •H l-l fa 0' •^ l-l CO l-l < •o c <: -* 00 CJN CJN l-l ^ I— I \0 NO CO r» CM NO NO CO n •% A •« at CO O l-l NO NO CM CO rH ON ON r-l CM l-l NO nO NO CTN N CO NO <}• O W NO ON r». -^ m CN| r^ CO -* m •O u u Q y oo z m M CTN CO •o rH V G •rl CO • U l-l y b y j: « .a 10 u S •A 0) y b y y y y iH 3 Q (0 O ■rl r-l r y O CO u y y M •H [^ C >-■ ^ o 0) o 4-1 ja o CO CO O ■H 14H CQ U< o • • y y b 3 O CO 108 < M Si pa u n 3i •«^ O O 0)r-j PUi-H 9 O U O B a. ^ CO ^§ 0) rH O a (D o u CL, a o o I U C4 O \0 O CM CM (n i-( o O CT> CO CM 0» i-l ON CN tH r>» i-< 00 CM CO («« CM in 1-t O 00 0> C<« O vi- csi in 1^ r-l u 0) 4J 0) (U u 3 (0 O o ^ n o a o •a o (U z o o 04 a2 n ^ ^ ^ ^ 53 :ii rH ■H ID i-H ;a « n «H 13 o 9 1 XI f-l (Q a -H i> ^ p< fl) en ^1 r o-\ a o . . o «a vt 3 o o (d CO > ^^ •nTJ T) 2 u B o o a> o S o 0) •P o SB 75 I H Q> O 109 ^/^ en n ^ a) 30 LA CO rH Tl § 0\ CJ\ to r^^ •p 43 =1 -P o ^1 d si O (1) Fh 9* C4 ^ s CO 0) Tt 3 § CO 10 Tl 0) (D (h -P lii< •H ti P o u (D Xi P O O P o E-t 10 •H O O P O «H -P tl O O © E-t O M Q) O Vi (D P-. Of t3. o CO © •H tl P o -^ o OooO^'^'Or-l O-d'l-ACJ • ••••••••• cvivo^i-AOsr-i ooor-o •H iH >-l CM ^ vOi-IOsr^CJvtACNJOOr'^oOt^ MDoOOsrr%OsCMa3C\JOOf— _^ \0 vO OO l-A -H-\rH i-H -d' -3- C^ CO O ^d' ^O O f»^ MD rH _::t CN O C^ t~~ OC -d' VO^O-dCVIrHCKrHt^XAr-ilACMVOrHOJrH rH_:j_:l-p^Vnoj_:JVAr^,^4 O f-C\l Os rHCVJr^CM-dCVJCVJCVjCJ CVjr^OOOONCVlcCcJrHvOr^Cri^CVlsOCNrH OC^OJ UNCNO CJMXvt^^rHoOCJ r~_d''LAcvi-:Jao-d'CMvOc\i OsCyvO CJsCJsO\OsO\ooONCO^-v01AsO'Lnc^C~-C~-^ r^MDrH_::trH'LAC--rH c— -:J'>-rvCMlJ>c^O'Lf\00 OOsf^ rHt~-0Of»>lXA^vOr^C0 0\C0rHQ0(NQ0CNOrHOrH -^vO CJvsOOQOr-ONCJs^sOCM'LA-ZjrH O-^COf^O Os Os Os ^ \f\ rr\ r-i -zt O 0< r-\ Osr--^ C>.rHvO O\0pfn r-i rH CM-d_:t'^-»-dJ^'lA'LA1A0O OsOsCD O 1^ rn CVJ OrH_::}rr\vO OsrHrrvlA[^oOvOcO i-HUNOO-^OrH O._;jo^ C^CVi-:a'vO r-OsvO r— vO 0\0 c^CM^O rHcoo^ CO r-OssO rrvlArHrH 01-At^_ctrH OlAvO O r-rHlA ONONOssOvO-^o^OsVArr^t^vOOOCO n^ t--OCOrHU\ rHrHCVJ_d_3r^XA_:;f\O0OO CNrAr^fn_a-NO rH rH rH rH rH rH OnOiH C\Jfn_:*lAvOt^aDC3sOHC\Jr^-::f}AvDt— pO ro-^^ _::t-::tI3--::J-iJ-^_d--^1AVA-LAXA lA LA X7\ ia UN OsCJNO. OsC>vOsOsOsO\OsC7nOsOsC>sCJ\ OsOsOsOsOs s 110 Table 1-16 United States Supply of Groundfish and Ocean Perch Fillets, 1939-1960 Tear United States Production Inqjorts y Total Thotisand Percent Thousand Percent Thousand pounds 100,I;82 of total pounds 9,892 of total pounds 1939 91.0 9.0 110,37U I9U0 90,6Uii 90.3 9,7UO 9.7 100, 38U I9I1I 122, 58U 92.5 9,931 7.5 132,515 I9I42 105,173 86.3 I6,67li 13.7 121,8U7 I9I13 86,562 8U.1 16,323 15.9 102,885 l9Uh 108, 63U 81.6 2U,5i;6 18. li 133,180 19U5 126,372 7U.5 ii3,l69 25.5 169, 5U1 I9I16 126,730 72.0 i49,171 28.0 175,901 19li7 115,507 76.7 35,093 23.3 150,600 19^8 137,758 72.0 ^3,^6$ 28.0 191,323 19i;9 1140,078 7li.6 klyVl 25.U 187,855 1950 136,593 67.3 66,U68 32.7 203,061 1951 lli8,786 62.8 88,196 37.2 236,982 1952 132,662 55.1 108,008 hk.9 2140,670 1953 112,280 55.1 91,571 hh,9 203,851 195U 122,391 li7.1 137,625 52.9 260,016 195^ 105,157 IU1.7 130,068 SS.3 235,225 1956 107,138 U3.6 138,7m 56.U 2U5,852 1957 96,650 U0.6 liil,180 59. U 237,830 1958 99,07U 37.U 2/ 165,531 62.6 261i,605 1959 , 91,133 33 oO V I81i,837 67.0 275,970 1960 3/ 93,793 37.6 V 155,551 62.il 2ii9,3lili 1/ Data from the Bureau of Customs, 19li8-1960. 2/ Includes inqwirts of frozen blocks and slabs. 3/ Preliminary. Ill 112 Tables for Chapter II Tables II-l through 11-19 113 CO •o a a a u <0 H U1 m « •o a a CO o -o c <0 (Q (U z a o m 3 I U n U U c c <0 i-< ^ > 4J O < u J4 u •iH (U en Z B 3 CO u o o ^ ^ CO > 9 o .^ z « >• -p P! Q O »4 • • u • 0) frl !=! c <0 .-1 •o c g s K JJ CO O •O (3 CS (M vO • • • CS «* r<. ^* «n iri • • • • vO tn lA t^ m •-4 o m i-H m (>• \0 ^ fj .^ vO CO I>- Vt O tn VO Q^ •* O vn o i/^ CM tn o m i-t •* -* en 1* pv A « ft M *< T^ rH O \o O m r* r*. ft ft * iH 00 CM 00 N o\ ^4 • • • • r-( sJ- tn en r-l en CM a> en ^ en • • • • ON CO iTi en i-ivOinvni-.^p*0>*oofnvor». r^t-HCMcn-a'OOirit-ics ftftftft ftftft* vOcnr»(T> envOoo^t oor««^cM oen0 1^ CM CM r^00CMt^r-i.*O-*e». -l CO <^ 00 vo en CM O lO <3 00 en 00 ft O o ON CJN CO § oo o CO tA * vO 0\ men..N0030r-4^^r^OVO ^ fn CM a cMcM.-ir>.o»Hino moor^OiACOr^cM . 1^ r^ i-H en CM CJN -:* 00 t-i • • • en en"Lf\ 1-4 CM p". r^ O \o in en n -* c^ oo en CO CM ejN • • • CM r- «n«*CNION-3'vO CM vo CM NO vO en oo , (U o 00 o 4J ej l-t M -^ M a •H U 3 3 4J h PU •H CO ^ CO h u (0 . m f>. ft ft •-I 1-4 o i-i en o oo • • o o o !-• r-t cn en NO m <^ NO ft ft 00 t^ St )^ 0) 1-1 4J o 5 I H a o u O U O C •H (0 01 c CO a o 0) 0) u c > o c 1-1 CO c 3 M ca § 3 O u CO CO > o z c CD u CO u j r» CTv • 9 • Oi r-4 (*1 1 fO O m CM >— 1 r^ O ^ > vo m vO -* CM <-* fO 2 00 r>* m d m O vO 1-4 M * S cn «* r^ > kM r^ PO • « OO CM CO On m :?; iH CM o\ CM cd •« « > fn | iH «*• >* CM rH <^ 1 ^ CO vO CM iH A » CO cn (Ti > 1-1 00 O O o o o fO o o CO o> 00 O o CO O o 00 e •H (0 (0 (U u o u at Ck b (0 0) 1-1 M . «n <^ o o PQ CO ►< to •o a a (0 o 0) o M 3 O CO 118 Table II Relative Importance of Fishing -_6 and Fish Process ing in Labor Force. Atlantic Province s and New England 950 Total Labor Force Total Fishermen Fishermen as Percent of Total Labor Force New England 3,845,879 Maine 342 ,442 Massachusetts 1,938,611 Maritime Provinces 419,000 Newfoundland 105 ,000 23,434 9,725 10,380 30,239 21,100 .6 2.8 .5 7.2 20.1 Source: Fishery Statistics of the United States, 1950 for dat in lini a on employment in fishery and fish processing. United States Census, 1950 for labor force data. Fishery Statistics of Canada, 1950 for employment processing. The Labor Force, November 1945 - Janurry 1955, Don fishery and fish on Bureau of Statistics, Reference Paper, No. 58, for labor force data. 119 Table II-7 Employment in Total Manufacturing and in Fish Processing, Selected New England States, and Atlantic Provinces, 1956 Manufacturing Employment Percent in Area Employment in Fish Fish Processing Processing New England 1,508,000 1/9,917 .7 Maine 110,000 1/4,607 4.2 Massachusetts 711,000 V4,626 .6 Newfoundland 10,361 2,735 26.4 Prince Edward Island 1,769 448 25.3 Nova Scotia 30,218 4,381 14.5 New Brunswick 22,434 2,570 11.5 Atlantic Provinces 64,782 10,134 15.6 1^/ Yearly Average (including wholesaling). Source: Canada Year Book. 1957-1958; United States Bureau of Labor Statistics. 120 0 u I z XT la m 0^ (0 (U u c > o u c T-t 01 c fl u 3 O eg oc 0) 3 •o c u Q f-i eg ca 00 S <«4 4J t4 o X a r-< 0) O S «> 3 4J O M f-i u 1-1 M (3 tg J3 U CO > tz« V] M « 3 -w _ Z m S 3 -4 a OS to A CO 01 60 to 3 to a> 4) o i- [I] (30 a <4-i >> c t-l 01 •-I 0) o S o> 3 4J a CO »-l O 1-1 < CO to ^ M to > til CO H V O 1-1 M U M 'O (U CO to a 00 60 >W c o ^ 3 « r-l CO to > ta to CO U 0) o e J P« t-t «o 1/^ o\ o • • • • OO i-« 1-^ CM C>4 CM CO CO CM 00 fO vo •* c^ O m CM r-l CM • CM • cn Ooo O^rH* ,-1 r-l r-t • r-t O m r- ^ • • • • •* * r-l m • • • vo ■* en fT, 00 '-' • • • U1 f^ r^ CM >~* oo >t U1 r-l CM >-l 0\ CO VA r-l trt rH vO •* 0» \0 iTi cn »n CM CO o ■UN vO (O CJ\ ^ «* CM \o CM vO 00 CM fO CM to 01 rH •o 00 V jO 0 u c V to to 0) iH xa 4J C Oi to o 0) O TS 00 a 00 CO ta 00 f4 c c o e (Xi 9) •o (Si u to fH u •rl o B > CO ^ w -o •O 0 « CO Wi 00 to <-t a u rH s'-i •M CO P4 rH M (Xt^ rH u 0) 3 •rl 0) 4J !U 4J jQ to 0) Ji a jd fl 4J t4 IH c 3 S 4J D. rH to 5 U 3 b ■r4 a< •rl CO •rl 3 -n 10 3 l-i u M J3 P4 h< CO 09 b 0* P4 CO CM tfj ^ vO 09 •r4 M u 0) 4J jO CO 4J 3 O TJ B CO u M ►J aS r.) H < CO P rJ O < z H M O H CO B « H) 3 O •* «> x: H • « CO U tH U to •rl 4J 10 4J CO rH UH o to V •r< 4J rH to ■i a M 0( B •H 3 • CM 4J V0 u CM to .-« in ^ a a ai <-* to as t-A ■« to CO jO u 3 a 0) 10 N 4J fl 1-1 "O o « a* 3 M 60 O '*■' ■H o a 01 u <-t (U Qu O. B o <0 m u 0) .O 00 (U 3 o- 03 o u CO CO 00 cd > o u O to r^ 0» IT) C Oi -^ 60 c s 0) CO Q n o I o _ w z in p^ 00 t i-H 0\ •k «k NO o CM CO n O- 00 • ^ •5' <*» •o rH M •» l-i iH 1-1 m -vf %i 1-1 o ~* CM s Q o u 0) vO 3 >-> - C o in I o • t-l o ** f-t z •o a Q •• i-t O "O ** S I 3 o o a 00 CM vO O CM in r^ 0^ r» CM 1-4 CM CO CO M at <* 1-t 1-1 CM vO O i-( en a* en O O O ON 1-H m ON CM 00 -* so » >* 1-t • « en m * 00 cn • • vO 00 r«« o en NO rH en CO 00 f-4 m 00 CM vO 00 m f<. lH O m CM «n CnI CJN c^ 00 ■^ cn vf m in u 0) I z (U ^ 0) >. >» 1-1 "0 •o b 1^ 1-1 O ^^ 4> ^^ u •H 3 (0 •rH 3 (0 w IS CO CO 4J Ji £ jO (0 3 4J u 3 u O CO 3 M to 3 o O 2 ^.§ 1-1 u u U 4J 1 o A 00 u V m t 00 c e 14 4J to O u z CO 0) 00 >• c CM CM \0 ON NO f-* CM NO CM 00 3 3 C9 3 S 00-.-S/-N •r4 0] ^ U V Q ti JQ oj n "5 5® w g^ Is ■rt >> CO •o ^ •^ 3 CO to 3 4J CO 3 O J3 JS ca ^ ,^/-N a> CO 3 0) >. CO S -ff^ iH 14 3 H CO CO .O 4J 3 U e CO 3 it o 15 5 s» gto 53 > ■P C •r4 3 0) CO -a d 3 4J O CO 3 iH O 4J ^ ^ CD u iJ CO 00 c B a n 9 ^ •H o f* 3 H i4 J3 a Id .o 0) O ft (1)0 P-. 3 3 (0 .o C -H " o 4) 10 0.2^ a« 0) 3 to CO 3 iJ CO 3 o a 0) IS Ji IS -"O l>> IS «n B ON cs r-4 U I tM O CM m la ON V iH 1-t U M Q f* i CS <<4 (U O CO 4J 0 B •H « B w « M r-t IS 4J CU < « Q 09 " U IS h a CO IS| CO 5 B • B c> m •.4 U ON ,J r-l 00 *> BO). 0 -rJ fl r-l J>i •6 OD 18 eo a U IS 01 04 u 15 o O 1-1 «*4 n u o cd ^ *i CO CQ B o • i4 M « 4j M a IS » b u X)_ f^ CT» o oa %D r-4 fH eg r-t o o . z a O O f*j a 2 C o C O Q O « "^ *^ p C >-J o ti C bit Q tn -rl m »-5 O^ t-5 T3 C •> «) C Q CO 5 o t-3 CO ^ z 1^ or a o o I O CM Ov CM O CI -cr yO O 1^ g S ?! r^ CM CM vO O 00 lO 00 m cN a m r- ■ ii • 0\ CM lO CM en rt c^ \o r~ h» 0\ CM CO CO O r«. ^ * 00 (O s r^ in CM o CM m O 00 -» -J CM in -3- -< CO ^ ^ ^ ja -a N 0042 43 O. ^ S S 126 Table 11-14 Comparisons of Average Weekly Earnings by Provinces and in Subsidized Fishing Operations , Atlantic Seaboard, 1957 Net Cash Annual Earnings Size Average Crew Share Prorated Over Class Weekly per Man Ent ire Year Area and Type of Vessel (Feet) Earnings per Season CCc il. (4) -52) Dollars Dollars Do i Lars Newfoundland 1/ 61.75 61.75 Trapper-LongLiner 30-40 59.15 1,641 31.56 LongLiner 40-50 47.51 1,354 26.04 LongLiner 50-60 35.15 868 16,69 LongLiner, S.C. 50-60 54.79 1,672 32.15 Dragger-Seiner 50-60 50.14 1,960 37.69 Nova Scotia 1/ 56.13 56.13 LongLiner (Swordfish) 50-60 70.98 3,284 63.15 LongLiner (Groundfish) 50-60 40.33 2,072 39.85 Dragger 50-60 57.98 2,686 51.65 Dragger 60-70 71.18 3,249 62,48 Prince Edward Island 1/ 50.45 50.45 Dragger 50-60 55,91 1,896 36.46 New Brunswick 1/ 57,35 57.35 Dragger 40-50 44.78 1,307 25.13 Dragger 50-60 61,23 1,786 34.35 Dragger, B.F. 50-60 63.54 3,036 58.38 Dragger 60-70 72.56 2,221 42.71 1^/ The figures in this line represent average weekly wages and salaries reported by firms customarily employing 15 persons cr more. Source: Table 10. "Employment and Earnings by Provinces", Canadian Statistical Review, February, 1959, Volume XXXIV, number 2, page 21; Operations of Modern LongLiners and Draggers , Atlantic Seaboard, 1952-1957, Part I , by John Proskie. Economics Service, Department of Fisheries of Canada, pp. 16, 28. 127 Table II -15 Numbers of Fishermen, 1937-1957 (In "Pious auds) Prince Maritlmes Nova New Edward Quebec Year Newfoundland and Quebec Marl times Scotia II Brunswick Island 1/ 1937 20.8 44.6 35.3 18.1 13.9 3.3 9.7 1938 23.8 46.7 35.9 18.5 14.1 3.3 11.2 1939 23.6 45.6 34.8 17,5 13.8 3.5 11.2 1940 21.3 44.4 32.9 17.6 12.4 2.9 11.9 1941 17.4 38.2 23.7 15.1 11.2 2.4 9.8 1942 16.5 35.4 26.3 13.5 10.5 2.3 9.5 1943 18.7 34.0 25.8 13.4 10.2 2.2 8.6 1944 21.0 34,0 26.6 13.9 10,4 2.3 7.8 1945 23.2 34.7 27.6 14.4 10.8 2.4 7.5 1946 24.5 38.3 30.0 15.9 11.1 3.0 8.8 1947 26.3 34.8 28.9 14.5 11.1 3.3 6.2 1948 26.2 35.1 28,9 14.9 11.0 3.0 6.6 1949 25.0 35.4 28.8 14.9 11.0 2.9 6.6 1950 21.1 36.5 30.2 15.7 11.6 2.9 8.0 1951 19.6 36.4 29.5 15.6 11.2 2.7 7.0 1952 17.8 32.8 28.2 15.2 10.3 2.7 li.6 19^3 16.8 33.3 27.9 lli.6 10.5 2.8 5.8 1954 16.3 32.0 27.0 14.9 9.3 2.8 5.1 1955 16.0 31.5 27.2 14.2 9.6 2.9 5.1 1956 15.0 32.0 26.8 lil.U 9.)4 3.0 5.3 1957 16.3 31.7 26.1 15.3 7.8 3.0 5.6 1^/ Includes small numbers in carrying smacks. Source: Newfoundland, p. 150, The Commercial Fisheries of Canada, Royal Commission of Canada's Economic Prospects, 1956. Maritimes and Quebec, p. 68, Canadian Fisheries Annual - 1959, National Business Publications, Limited, Gardenvale, P.Q. Others: Fisheries Statistics of Canada. 128 Table 11-16 Comparison of Percentage Returns to Vessel Ovmer, New England Union Lay Versus That on Atlantic Provinces' Trawlers New England 1/ Newfoundland 2/ Nova Scotia 3/ Boat A Boat B Gross Receipts Joint Expense Gross Crew Share Gross Vessel Share Bonus and Commissions Fuel and Ice Contribution to Vessel Overhead 100.00 3.75 57.75 38.50 3.85 34.65 100.00 37.50 62.50 7.80 26.50 28.20 100.00 100.00 2,10 1.10 35o70 36.70 61.20 62.20 7.70 7.60 16.00 21.70 37.50 32.90 1/ 2/ 3/ Theoretical lay without considering effect of "broken" payments. Average of seven vessels results 1958. 1957 results much the same. In 1956, however, fuel and ice costs were only 21.8 percent of gross revenues and, hence, contribution to overhead was 33 >9 percent. Based on two vessels only for 1956. Need further data. 129 (3 H •o c f-l CO 01 r-t 0) -0 u a 0) 3 > O U-l - o >. Id c ^ o •H 4J -o s c A CO 1-< r-l h 01 4.> c 03 bl •H Cj 5 0) t-l 2 m 3 CO 4J U u (U < 1 c o <— 1 •H (U ts 4J 01 CO 3 0) OJ A lU J= iM > >4 u o 4J c o 4J s o u CO -o •o c CO CO c >> CO fH i-H -• c*> m en fn en 00 "^ f-< CM en • • • • • en en en CM CM en en fn en en ff> r^ CM m a\ «M r^ o\ o> f* en cjN 00 t*. (M en P^ rH CM rH en CM rH lA VO Cvi evi CM O 1^ ^ CM i-t fH O 00 o\ • • « • • ^ <^ ^ cn en r>. r^ r>» o O • • • c • f^ C^ ^ y^ ^ 00 O 00 • • « vO r^ r*. m • O <-t O ON O • • • • • «* «» vr c^ •* f-i CO •* en t^ • • • « • 00 r*. r>. .^ iTt en en en en m u-> »-i CO CM r^ r«> r*» vD vO vD en en en en en m «* li^ CM CM CM 00 ON 00 r* CM CM CM r^ CM r* r«» iri CM m NO \0 vO SO NO en en en m en o o o o o • • • • • o o o o o o o o o o o o o o o • • • • • o o o o o o o o o o o o o o o o o o o o • • ♦ • • • • • • • o o o o o o o o o o o o o o o o o o o o en ^ m NO r<- ir> m «r» i/> in CTn ON On On On en >* lO nO r^ lO m u*i in in On 0\ On On On CO h 0) ^ , 0 CO M t-4 PQ 0) 0) 4J •o CO C e CO V OJ vt •H > 3 r^ 4J o •o o B cu a u O u 3 en 4J b o CO (M NO r«. 00 cd NO h- O J3 » m m m > m m (Q 4J (U On ON ON o ON ON 1-t en N X) -3- cd Os w rH a) • bO n ^ t H^ o pL. t3 § (U X3 ^ o > >H o (D u pL, (^ C! o ^ rH > J3 0) +> ^ c o rH K a j2 •H CD O g .9 © ^4 s (U -p (« «n U CO o ■o T5 (0 0) <4H 00 -H M r-l CO ca a a o o u u n o r-< o a o 4J CO S » r- CM 0000fs!csjr*.0 \oiAmiAiA»/^u->ini/%iniAvo O CO rH CSl O O tM f*> u-i r«« •* \o »o o vo 00 r«. (^ CM >• m i-< ro (no^Ox^«o^ooo^OOrHCMCM ooooooinmmooo oooooot^f>-t>.ooo (n CTv CO O r-l CM to iTviALomiOioOiriirifOinm oo vOvOOOO00ir»O-*v0>*-lo^•ovooo o^co^-vO\o»o^nr-t^c^^»oo (4 >^ U Xi U O O 3Wiu-r) .3uoa;(u C^)HU>,CrH00O.4J>U rH rH •o •o o O •H •rJ >d M > o o • CO CO o ■i| O o o 3 >> J3 tT C ». c3 M 1—1 -o M B c 3 tJ O u & at CU Z T3 c 01 CO JS 1—1 u TJ B •a 3 6 O M y-) IK :% 0) X Z CO •--1 'a <*.\ c Xl cd Q 3 0) O u s u (4-1 s O cfl >J 03 M • e 4J •H CO '0 c U-l (D o hJ U-l 1—1 3 a •o a in s (U o tu a 2; z fa B CO • r-l r>. 4J r-l < 1 vO 4J 1-1 CO QJ • 3 a X! & u Vj O • S CO in B 0^ O 1-4 •r-l CO « CO CO •1-4 •r-l s U D o o o o CO fH CO CO > B o o a iH 4J •V CO J^^ B CO U U-l » 1-1 u-1 3 r-t c tn rt OJ .^ 0( o M o O -o c; TD o rt a e o x) M o >4-l u o 05 w (i! C •u M-i •O ra C n) 0) .-J o: Vi ^ (0 a l-J o XI u "O c en tL, s >% U-( CO 0 u p u f^ 0) o PM •o ^ x; CO , J2 CO CO O •■-< fa CO <-l XI CO i-H 4J o o H O O ■p r-l B Ti CO §g 0 Ih C H 0 W P^ 'M ■V o u u CO 43 to C (B-U ffi Pi to 00 rH )-l CO O ►J O O i-i .0'-io>cMro^ovOOoou-ir-icr>cMcoocnf^oocTNCOOi^f^'vO<3NONOoi^i-.f^in r-< cnc^lfMcn>voooocou-iLn r^ oor^r-^oocxjr^'.or^ooTiOO-d'fO'— 'r^ovomLri<)'r-Hvt^^CMrv)OCMncn.av<}-o oocntOr-tomONin cN o^c»•d•^f>ocor^co i^- i~.in-d-m~d'r^c30r»r^u~)vOinommvoco 000.oocMmt-< -oco>— lo<}■c»^m>iD^»omc^c^^ooc^lm^»~comvoo><)-LncM-vtcNi— ir--ONmcorOLn»cj\03vocor^(Tico c\iOvOOfOvuvocscicy>cscNirocj\^ r^OOOOvtmcsiocM mONCO-^cNincvicni— i<-<<)-\D'-iin»i— la^cJ^v£>d-LnLnvom\oininin i-i rocx)Or^o'inoj 0'-icTsr^fnincxDOCMOvOcoo.Or>«<}•LnC^lvO^H(3^u-lO'-l•-^ <^ cvj ro in CT\ O C30 C3N r^ eT\ C3^ On r^ in m o r^ !>. i-H 00 csi r-H m i-( r-l csjcMfOfOvfcMin^d-m in i-< r-H I-I I-I cs 0.<)-ini^OvtoJ'to«vfm<' c30i-)oor^»r^r^\0^vOinLnvOinintn co GO r^ ^ in in ■ct >* CO m » (3\ en .-0^(^Jrof*»>.Of— iin»^4'-imr-r>.fMO\O.|>.rH(7\«;J- i^vOf'im-r)\OinvOvO\Oininoovocx)vo^>^f'>rocM<*>fMroj r-4 (Nt*>» ro tncomcof»itncnfnvf-^3'^ u und3) Year Large Haddock 1946 10.55 1947 8.71 1948 9.95 1949 8.81 1950 10.65 1951 10.61 1952 10.69 1953 9.57 1954 9.40 1955 7.81 1956 7.96 1957 9.67 1958 11.87 1959 12.13 Scrod Haddock 9.61 6.51 8.44 6.90 6.83 7.58 7.68 7.94 5.90 6.11 6.67 8.24 11.08 10.58 Weighti ed Average Difference In Price, Price All Haddock 0.94 10.35 2.20 7.96 1.51 9.27 1.91 8.02 3.82 8.52 3.03 8.89 3.01 8.92 1.63 8.7^4 3.50 7.42 1.70 6.93 1.29 7.31 1.43 8.94 0.79 11.48 1.55 11.37 * - The auction price at which the catch is sold. Source: Annual Summaries, 1946-1959, Market News Reports, United States Fish and Wildlife Service, Boston, Massachusetts. 11^1 Table III-8 Changes in Per Geori Day ^es Bank Haddock Fishing Effort , , 1931-1956. in Effort on Catch , Annual Fleet Landings , Annual Fleet Catch in Numbers Years Average Catch Per Day In Pounds Average Total Annual Catch In Thousands Of Pounds Average Annual Catch In Thousands Of Numbers Average Number of Days Fished 1931-1939 1942-1945 1947-1956 10,267 17,502 13,474 80,756 92,735 86,310 31,484 35,593 40,082 7,257 5,290 6,516 1931-1939 to 1947-1956 Percent Change +31.2 +6.9 +27.3 -10.2 1931-1939 to 1942-1945 +70.5 +14.8 +13.1 -27.1 Source: United States Fish and Wildlife Service, Woods Hole, Massachusetts. Table III-9 Taylor Basic Study of Effort /Catch Relationship Georges Bank Haddock Fishery Fishing Effort In Days Effort Before Mesh Regulations Level Annual Landings Catch Per (Per- (Millions of , ^ ^^ , cent; pounds) (Thousands ; \ of pounds) After Mesh Regulations Annual Landings (Millions of pounds) Catch Per Day (Thousands of pounds) 1,827 3,653 5,480 7,306 9,133 10,959 12,786 14,612 25 50 75 100 125 150 175 200 70.7 92.5 96.6 94.2 89.7 84.8 79.7 75.1 38.7 25.3 17.6 12.9 9.8 7.7 6.2 5.1 73.6 103.8 115.5 120.7 122.0 121.7 120.8 119.4 40.3 28.4 21.1 16.5 13.4 11.1 9.4 8.2 Source: Excerpts from unpublished manuscript of Clyde C. Taylor, Fishery Research Biologist, Woods Hole, Laboratory, United States Fish and Wildlife Service, Woods Hole, Massachusetts. Iii2 43 o u 3 o CO 0) o o T3 n C ra oa 03 a c o 4J o at C J! 03 O en .-1 Hi > hJ U3 3 O •w CO > 03 u ■-I CO H M 01 4J 4J O . CO o -o vO r^ u-l f^ CN <3^ vO < 45 a 4J !U M S ■i-i CO >' D u O a H 4-1 m 4-t C 4-1 o CU h 4J 03 o CO u ja CM c M 0) ■~i* m M rQ B M e 03 o >-i > 3 >> i-i Q) s CO O fa fa 03 V4 4J Id a CO CU o —1 CU CU M ^ u tH 1-1 M § H fa > )d z U-i CU >^ O si P3 Xi o u CO a M 00 u •f-i > c u CU IM H ^ o to •o >. CO x: CU 1-1 Q 03 T-l fa X! CLI H o u >, > 4J ,'a CU CO 0) CO 0) 1-1 3 ,Q C4 x: fa C e 03 C 3 14-1 •W >v -C Z O fa m t H 1 '^ H O 0) (D c Vl >. CL, (D «H (D > -^-^ O W -3 CM CO <,"• rOvOOc^-i«xiOOCOC3-i 00000vJ-<)-0 0000CX)C30C000CJ\O ^^>^^lLO^/^u^C3^e3^u-| ul LA lA iJ^ ul m vD P^ n-cj-i— iiA-vti— iOr^oO-«S' ncoinocvit— ioctn r»0•-^cMCMc■^lcMr-l f>»mO\DCOCT\\OCM CM m CO O C^'l U~l fX3 1-4 OOvOvtmi-HCT^I^^O i-icoinr^^cTNOcN-d- inoiAOti'3 01'^0 cMmr^OCMmr^O 1-1 f-l 1-1 I-I CM a> 4J CU d) CU u u 3 o iM3 Table III-ll Number of Haddock Tr awler Vessels by Size - Boston, 1947-1958 Over 150 50-150 Under 50 Gross Tons Gross Tons Gross Tons Year Large Medium Small 1947 59 28 30 1948 52 24 30 1949 38 24 32 1950 39 24 31 1951 38 23 29 1952 38 22 24 1953 34 23 20 1954 34 27 16 1955 31 24 14 1956 30 28 11 1957 30 33 10 1958 28 36 8 Source: New England Fisheries - Annual Summary 1957, 1958, by John J. O'Brien, Bureau of Commercial Fisheries, Market News Service, Boston 10, Massachusetts. lilll H M <^\ /-v ^ |4 t) r^vo<}-OcnOr-lu-i r-^ -P 0\1A 0) 0 o. cn--o • U ^-\ 4J OOOr>-coOC7^c^ ft VH n •« M M n 0) n vO^OvOvOO'»O^D\0 ■'B CO- «3 pCi^ - Kw C cu ffl „ * § -p 03 B "O F R< V o 0 rt C iH fn PQ CO .r4 0) c^vo^d-omooDin 0) ft O X! Eh 0) 4-J J en*— *coo^^OCT\ "2 g D U OOor^cni)u-|<3-oinocNjLO «H O f^ •r) e r-ICOr-IO'-HO- W CQ ro C C2 vOrHvfCNCninin^O ^ ftft««Aftft»in .- r--'.ocr\LncMOONoo CD 0) t — € Eu P-. ^^ ^-r^ o to en CM 1-1 i-l .-H I-) mOOOOO"-lu-| u dJ 4J vocMLnoNr>.inmeT\ •♦^ p & 03 M 0 COi-lf^CMCX)r-IOO< ID cu Cd CO a -3 > i-H CQ voocT^cncaoocncsj ci a 1^ to 4-1 U O 1) in^CMCMi-(i-Hr-li-l to- gS5 i^ ji H CLi «8 O T) (/ "5^ «) -P o 4J (0 t: CD rH m CO rt -H •H •3 -H CO c c £ u CO TS o 0 ; cr^c-lo-d•cNOcnr^ t= a > 3 ^ m -.^ c vor^cnr-cMOvOv}- JR 2 „ 1-4 CO) r-l Q. • ••••••• & =* s 2 0) q 1-1 H r-< t cu iw c*- vD o ■p ft< S c ^ !9 *^ di Et d o o 09 a> C ■p c (0 h O ch u 00 O CQ o ?• o C 10 Vr s •^ c >4 ta +3 Q) [d "O O CO d !::. S C 1 C -M -T3 *d "^ <'^ 3 «> CO n-( C vO(X5Lnr~Oi^oo<}- nj T o o 9 > J -H 3 • ••4««*a O ai k 5 1-1 ■!-( O cicncnocNi-ioo^ C §* ^ r-H 0) '>-> s: Pd r-sO<-< (0 4J U CO (U 0 M ^ CQ rHCNCn^cna-cn\orN.oo 9 CD O 0) • ■p M 3 M-< -p 3 O •O KJ <« 03 C d C HI t. ^ WO u M J3 0) ft O PQ CO ft-H W ti 0) M JJ -H t^cnoocnc^vocM tn 0) o a ■a M M fa CMinOOOcnu-lCOrH •Q ^ 2 , r. •S O oo ^ . .-(cnu->r^cj\ocvj^ g Id CO ■-H rH r-l o Q 0) ID C ft ^^|Cl o 0) ca TJ «^^o" 0) U f-l J '"^ PQ »^ I* J;*. -S 0 s» ^ 9 ■p O h ffl « <^^ ^. ICMl rol lliS /— « ~^ U C 9 4) S OS 0 (h n S WO fl) Ti W ^-' ^ -P o 0 lA bf C Tl /-\ g 2 I-I S a r-i 0 4/ x: OvOfO>-ivo~*^in 0 M CO ^ OOOcy>vOvOOOiAvO ® O fH 00on 3 '-' M«AM««*M ^ 2 tw § 00CM00m• m a U s •ti "^ c iJ *" t4 (U V4 •2 •§ ji z CO CO S S m .tAMMMAM* ^ 's en ;0 M S C3^C^^C^^lACT^^OCO t-H 0) tO kl M C:0O^cOO^^Ol/^•'Jc'^ 1 D H CJ lU CM r-l M M 45 M 0 CM <«• » d M 1-1 e 4J n 0 W 53 •.-1 z ^ ^ a> > ffl m cO i-i u 0 "O ^ 4J to *^ t. (Q CO Q M H «H ^ 0 P< 0) O 0^0^0^0^0^0^0^0^ c X^^ 9 rO fOTO CO CO CO CO «*1 P • CSj CB U M|0 v> .^ -ea- 4) »*-!>. rn CO j3 01 CO CO h O Q U P3 CO u a u c« a a 5J S Vj sti^i CJ g 0 fl 8 (» to 1 p< 0 Shar 7.75 Gros \0 0 0) rH «H >, 0 ^^ a 13 0 -a \A '-^ ^^>^O^fiQ•>*^'nCJ^ O^O^OOf^»Cr^"^ 0 -t^ -9 ^ » ^^ch a) 3 to 0 xl 0 '-^-::r 0) OS rOvO(X3mO>CMO»-l fn 45 C M*A*«k«»** P< h 0) $ C5 fi &. fl) 0 -B , eo J- e CM fl CM a 0 © C 60 0 5» § * -e S © to l3^S5 4J r^ I ^ ii ai^-*' M^ S-2^ inoiAOirvOino CMl?Sf^OCMu-(I^O >1 ^ M *"^^ rH r-l r-l rH CM IkS 0) s JS u O U < (U o 0) a J= c o 1-1 4J .-I (U c a i 0) 9 a > u ^ •r4 o O U u /-> 01 (^ 0) -w o H n o ~: Q c o c ■« O H M O O a. C VM ■ — , •f-i M o '-'1 u H W UJ 01 c U 1-1 CO o {■1 • r-j r-) do, ^ O -H 0) S .-I O u u 0) c3 JS o S IS 3 *< <" fe "tJ U.4 m PL, O Ed oooooooo OOOOO -JOO oocooooo inOlAOu^OOiA iri(nu-iO>-i,qcm-* <)• vO csi t^ U\ CM r^ oooooooo oooooooo oooooooo .^ A at •« m o tn o A M •« *« in o O m r-l tn « -J rH 00 * •! t* m .-1 CO CM •« A '^ M r-l CM eg ro Of vo CM r— I o <^ L.'i . iri m lA to csicicococ^rococo (TivOCSIOODOr-ICO Of^vfr^t^f^l^vD >:t'tOvOOvD*«OvOvD CMOOOOCMrOrOCMrH v£)ooo^OOOOO \Doomr^or>.oo^ <»^comO(Ni-io r^Oi-fCNCMfMCMf-l i-tCMt»1. o m t.5 LTl o CM la i^ O rH r-4 I— I CM .a S{K° tS w 4? :^ ^ iki Table III-15 Poimdage Needed To Make A Return On Investment Of 10 Percent, If Price Is 8^ Cents Per Pound A. In the case of a new large otter— trawler of same size as the ones now in the Boston fleet : Let y = revenue necessary to make $23,750 before taxes. Overhead = $75,000 Trip Expenses = 65,35 percent of gross revenue then, y = .6535y -*- 75,000 + 23,750 .3465y = 98,750 y = $284,993 At 8| cents per pound, this is 3,3^2,8^8 pounds per vessel. B. In the case of the smaller large-trawlers now being designed: Overhead = $61,000 Trip expenses = 65.35 percent of gross revenue then, y = .6535y = 61,000 = 14,500 .3465y = 75,500 y = $217,893 At 8| cents per pound, this is 2,^63,hhl pounds per vessel. Iii8 I TJ O C in O " CO a 1-4 c to cs\ a H O B O O in en CM ■to- c tfl s t-l 1) o u o 03 bj H 1 ^ D lU K CQ o H foO'-' ON a\ ON o^ 0> o> a\ o^ C ' CO 00 00 CO CO CO X) CO UCMCNfMCMCNCMCMCM b''CM\OCMON0O,^ror^ Jii'rO ^ sO t»» ON rH rO <)• r) . . . (U M to ^ H M 3 1 o z 1.M (Lc •wl Ml o H C (U (U > 3 W C I > ^ (U CO M m oooooooo t-(.-li-lr-lr-lr-(f-li— I (NCMCMCMCMr-JCMCM •H c X! u to u CJN CM »0 f^ O o vd" U r-l (U i-H PM -H n I ^ 0) (D C <5_o vO>*rOCMCMi-lr-(f-l moinomomo cMinr^Oc^mP^O rH i-t r-( 1-1 CM a' C 'a'•^^ c <1) > w I to (1) CCJkJ olo H o o m o •• H (U > r* W (U I u oocncnrOfOfOcOtn (7sCTvONcricrvCTs<7>c7N oocooooocooooooo r-(r-lr-li— ll-(l— ll— lr-( CMCMCMCVJCvlCMCMCM '.£)r-»0<}'<3Nroooo • ••••••• cMfOinv£)r~- CO (U (1) (iS u CQ OOOOOOOO J3 CJ 4J CO CJ o m 1-4 0) o a) ;-) c 1 \^f~^ W I OCMO-CfCMOOt^ ^r^mi^cM*rnCMCMr-(rHt-H u % o o o in O m o CM in r^ o O in in o r-« o t-H CM C u 3 u c CO 4) M CO M (U O in CM o CO 0) X! > o o O O vO 0) ?• in o r». XJ _ c c c o o o "O ^d "O 0) l-l ■nl a T3 >\ 0} a 0) (0-0 3 00 a c oi x: (0 ■^ to ft. M l-l J3 to 4) >; a) O 3 >« o > JJ O O C n) < CO x: 4) VM M CO u •H iw to O rH b Ci] > VH -rJ CO (0 O 4J o e >" 0) en 0) CO C B OO Q CO 31 CO -^ CO O U JS 3 Ph 0) o o ^ > u Xi '*^ ^ <: to H O ca (U ^•^ M 'O « -o •P C -H to CO •P CO u U CO O e W t CO 4J to o t/1 0) Vh >• l*H W ^ M >, to to ^ 0) 1T1 t> TD MQ C CI •S to ^ CO 3 ^ l-l M jC to O r M 0) y 3 (X (^ g > ■U O < to X! iw Xi (0 OHO o ^ (0 v.^ p C 01 •^ (D CO M •o pL. CO CO •o ^ T-l to to CO u o o > 05 O -H Z 4J M CO to u (U w >< >^ en ,^ 0) eO -O CO 00 Q C T3| to ^ CO C ^ J3 to 3 M u O pu X < CO J3 ;^ U H >« w o ta 0) •^ V h •o •o C CO v iw -w CJ CO i-l 4J o 3 to O -r^ 4J M CO CO u 91 w >> pg r>. r-l en in s* O •-I «* iri o CJ^ O vo ^ i-i m in l-l ro o C~J CM CS CM en fM CM l-l <)■ r» vt l-l O . <}• o m vD 00 •-< (Ti CM ve en >* vo m m o ejN •% A i^ « r-l CM CM i-H fi CM cn »* m vo f^ \r\ \rs xr\ \r\ \r\ \f\ \r\ ON On On O^ On On On o r-l r-l cn rH r-l vO O rH CM rH o l-l r-l vT) sO CM r-l vO • • • • • • • • 00 r>. m * cn CM cn cn osm^oNCNejNiTiin • ••••••• cMioooi^cnincMco rH vO r- rH cjs CM OrHcMcnvtmvor* mmineAinmmm ONOnCnONONONONCn i-l<3NrH<)-00e»f>.fN)fni-H»cnvofncMCMoocor».inc:Nc^vo vOOOC3NvOejNO-*CTN 00vOvOmp«.CM00rH cMCMen-S'OoooNr* OcMcnr^ejNONOtn \OCMi-HCntjNONVDON 00\000000<*CO CMcnCM>*r-r««\0 inrHrHrHrHrH cMfn«*mvor-»ooc3NOrHCN4fo r^ r-. NO OO <-i 03 (3N r.* r>. cn CM i-H vt vt o jinvorv.ex30NOi-ieMcnvt'inor». vtvt«3'^v}'-^-:}'~tminminmininin ONONONONCr«CTNONONOSONONONONONejNON 0) o •H 3 •> o 3) U o to 153 Table IV- 3 C )cean Perch Landings, By Gear, , VaLTious Tears, at Certain New England Ports (In Thousands of Pounds) Large Per- iledium Per- Small Per- Year Trawlers cent Trawlers cent Trawlers cent Total 1942 5,810 5.0 92,428 80.3 16,903 14.7 115,141 1943 5,246 5.2 83,206 82.1 12,875 12.7 101,327 1944 4,584 4.4 88 ,440 85.0 11,026 10.6 104,050 1946 23,118 14.6 120,499 76.3 14,327 9.1 157,944 1947 28,539 26.8 72,327 67.8 5,731 5.h 106,597 1948 69,631 36.8 114,730 60.7 4,690 2.5 189,051 1949 66,925 36.9 110,065 60.6 4,486 2.5 181,476 1950 43,809 34.1 81,343 63.3 3,360 2.6 128,512 1951 67,320 36.5 114,169 61.9 2,877 1.6 184,366 1952 51,125 39.8 74,834 58.2 2,602 2.0 128,561 1953 45,141 48.4 46,262 49.6 1,868 2.0 93,271 1954 47,928 47.1 52,881 52.0 968 0.9 101,777 1955 51,907 58.1 36,529 40.9 866 1.0 89,302 1956 46,580 54.1 37,954 44.0 1,613 1.9 86,147 1957 41,154 59.5 26,130 37.8 1,924 2.7 69,208 Source: Fishery Statistics of the United States, 1942-1957. 15U Table IV-4 Whiting Landings In Massachusetts and Maine, Various Years (In Thousands of Pounds) Years Massachusetts Maine Total New England Landings 1932 1933 1935 1937 1938 1939 1940 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 6,377 8,678 15,418 21,038 24,203 23,493 35,954 43,266 46,497 43,537 68,577 43,171 52,921 68,904 75,776 48,831 97,974 81,202 71,858 78,050 81,884 72,445 107,972 65,582 67,254 12 (1) 648 4,046 4,036 2,634 1,962 3,836 5,289 5,697 6,015 8,655 12,580 15,616 19,577 23,328 12,66b 9,319 25,128 14,835 15,810 15,522 14,019 7,201 9,419 17,415 22,480 25,095 28,055 40,869 46,870 53,997 51,788 77,664 51,080 61,981 80,468 90,036 65,464 118,467 105,955 85,365 90,386 110,630 90,090 126,312 82,140 82,961 1/ Less than 500 pounds. Source: 1932-1957, Fishery Statistics of the United States (Annual)} 1958 and 1959, New England Landings - Annual Summary. 155 156 Tables for Chapter V Tables V-l through V-19 157 Table V-1 Landings, Receipts and Trips for the Avcrap.e 200 Gross Ton and Over Vessel and the Average 150-199 Gross Ton'vessel. 1956-1958 (In Thousands of Pounds and Thousands of Dollars) 200 Gross Tons ?,ad Over ll 150-199 Gross Tons 2/ Landings Receipts Landings Receipts ^^^"^ (Quantity) (Value) ^''^^^ (Quantity) (Value) ^""^P* 1956 3 ,393. .2 ■238. ,9 29 2,437. .9 169. ,7 27 1957 3 ,190, .5 261. ,1 29 2,008, .5 143, ,9 26 1958 2 ,770. ,5 286. ,5 29 1,811, .0 190. ,5 27 l_l Average of 15 trawlers in each year. 2_l Average of 9 trawlers in each year. Source: Information furnished by the New England Fish Exchange. 158 Table V-2 15 Boston Trawlers 200 Gross-^ Ranked By Total Receipts, 1956-1958 Vessel 1956 1957 1958 A 1 11 B 2 3 3 C 3 2 2 D 4 4 4 E 5 6 6 F 6 7 7 G 7 5 5 H 8 8 9 I 9 10 10 J 10 9 8 K 11 13 12 L 12 12 13 M 13 N 14 11 11 0 15 15_ Source: New England Fish Exchange. Table V-3 9 Boston Trawlers 150-199 Gross Tons Ranked by Total Receipts, 1956-1958 Vessel 1956 1957 1958 PI 13 Q 2 2 5 R 3 3 1 S 4 7 T 5 U 6 5 9 V 7 2 W 8 4 4 X 9 8 Source; New England Fish Exchange. 159 Table V-4 Average Landings, Gross Tonnage and Number of Trips, Best and Worst of Boston Trawlers 200 Gross+ and 150-199 Gross Tons, 1956-1958 1956 1957 1958 200 Gross+, Top 6 Trawlers Average Landings Average Gross Tonnage Average Number of Trips 200 Gross-f, Bottom 6 Trawlers Average Landings Average Gross Tonnage Average Number of Trips 150-199 Gross Tons, Top 3 Trawlers Average Landings Average Gross Tonnage Average Number of Trips 150-199 Gross Tons, Bottom 3 Trawlers Average Landings Average Gross Tons Average Number of Trips 3.9 3.7 3.3 245 245 245 31 31 31 2.5 2.2 1.9 240 240 240 25 25 25 2.8 2.2 1.9 164 164 164 29 28 28 1.9 1.4 1.7 170 164 164 23 21 23 Source: New England Fish Exchange. 160 Table V-5 Range in Landings, Receipts, Activity, Boston Vessels 200 Gross+ and 150-199 Gross, 1956-1958 Millions of Pounds High Low 1956 1957 4.7 4.8 2.1 1.5 Iteceipts (Thousands of Dollars) 1958 4.2 1.3 High Low 340.0 390.0 137.0 114.0 Trips 400.0 121.0 High Low 33 33 14 16 32 13 Vessels 150-199 Gross Tons Millions of Pounds High 2.9 2.2 1.9 Low 1.5 1.1 1.1 Iteceipts (Thousands of Dollars) High 211.0 193.0 213.0 Low 108.0 118.0 Trips 103.0 High 30 27 30 Low 20 18 15 Source: Information furnished by New England Fish Exchange. Table V-6 Comparative Performance of Two Sister-Ships Similar in All Respects Except for Captaincy 1956 1957 Vessel A Vessel B Vessel A Vessel B Per Day Absent Receipts $880 Per Day Absent Crew Earnings $20/man Vessel Share/Per Day Absent $316 Source: Information furnished by operators of Vessels A and B. $759 $958 $835 $16 /man $23 /man $20 /man $291 $370 $323 161 ■P CO M 4-1 CM On en en m en ■* rH r^ r-l 0) u CM r^ en .-4 » • • • • • • • • • • • • • CM r-t f>. CM 1^ M CO iri 0) xj 1-1 F CI en C30 00 rH .* c^r«. r-A o Os 1 (D dj • • • • • • • m • • fO p4 CJ en On en en >* -=J<* r-i f~ r-l in 0) CM en en r-l f^ o> rt OS rH ^ iS'S + CO O CM <}• m C:N 1-1 CJN >3' \0 CM CM CM r^ rH (^ o CO en m m o OO l ON U-> CNj <-i O 1-1 (O O O ■S " £M u -^ CO ^H CD m.^ 00 m cn rH m 00 l«» >* J^ a> CJ • • • • o • • • • • 4J iri r«. C30 in CM f^ On <}■ rH r-l rH 0\ 1 en (3> O CM l-^ > O 03 1-1 • US 0) u ; 0 !o f— ( 43 CO 4-1 CO CO 3 a jj H Ci-I CD o u CO O i-< Qi CO ^4 . CO U U ^ • • • • • • • • • • • • • CM 1-^ (U lO CM ^ c^ lA o 00 C3N r-l m m m r^ lA >N o 4H 0) PU cu • • • « • • • • • • 0£ Di O <-< en * O r^ 00 o • • • • • • • • • • • • • en •-> c in en vD V* rH O r-l CJN r-l en en r*. -S \o iH ON CO vO m r-l 1-1 CJN en rH r-l T-* OO c f— ( rl CM 1« en r-l 1 K CO u u •rl 3 e o CO C CO ca o 4J •H 0) ex. c a •rl rH CO s, Vl (U o X U (U o CO '^ -n CO CO CO 00 8. o O x: u (u H u CO c -rl g rH CO t) 3 CO rH CO U > 0 • • CO O. CO u 0) rH •rl (U N 0 O u cd T* a 3 O 0) U ID O 01 (U cu C a <0 •o O U (U 0 pL. erf H S CQ > CJ) Q M M CD <: H o H a Cfl 162 H p«. 2 in i-H cr. 3 r-l 14^ 1 « m CD in o o> u r-l u 3 *• (0 + jg 9 o U U4 o O o a' o o CM c cfl •> C CO VJ u o 01 4 3 0) n) 04 M H (U en C <9 o u iJ (U en > 0 < « 4» •5 O r^ CM in o -d- r«. • • • • • • • • • • • * • CM >H VO i-l in O <}• vO so r» r» 4J o CM 1^ so OS CO r^ CO vj- CO 00 00 CO OO Csl sO CM 1-4 OS CO t^ 00 CM rH (0 4J 0) a T3 1-1 c * CM . . O -* sD CM <-^ CM O O OS r>» CM sO •* -* r-l CO r-l Csl s O Q M ft* u c CS C O u iH c -< •rl Cfl S w •o o «a- <3S vD in CO CJN CM >* O rH vt r^ • • • CM rH CO O rH rH NO CM » r^ « CM rH 00 r» r» • CM rH CM (A w o I-) u o <4H o u 00 c eg CO 01 iH OJ CU )H ^ OHO CO U O 4J CO u u u 3 o CO 163 Table V-9 Boston Trawlers 200 Gross Tons and Over Assoclacion Between Vessel Receipts and Gear, Repair and Maintenance Expenditures, 1953, 1955. and 1957 V. J53 - Rank 1955 - Rank 1957 - Rank Vessel Vessel Vessel Receipts Gear, Etc. Receipts Gear, Etc. Receipts Gear, Etc. 1 1 1 2 1 1 2 2 2 3 2 2 3 3 3 1 3 3 4 4 4 4 4 4 5 5 5 5 5 5 6 6 6 6 7 7 7 8 8 8 8 7 Source : 1953- -1955 data furnished by United States Tari f f Cnmmi ssion. 1957 data furnished by Boston large trawler owners, 16U f^ CO u-l ^ ON a ■-I i-H 1 1-4 CO in cS t4-l CN O l-l o U) * 4J w CO i-H C ■o 3 o c to H CO 4) 03 Ci w 3 w O c o u ^ T-( O 4J -a n) ON c n 3 O M nj W 01 u ■o PL4 H C oco-^ vO eo «n O -^ in r^ rH rr\ r-H oc^m vo-*o>inoococo r^rooo ojvoinr^cAvOdvo fn 0 COCOr-40U-|vO CO i-t 00 XA <£) tn sO CMi-tr^OCOiHOOCM m CM iH m CSJ CM C-i -) to C dl m cn 00 CO m m CM t-l lU ta (U o. c >H CO ■o a a a> (0 Q. X c a o 4) U G .-• . O CO 1-4 HI ,4JB'lJ 0) -H Vj C 1-1 (U 1-1 to CM m 0 0 0 m O- (J\ 1^ rH CM r^ ON • vO m o\ m ^a- \o s^ rH fH «' vO m in vOf-i cMcT\inONini^ /^ • • • • « • • • • • « « • •* \D m r». cn vO 0 vO 0 m CO cyi cn r^ cn • CM r-l cj vD CO r» m CM m cn CO <-! y^ OOlAtX) 0\iCMeMr-i •-icMcn i-icn*rH mO c3no\vo . m (M 1-1 HZ« >C>QMaiM o H CO M (U c 3 o t-l 01 § X) •o U 3 O CO 165 Table V-11 Boston Trawlers 15 0-199 Gross Tons Association Between Vessel Receipt s and Gear , Repair and Maintenance Expenditures, 1953, 1955, 1957 1953 Rank 1955 - Rank 1957 - Rank Gear , Repair Gear, Repair Gear, Repair and and and Mainte- Mainte- Mainte_ Vessel nance Vessel naxics Vessel nance Receipts Expenses Receipts Expenses Receipts Expenses 1 1 1 1 1 2 2 2 2 2 2 3 3 3 3 3 3 4 4 4 4 4 4 1 5 1 6 Source: Data for 1953 and 1955 furnished by United States Tariff Commission; data for 1957 furnished by trawler owners. 166 o 88 r^ CM o o o o so r-l o o o o «n en m 1-1 r-l O /-s O O -I o o o o o U-l f-l O O o o CT\ CM o o o o «r( CM ON H O O o o o o o o o o o o CO ^ U 4J H a\ 00 !0 eyi o^ CT> (U C3^ ~a- 0) r-4 in y f-l <-i B 1 r^ 3 1 1 M-l O 1 O o in « m o r-t m CM i-H in U) iH t-l CO u O in ir, lO ON m OS CM in OS •-I I o in OS oc c s 01 C 1-1 c (0 oc c 1-1 •o a CO I-) to C •o c <0 00 \o «»> >* O fO Ov 00 m vo rH O 1^ Cvl o <*» OS >* • • 00 v£) 35 OS en 4 • OJ in o 6C • • c en <» •H en m "O OS rM c * M CO CSl i-H hJ o o 00 P>> I-l oo CO r*. O -I O <» ■cJ- V r^ vO 00 en en -ct * OS CT\ •^ m <»■ «* O ro • • 00 CM vO ^0 in o CN) CM OS CM 00 oo >* «* • • en CM -I >t in OS cn CM CO CO C B o o u u CO CO CO CO O o M |4 00 00 CJ\ C3S CTi .* r-t I-l 1 o 1 m m CM r» yO CM 00 • • • • CM <» 00 CM ^ 1 -t cn 1 ' + 00 r^ oo m • • • • O C3\ * 1-1 r-4 I I I-l o o o o o o o o o o o o o to CO »4 m CO B t> B 3 O en rH O O u B S 4J U CO O CO u cn u Vl CO CO at CO H CO CO r-l O 0) o o » Vl CO ^ u u CO 00 o cu 00 00 u u 4J H OS 00 CO C7\ OS C3S u Kl 3 O CO 168 I Table Y-lh Per Vessel Receipts Gloucester and Maine Trawlers, 1950-195V (Thousands of Dollars) Annual Average Annual Average Maine Trawlers 1950-1952 1953 I951t 1955 1956 1957 150-199 gross tons Percent change from 1950-1952 lii6.1 llli.it -21.7 116.6 -20.2 im.o -22.0 87.3 -ltO.2 lltli.O -1.0 50-75 gross tons Percent change from 1950-1952 ek.i 52.lt -18.3 lt9.8 -22.3 lt7.lt -26.1 lt6.6 -27.3 52.9 -17.5 Gloucester Trawlers 150-199 gross tons Percent change from 1950-1952 i73.lt 103.0 -liO.6 U2.8 -35.0 118.7 -31.6 128.8 -25.7 112.5 -35.1 125-li49 gross tons Percent change from 1950-1952 li*7.3 91.2 -38.1 120.5 -18.2 101.1 -3i.lt 113.5 -22.9 109.0 -26.0 Source: Information furnished by trawler owners. 169 Maine Trawlers 150-199 gross tons Percent Change 50-75 gross tons Percent Change Gloucester Trawlers 150-199 gross tons Percent Change 50-75 gross tons Percent Change Table V-15 Average Total Costs Per Vessel 1957 Gloucester and Maine Trawlers ., 1950- (Thousands of Dollars) 1950-1952 1953 1954 1955 1956 1957 135.8 118.6 -12.7 126.1 -7.2 119.9 -11.7 108.0 -20.5 121.7 -10. li 58.2 47.7 -18.0 47.7 -18.0 45.4 -22.0 45.1 -22.5 50.5 -13.2 160.2 108.1 -32.5 121.5 -2I1.2 123.6 -22.8 117.7 -26.5 119.2 -25.6 139.3 96.6 -30.7 124.7 -10.5 105.3 -24.4 113.6 -18.4 110.1 -21.0 Source: Information furnished by trawler owners, Table V-16 Average Annual Trip Expenditures of Gloucester and Maine Trawlers, 1950-1957 Maine Trawlers 1950-1952 1953 1954 1955 1956 1957 150-199 gross tons $1,318 $1,815 $1,860 $1,890 $2,065 $1,900 50-75 gross tons 292 333 365 343 372 377 Gloucester Trawlers 150-199 gross tons • $1,563 $1,820 $1,915 $1,784 $1,980 $1,770 125-149 gross tons 1,418 1,444 1,485 1,305 1,104 1,135 Source: Information furnished by trawler operators. 170 Table V-17 Vessel Expendit ures A£ ! A Percent of Vessel Receipts , Gloucester and Maine Trawlers , 1950-1957 1950-1952 1953 1954 1955 1956 1957 Per- Per- Per- Per- Per- Per- Maine Trawlers cent cent cent cent cent cent ( 150-199 gross tons) Trip and Joint 18.1 28.6 28.7 32.3 35.5 31.6 Ret Crew Share 42.2 32.3 37.3 28.8 25.4 29.4 Bonus 3.6 3.7 3.9 3.9 3.9 3.9 Vessel Shtare 36.1 35.3 35.0 35.0 35.2 35.1 Gloucester Trawlers (150-199 gross tons) Trip ari Joint 19.2 30.0 28.9 27.0 29.2 29.9 Net Crew Share 42.4 37.5 33.9 36.1 34.2 34.0 Bonus 3.8 3.8 3.7 3.7 4.3 4.3 Vessel Share 34.6 33.8 33.4 33.1 32.2 31.7 Maine Trawlers (50-75 gross tons) Trip and Joint 13.4 19.1 20.5 22.4 23.8 21.2 Net Crew Share 47.4 42.2 40.0 38.8 37.3 40.0 Bonus 4.3 4.0 4.0 4.0 3.9 3.8 Vessel Share 34.8 34.7 35.5 34.8 35.0 34.8 Gloucester Trawlers (I25-IU9 gross tons) Trip and Joint 21.4 30.0 23.3 27.1 26.3 27.1 Net Crew Share 40.4 34.6 39.4 37.0 35.9 36.9 Bonus 4.2 3.8 3.4 3.7 3.7 3.9 Vessel Share 34.0 33.7 33.8 32.2 34.1 32.2 Source: Information furnished by trawler owners, 171 Table V-18 Per Man Earnings, Gloucester and Maine Trawlers, 1950-1957 Maine Trawlers 1950-1952 ; 1953 1954 1955 1956 1957 150-199 gross tons 50-75 gross tons $6,900 6,100 $4,600 4,400 $4,700 4,000 $4,100 3,700 $3,200 4,400 $4,200 5,300 Gloucester Trawlers 150-199 gross tons 125-149 gross tons $6,700 5,700 $3,400 3,600 $3,800 5,600 $4,300 4,200 $4,900 5,100 $4,300 5,000 Source: Information furnished by trawler owners. Table V-19 Average Annual Expenditures for GeJr , Repair and Maintenance, Gloucester and Maine Trawlers. 1950-1957 (Thousands of Dollars) 1950-1952 1953 1954 1955 1956 1957 Maine Trawlers 150-199 gross tons 19.3 15.4 17.7 15.6 14.7 15.0 50-75 gross tons 7.8 6.6 7.9 7.0 7.0 8.3 Gloucester Trawlers 150-199 gross tons 22.8 16.9 21.0 20.8 16.2 18.7 125-149 gross tons 22.5 19.3 23.6 20.1 22.7 19.5 Source: Information furnished by trawler owners. 172 Tables for Chapter VI Tables VI -1 through VI -7b 173 u :i.;; Table VI-1 Average Landings By Large Trawlers, Atlantic Provinces and New England, 1956 and 1957 200+ Gross Ton 150-199 Gross Ton 1956 1957 1956 1957 Atlantic Provinces 6.2 6.5 5.1 4.7 New England Boston 3.0 2.6 2.1 1.7 Gloucester 3.1 2.8 Maine 2.2 2.5 Source: Data submitted by trawler operators. Table VI-2 Average Trawler Activity, Atlantic Provinces and New England, 1956 and 1957 200+ Gross Ton 150-199 Gross Ton 1956 1957 1956 1956 Atlantic Provinces Newfoundland 33 31 40 39 Nova Scotia 31 30 New England Boston 28 25 26 25 Gloucester 19 19 Maine 15 17 Source: Data submitted by trawler operators. 17U Table VI-3 Average Trawler Per-Trip Running Costs, Atlantic Provinces and New England. 1956 and 1957 200+ Gross Ton 150-199 Gross Ton 1956 1957 1956 1957 Atlantic Provinces Newfoundland Nova Scotia New England Boston Gloucester Maine $1,370 1,170 1,860 $1,400 $ 727 n.a. 2,080 1,540 1,990 2,000 $ 770 1,560 1,790 1,950 n.a. - Data not available. Source: Data submitted by trawler operators. Table VI-4 Food Expenditures Per Man For Atlantic Provinces and New England Trawlers, 1956 and 19^ 200+ Gross Ton 1956 1957 150-199 Gross Ton 1956 1957 Atlantic Provinces $26 New England Boston 31 Gloucester Maine $23 33 50 $21 30 35 40 $20 30 33 40 Source: Data submitted by trawler operators, 175 Table VI-5 Per Man Earnings. Atlantic Provinces and New England Trawlers, 1956 and 1957 200-*- Gross Ton Trawlers 150-199 Gross Ton Trawlers 1956 1957 1956 1957 Atlantic Provinces Newfounuiand $2,300 $2,100 $2,300 $2,100 Nova Scotia 3,200 2,500 New England Boston 5,100 5,200 4,000 4,000 Gloucester 4,900 4,300 Maine 4,000 3,400 4,000 Source: Data submitted by trawler operators. Table VI-6 Crew Earnings On Atlantic Provinces and New England Large Trawlers. 1956 and 1957 Boston 1/ High Low Gloucester High Low Maine High Low Atlantic Provinces High Low Range In Earnings 1956 1957 $9,000 $9,900 2,100 2,400 3,600 7,800 4,600 3,500 7,300 6,200 1,800 2,100 4,300 4,300 1,900 1,600 1/ Range in Boston is for the entire large trawler fleet. 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