A STUDY OF THE FLORIDA NATURAL SPONGE INDUSTRY WITH SPECIAL EMPHASIS ON ITS MARKETING PROBLEMS By JOHN VASIL PETROF A DISSERTATION PRESENTED TO THE GRADUATE COUNCIL OF THE UNIVERSITY OF FLOIUDA IN PAKTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY UNIVERSITY OF FLORIDA June, 1967 UNIVERSITY OF FLORIDA 3 1262 08552 3792 ACKNOWLEDGMENTS The author Is greatly Indebted to members of his doctoral committee. Dr. Carter C* Osterbind, Dr. Myron S. Heldlngsfleld, Dr. Ralph H. Blodgett, Dr. Charles W. Fristoe, and Dr. John H. James, for the guidance they have provided during the writing of this disser- tation. He is particularly grateful to Dr. Carter C. Osterblnd vho encouraged the vriter to undertake the present study and frcmi %rtiom the writer learned the first elements of the fishing industry. The author also wishes to express his gratitude to the many fishermen, packers, and distributors in the sponge industry, without whose cooper- ation much of the Information presented in the following pages would not have been available. Equally real is the author's debt to the staff of the Bureau of Commercial Fisheries, United States Department of the Interior for providing him with the financial assistance which made this study possible. Lastly, the author wishes to thank his wife for her encouz^gement and assistance during the preparation of this manuscript. 11 PREFACE The sponge industry In the Ifalted States Is located primarily on the vest coast of Florida in Tarpon Spring* Around the turn of the centuiry the indtistry vas established by iimnlgrants of predominantly Greek origin from southeastern Europe, and their old-vorld methods of operation are still being used. From the tiiae of its establishment until World War II the industry experienced an increasing amoimt of sales and prosperity. For example, during the 19l40's sales of natural sponges climbed to approximately $3 million annually. After reaching their peak in the early 19*K)'s sponge sales have declined up to the present time. Annual sales of domestic natural sponges have dropped from their approximately $3 million peak to an average annvial figure of less than $U00,000 between the ^ars I960 and 1963. Persons engaged in the btisiness of harvesting and selling sponges realize the existence of a problem, but they disagree concerning its causes and solutions. Some industry members attribute the decline in sponge sales primarily to the invention of artificial sponges, %rtiereas others see an inadequate supply of divers as the main cause of their predicament. Suggested solutions Include tariff protection, inq?ortation of middle-aged di-vers from the eastern Ifediterranean, and gc^'ormient support of sponge prices. Confusion and diversity of opinion prevent spongers fi^am taking steps toward a constructive solution of their problems. The bulk of ill the research that bss teen conducted on the sponge fisheries has eaqphasized the biological aspects of the industry. The economic aspects of the Industry have either been totally ignored or have been touched uix)n only incidentally. The purpose of this st\:dy is to analyze the neglected economic and marketing aspects of the natural sponge industry and to attempt to determine the r«al causes of its problems. With the exception of landing statistics there is virtually a complete lack of information on the sponge fisheries betveen the years 1908 and 1937. Inasmuch as no such vork has been \mdertakan before 1 an attei^ has been made to bring together, analyze, and evaluate all factors of economic significance pertaining to the Florida sponge industry at its various stages of production and distribution. Because of the scarcity and fragmented nature of the available statis- tics on the sponge fisheries, past and present data have been supple- mented by Information obtained throu^ interviews conducted with fisher- men, packers, and sponge distributors and by the personal observation of the author. For example, most of the material presented in Chapter III is based upon information obtained frcua a eaanple of better than 80 per cent of the diving craft operating in the sponge fisheries in the summer of I96U. Also, to obtain material in Chapter IV it vas necessary to interview the entire packer population in Tarpon Springs, Florida. The section on distributors is based upon personal interviews conducted by the author in Hew York and New Jersey. These Interviews covered 30 per cent of the total distributors in the Itoited States; however, according to trade association officials this 30 per cent sample is responsible for more than 60 per cent of the sponge sales at the distributor level. SlBllarly, the Information on the operations of the Tarpon Springs Sponge Exchange and the Sponge and Chamois Institute vere obtalzied through Interviews with the officials of these organizations and through personal observations by the author. Foreign ccaopetition and coo^tition by artificial substitutes have also been eicamined in order to evaluate their impact on the natural spongy industry of Florida. Information on foreign ccaopetition was obtained through correspondence with U. 3. Department of State officials in sponge -producing countries and foreign government officials of such countries. Such information vas further supplemented by correspondence and personal intervievs with U. S. Customs officials and International Trade specialists in Atlanta^ Georgia. Data on synthetics vere obtained through correspondence with home offices and interviews with the regional representatives of the major synthetic prodiicers in Atlanta, Georgia. Because of such factors as the very small size of the populations involved, the great length of time spent in contacting individual respondents, the language problem, euid the lengthy and vide -ranging nature of the responses, it vas not practical to attempt to crystallize the data-gathering lorocess into formal questionnaire form; therefore, most of the prepared questionnaires vere used loosely as interview guides (see Appendix A). The resiilts of the present study have led to the identification of the problems of the sponge industry and to recommendations vfaich, it Is hoped, will benefit the Florida sponge interests in the long run. At this stage it may be useful to point out that the recoannended coxirse of action nay not coBipletely solve the paroblsins of the sponge Interests In Florida; however, correct prohlem recognition is of paranovmt liiqportance in determining any futuire covirse of action for the Florida sponge industry* TABLE OF COMTEMTS ACKNOWLED(MEI>ITS il PEIEFACE iii LIST OF TABLES ix LIST OF FIGURES xiii Chapter I. II^fTRODUCTIOH 1 Historical Utilization of Natviral Sponges 1 Description of the WaturaJL Sponge 3 Ccanmercial ICinds of Natural Sponges 5 Qualities Affecting the Value of Natural Sponges ... l6 Geographical Location of Natural Sponges in the United States 19 II. ECONOMIC HISTORY OF THE SPONGE INDUSTRY 21 Historical Development 22 Early Period, 1895-1937 28 The Period from 1937 to 1964 h& Impoirtance of the Sponge Industry to Florida and the United States 77 III. THE PRODUCTION OF NATURAL SPONGES 8l Sponge Fishing Methods and Auxiliary Procedures. ... 8l Units of Operation 8^+ Dependability of Supply 9^ Comparison with Earnings in Fisheries 102 IV. THE MARKETING OF NATURAL SPONGES 107 The Tarpon Springs Sponge Exchange 108 Packers Ill The Sponge and Chamois Institute 123 Distributors 126 V. COMPETITION 1^+5 Imports 1^5 Synthetics l62 Protection and Subsidies l80 vll VI. CONCLUSIONS l8U Supply and Deaaand l84 Distribution Structure 193 Product Trend 155 VII. RECOMffiNMTIOKS 200 Marketing 200 Production 209 Ad^xxstments 211 APPEIIDIX A 215 APPEiroiX B 216 BIBLIOGRAPHY 219 BIOGRAPHICAL SKETCH 22? vill LIST OF TABLES Table Paga 1* Caamon Snglish, Scientific, and Foreign Names of CcHmasrclal Si)onge8 with Tbeir Soiirces of Supply 6 2. Weight, Valvie, and Average Price Per Potind of Wool, Yellow, Grass, and Other Sponges Landed in Florida, I895-I908 ..... ... 30 3. Percentage Distribution of Catch and Value of Landings by Method of Operation, I905-I908 36 k. Indexes of the Nianber of Craft by Method of Operation of Total Bstploynent and Investment in the Florida Sponge Industry for Available Years, I88O-I963 38 5. Semi -Annual Operating Expenses of k9 Diving Craft in Pinellas County, January 1 - June 30, 193^ .... kO 6. Fishermen Employed in Commercial Fisheries in Florida, Selected Years, I89O-I962 Uz 7* number of Craft and Eioployment by Method of Operation, 1895, 1900, 1903-1908 If3 8. Average Catch Per Hooking Craft, 1895, I900, 1903-1908 he 9. Average Catch Par Diving Craft, 1905-1908 kf 10. Weight, Value, and Average Price Per Poiuad of Wool, Yellow, and Grass Sponges Landed in Florida, 1913-I963 51 11. Catch of Wool, Yellow, Grase^ and Other Sponges by Hooking Outfits, 1937-1962 55 12. Catch of Wool, Yellow, Grass, and Other Sponges by Diving Outfits, 1937-1962 56 13. Percentage Distribution of Wool, Yellow, Gz^ss, and Other Sponges by Ifethod of Operation, I937-196I 57 ix Ik, Nvjinber of Craft and Employment lay Method of Operation, 1937-1963 61 15. Average Landings Per Diving Craft, 1937-1962 70 16. Average Landings Per Hooking Craft, 1937-1962 71 17. Percentage Distribution of Landings and Value of Landings by Method of Operation, 1937-1963 .... 72 18. Averagie Operating Expenses of Nine Diving Craft, 1963 "^^ 19. Quantity and Value of Landings by Comoercial Fisheries in Florida, Selected Years, 188O-1902 ... 78 20. Indexes of Quantity and Value of Landings by Com- mercial Fisheries in Florida, Selected Years, 1895-1963 79 21. Indexes of Production and Average Price Per Pound of Florida Sponges, Selected Years, 1896-I963 .... 80 22. Florida Landings by Months, 196I-I96U 102 23. Sponge Landings by Months, 1961-196*+ 103 2k, Average Price Per Pound Received by Sponge Fisher- men and by Fishermen in the United States, I9U6- 1962 105 25. Total Huniber of FviH-Time and Part-Time Employees of Eleven Packing Firms in Tarpon Springs, Florida, and Their Relationship to the Owner II6 26. Packer Sales by Line of Product, 1963 II8 27. Financial Strength of Eleven Sponge Packers in Tarpon Springs, Florida, I963 • ^9 28. Summary of Operating Expenses of On© Packing Firm for 1963 121 29. Domestic and Imported Sponges as a Percentage of Total Supply, 193'*-1963 ^7 30. Sales in Dollars of Natural Sponges, Synthetic Sponges, and Chamois at the Distributor Level, 1951-1961+ 130 31. Distributor Sales of Natural Sponges, Synthetic Sponges, and Chamois as a Percentage of Total Sales, 1951-196»f 131 32. Distributor Seles of Natural Sponges by Type of Customer, 1962-196^ I3I 33 • Distributor Sales of Natural Sponges to Trade Customers 132 3*^. A Comparison of Average Per Pound Prices of DcHnestic and Inqwrted Sponges, 193^1963 ^3^ 3?* Financial Strength of Natviral Sponge Distributors Who Are Menbers of the Sponge and Chamois Institute, I96U 136 36. United States Dnports of Sponges by Country of Origin, 1957-1963 I'tfi 37. Greek Sponge Production, Total Exports, and Exports to the United States, Selected Years, 1936-1963 1^*9 38. Sponge Trade with Gbreece, 1956-1963 151 39» Total Available Supplies of Sponges in the Ifelted States from Production and Imports, 193^-1963 . . . 15^ 1*0. Total United States Imports from Cuba and the Bahamas, Selected Years, 193lf-1963 157 kl, ttoited States Imports of Natural Sixsnges from the Bahamas, 1956-1963 159 42. Uhlted States Imports of Natural Sponges from Cuba, 1956-1962 160 U3. Imports of Synthetic Sponges in Dollars, 1956-1963 • * 176 hk. Marine Sponges: United States Rates of Duty Existing on January 31, l$63f as Defined in Sec, 256(4) of the Trade Expansion Act of 1962 . . . 177 U5. Synthetic Sponges: United States Rates of Duty Existing on January 31« 1965 > as Defined in Sec. 256(4) of the Trade Expansion Act of 1962 . . . 177 46. Federal Government Purchases of Natural and Synthetic Sponges, Selected Years, 1946-1964 .... 183 xl 1*7. Cellulose Sponge Salee, 1953-1962 I87 kB, Annual Percentage Change in Sponge Landings and In Average Sponge Prices, 194l-19ii6 I88 49. SusBnation of Sponge Sales In Barrisburg I92 50. Sponge Purchases for I963 by Eleven Packing Finns in Tarpon Springs, Florida I95 51. ComiHitation of Least Squares Strai^t-Line Irend of N&tixral Sponges I99 52. Number of Tourists, Tourist Expenditures, and Tourist Expenditures for Gifts and Souvenirs, Selected Years, 19B9-1963 206 53. Number of Souvenir and Gift Shops in Florida ... . 208 xU UST OP FIGURES Figure I^ee 1. Value and Weight of Landings In the Florida Sponge Fisheries 29 2. Per Craft Landings and Value of Landings by Method of Operation In the Florida Sponge Fisheries ..... 3^ 3. Average Sponge Prices and Valvte of Landings Per Fisherman by Method of Operation 35 k, EDploynent by Method of Operation in the Sponge Fisheries of Florida ^ 5. Val\;ie and Weight of Landings in the Florida Sponge Fisheries 50 6. Average Landings Per Enterprise Unit in the Sponge Fisheries of Florida 53 7. Nuniber of Hooking and Diving Craft in the Sponge Fisheries of Florida 60 8. Ifumber of Hooking Craft and Landings Per Hooking Craft in the Sponge Fisheries of Florida 63 9. Number of Diving Craft and Landings Per Diving Craft in the Sponge Fisheries of Florida 6k 10. An Equilibrium Model for the Sponge Fisheries of Florida 65 11. Value of Average Landings Per Enterprise Unit in the Sponge Fisheries of Florida 89 12. Value of Average Landings Per Fisherman in the Sponge Fisheries of Florida 90 13. Monthly CMJjarison of Total Florida Landings and Sponge Landings, I96I 95 Ik, Monthly Comparison of Total Florida Landings and Sponge Landings, 1962 96 15. Monthly Comparison of Total Florida Landings and Sponge Landings, 1963 97 xlli 16. Monthly Comparison of Total Florida Landings and Sponge Landings, 196'^ 9^ 17. Sponge Landings by Months, I96I-I96I+ 99 18. A Comparison of Average Per Pound prices Received by Fishermen and Sponge Fishermen in the United States 101 19. A Comparison of Average Per Pound Prices of Dosnestic and Imported Sponges • 133 20. Relationship of Synthetic Sponge Sales to the Sales of Chamois Vi2 21. Least Square Stral^t-Line Trend of Natural Sponge Consumption in the United States > • 193 xlv CHAPTER I miRQDUCriON Historical Utilization of Natural SponaeB The natural sponge has been known and traded in the Mediterranean for thousands of years. Many ancient G^reek excavations have uncovered pictures of sponges. According to Honer, Hepaestus used a sponge to vash off the grime of the smithy,^ and the housesaids of Penelope and o Odysseus used sponges In cleaning dining tables* Aristotle mentions Greek soldiers padding their greaves and helinets vlth sponges they called "Achilelon."^ According to KLiny, Ramans used sponges as paint brustes and maps, and Roman soldiers carried a piece of sponge k rather than a cup for drinking purposes. This early usage is further verified by the Bible r it describes the way in which Ranan soldiers gave Christ vinegar to drink from a sponge while He was on the cross. ^A. T. Murray, The Illiad (Cambridge i Harvard University Press, 1935), p. 319. ^A. T. Murray, The Odyssey (Cambridge: Harvard University Brass, 1931), p. 369. 3a. H. St\jart, World Trade in Sponges, U. S. Dept. of Commerce Industrial Series No. OS (Washington: U. S. Government Printing Office, 19'*8), p. *♦. '^"Sponges," Encyclopaedia Britannlca, I963 ed.. Vol. XXI. ^Mark 15:36. 2 In the thirteenth centviry Arnold of Villa Nova introduced the "burnt sponge" as a medicine to be taken internally for scrofula, tuberculosis of the lyiqphatic glands* Any therapeutic effect can probably be attributed to a hij^ content of iodine vhieh is present in the "burnt sponge" in the form of Ral. The first sponges used by man vere probably those vashed ashore by stoms; however^ as was pointed out previously, sponge fishing has been known since the early days of nan's civilization. The first deliberate efforts to obtain sponges vere those of naked divers vho dived by using heavy stones as weights in order to reach the depths of o the sponge beds. According to legend, numerous divers' lives were sacrificed in supplying the sponges for the baths of aDpresses, such as Messalina and Cleopatra.-' In modem times, besides obvious toilet and household uses, sponges are used for many purposes, svich as the washing of cars, the manufacture of special surgical and hygienic preparations, the appli- cation of glaze to fine pottery, leather dressing, and the manufacture of electric chairs. They are extensively employed by garages, tile and bricklayers, painters, lithographers, decorators and window washers, although all of these markets have been constantly shrinking k for reasons to be explained later in this study. ^"Sponges," Encyclopaedia Britannica. Stuart, p. k, 3lbid. John F. Storr, Ecology of the Gulf of Mexico CcMmercial Sponges and Its Relation to the Firtierjy, U. S. Fish and Wildlife Service Special Scientific Report, Fisneries No. kSS (Wemhlngton: U. S. Crovernnent Printing Office, 1964), pp. 63-65. Description of the natural Sponge Alttough ancient Greeks called the sponge "zoo-phyton, a which lapliee part anljaal and part vegetable, in the past many people regarded sponges as vegetable because of their stationary nature. In 1765 t John Ellis was the first to discover the anisal nature of sponges by observing the vater currents produced by a spcmge and noticing the p contractions on the surface of its body. Today sponges are considered to be one of the sii^plest fonas of aniaal life and are classified as Porifera.^ Persons vho have seen sponges displayed in stoxres vould not recognize the animal as it cones from the sea. The live sponge is an aniaal vlth a solid and fleshy body. Its color varies in a consider- able range from grayish yellow to brownish black. Its form varies from cup-shaped to steroidal and cake -shaped^ depending on the speciesy age, and subsurface environment.^ The marketed sponge is merely the skeleton of the living animal. This skeleton is coDq>osed of a sub- stance similar in chemical properties to silk, horn, and chltin which Is the basic material that forms the shells of insects and crabs. This material is distributed in a fibrous network in sponges, usually in accordance with a definite general pattern in each species; the diameters of the fibers, the sizes of the meshes, and the relatione ^orgB Frantzis, Strangers at Ithaca (St. Petersburg, Pla.: Great Outdoors Publishing Co., 1962;, p. 327. ^"Sponge," national Encyclopedia, 19^*5 ed.. Vol. DC. ^Ibid. Stuart, p. 25. k existing among the various fibers in each species lie within aore or less well-fixed limits. In addition, the main fibers cQ-vays contain some foreign natter, sxich as sand grains and insects* An examination of the living sponge shows it to be covered by a skin raised periodically into blunt little cones over the ends of the supporting skeletal fibers. Distributed over the surface are sieve- like membranes, whose small pores lead into cavities lying Just below the skin. From these cavities canals lead into the substance of tbs sponge, opening by several minute pores into many small chambers > Vhioh from their opposite ends discharge through larger openings. The canals gradual:!^ increase in diameter until they reach the surface of the sponge as large conspicuous pores known as "oscula," or, as the spongers call them, "eyes." The position and distribution of such osciila depend on the species. Each osculum is surrounded by a smooth membrane which by expansion or contraction varies the size of the 2 opening. Throui^ this canal system feeding and respiration are accomplished by the sponges in the following fashion. The small chambers dsscaribed previovisly are lined with cells, each of which is provided with a little lash projecting into the chamber and beating in a rhythmical manner so tteit a one-directional current is created. Through the action of these cells, water is sucked through the pores in the surface of the sponge and into the small chambers and then is forced into the Stuart, p. 26. o Paul S. Galtsoff , Sponges, U. fl. Pish and Wildlife Service Fishery Leaflet 1*90 (Washington: U. S. Government Rrinting Office, I960), p. 2. 5 larger canals until it is sent out through the oscula* Food is carried into tbe sponge by the water stream and waste material is discharged in the same oanner. CogBnercial Kinds of Natural Sponges Biologists mention the existence of aore than 3>000 species of sponges distributed tbroug^Knit the world from tropical seas to polar 2 waters. The presence of a hard object to which the sponge can attach itself and of flowing water for filtering through its canals the microorganisms on which it feeds are sufficient for the survival and growth of sponges. ¥rcm this extravagant variety of sponge species only thirteen are comoerclally important. Eight of the thirteen ocxggmercially lioportant sponges which will be identified later are available in Florida and contiguous waters. Without exception all cdBBierclal sponges grow in warm tropical or semi tropical waters. At present ctLmost all sponge fishing operations are confined to the Mediterranean Sea^ the Caribbean Sea, and the Gulf of Mexico.-' Table 1 lists the thirteen comaereially known sponges in their ccnnon English, soientific, and foreign names together with their sources. Hrilliam M. Stephens, "A Remarkable Anlmal»The Sponge," Sea Frontiers, X (February, 196'*), 17. %tuart, p. If. 3 Stephens, Sea Frontiers, X, 20-21. fi i •3 •ft-. a >» b n TABLE 1 OOMBH £aCUSH, SCXESTZnC, AHD FORSZON KAMiB OT OOMflSCIAL 8R»CBB VfTTK THEIR SOUtCEB OF BUfPUl ItaMB of CatEOBrcial SpongM BagllBii Scientific French Cuban Qert'ian Elsphant Ser, Flat Potter's Suspoogla Offlclnali* Oreille d' Blepteat (Hu-enacliwauiiB Muridscbwoaa Olcnre UippioepoDgla OBoallculate Var* riabellum Macho Quanto Onws Spoagia OnndMa Ai-rlqM Itoebo QuBve HwrdhMid Spongla Dux* ana S. Agarlcine OorXosia Fine Dura Ikeblto Flno Hippioapongla XvOna ELaatica Fine 4e Sjnrte, riae Blonde BMff Spo2-.^a Fl>» Antille mcho Oulco ItnUan Gree:-; Other Sources of Bvqppiy Foatbourla, Pll iCulasl La^flta (Turkey) iiediterraaeaii BatasBBS, Cuba, FXorlte I, CUba, Florltef ■onkiras Bahanaa, OUba« Bonduras «e HiHidra, CUmr Btulae Hafaadlkn (Sjnr^) narMB» •So q Tt to I I 74 p .3 i4 s SL!t 8 Turkey Cup spoiaee Turkey Cups are cup»sbaped sponges and bring the hlgjbast prices; perfect cups ore relatively rare* The oscula are cra^Muratlvely large and numerous and are grouped together In the concavity of the ciqpsj the skeletal partitions separating them being often very thin. The outer surfaces are perforated by several pores; the narrov skeletal partitions betveen the pores are surrounded by slender, soft, fibrous pencils. The foreign bodies In the fibers are negligible, and the aaln fibers themselves are small In number. Such characteristics make the Turkey Cup the softest, finest, and most elastic sponge on the market. These sponges are used primarily for applying cosmetics 8md for bathing. This sponge grows solely In the ^ratters of the Msdlterranean Sea, especially aro\md the Syrian coast and the islands of Crete and Cyprus. The best kinds of Turkey Cups are obtained in the underwater caves and crevices, where they attain a finer growth than else>rtiere. Tiurkey Toilet sponge Turkey Toilets are flatter than the cup sponges and their oscula are confined to the upper surface. Not as soft, fine euod elastic as the Turkey Cups, toilet sponges can be found throu^^ut the Mediter- ranean. They are used for leather dressing, surgery, toilet purposes, p and various other uses. Stuart, p. 20. ^ibld. i '^ •H W « a 1 flti ^a?^ SIiMpmnol HlFpiospongla Lachne Inciienne BaOnra Turkey Cup, 8oUd Xurtey ToiXat TelYBt y«iiow Ziaoeax Euapongia Officinalis NoUisUaa ^lapongia Officinalis Adriatica Hippiosponeia Grossyploa lot BOOWB Spoagla Barten Euspongia Zlaoeea Coupa Turque, ?lne Souce de Syria, Fine IXMce de Arcblpel Fine Souce de AdrUtie Havanzw FeiDsr Levantinersctaiiaai Taiimil liMiiiii liiMiMi Spugos ds BegoB, Lsvantine Nelatl, Fina Bklekta Iblati Ablund (Syria) Hsdlterranean Boulet Cblawuse, Fine Sure de Syrie, Fine Gr^cque Farao, Aforrada Ihebo Fiao 9, Cube, Florida, Booduras, TlmntlmgiTtni— n Sinigne ZliBocca Tsiaouka AelBBr (Syria) Telanuri (Turkey) Hadjemi (Tunis) CkA>, Florida Florida, BonduTM, Jknaiea, Mediterraneaa Hediterraneaa Sourcet M i>M>4 " «-^!fii*^ *"* •"'^•"*^*^° nanes and sources of sponges froa Stuart. Foreiga uaasB from H. F. Moore, 'The CaaBercial Sponges and the Spoajps n !!r'^*!-L^TLf'?i°i.^^ Fourth toternattonal Fiabery Oaaepesst Orgaii»ation and Seseional Business. Papers and DlscuaaionB. U. S. Sept. of *""**• *°^ ^*'or. Bulletin of the Bureau ot Fisheries, vSi.^Vltt, Part I o^ 1^ (WashingtoDt U. S. G^r^ni Friniing 6tfic^, I9IO). 9 Zlmocca spongg Tbe Zimocca sponge is distributed throughout the Mediterranean Sea, the Adriatic Sea, the Dardanelles, and the vest coast of Asia Minor. These are massive sponges, broader than high, vith their oscula scattered over the upper surface and arranged in irregular radial rows. Tbe Zlmocca sponges are the harshest of tbe Msditer- ranean grades. It is possible to soften thera throu^ bleaching, although bleaching reduces their durability. Both bleached and unbleached Zinoccas have a relatively dark color. They are used by potters, leather dressers, and other artisans. Honeycomb sponge Zoologists classify the ffimeycomb vith the Yellov sponge of the Plorida Keys J but unlike the pineapple-shaped Yellow spongB the Honey- comb is always broader than hij^ with the oscula unevenly scattered over the upper surface. This sponge is generally distributed througb- out the Mediterranean. It is a popular bath sponge and is also used 2 by Jewelers, leather manufacturers, bank tellers, et cetera. Elephant Ear sponge These sponges have the shape of a rolled ear. Tbe oscula are confined to the inside and are arranged in groups of four to six in radial or concentric rows. The Elephant Ear is found on the coasts of North Africa and the Ae^an Sea. This sponge equals the Turkey Toilet in fineness, softness, and durability. It is used for toilet ■'•Ibid., p. 22* ^Ibld. 10 purposes, in the medical application of electricity, by potters, fine- leather vorkers, Jewelers, and other craftsmen requiring a smooth, fine, soft, and durable sponge. Yellow spongjie There are various kinds of Yellow sponges known in commerce. These sponges are more elastic than other western hemisphere sponges with the exception of Sheepsirool sponges. They are regular in shape, attractive in ai>pearance, and grow to a diameter of about l8 inches* When alivs they have a smooth suirface and are very daurk brown on top, becoming yellowish on the sides. The oscula are situated on the top of rounded cones or in the upper surface of the sxxmge. Yellow sponges are less durable than the Sbsepswool or Velvet sponges, but they are attractive and inexpensive bath sponges and are used for many other purposes. The commercial varieties of Yellov sponges are as follows: Florida Key Yellow, Anclote Yellov, Bahama Yellow, Cuba Yellow, Honduras Yellow, and Mediterranean Yellow. The Florida Key Yellow is the best kind of Yellov sponge and comes from the vicinity of Matecumba Keys. Oscula are confined to the upper surface. The Anclote Yellov is harsher and less elastic than the Florida Key Yellov and, consequently, less valuable for commerce* Uhllke the Florida Key Yellov the oscula are not confined to the upper surface but occur all through the sponge. The Bahama Yellows are light brown sponges with oscula scattered over the top surface and somstimes on the sides. This variety of Yellov sponge is common near Andros Island. The Cuba Yellov sponge is similar to the Anclote Yellov; ^Ibld., p. 2l*. 11 however, it differs In its brighter color, more cavernous strucUire, and greater nuoiber of oscula. The Honduras Yellov comes from the British Honduras and is harsher than the Florida Key Yellov but less harsh than either the Bahama or Cuba Yellow. SheepsvDol sponge Sl^epsvool sixxages are a product of the vestern Atlantic* They exhibit vide local variation, aire very sensitive to environment, and when transplanted undergo significant changes in character. The oscula are large, fev in number, and confined to the upper surface. The living sponge has a black color, becoming brovnish at the base* Sheei)evool sponges grov to over l8 inches in diameter and are unex- celled in softness, absorbency, and durability* They are employed for general bath purposes and for cleaning cars and other hi^ly polished surfaces vhere size, softness, absorbency, and durability are required. Sheepsvool sponges are knovn under the foUoving market varieties: Florida Rock Island, Florida Key Wool, Bahama Wool, Cuba Wool, 2 Mexican Wool, and Honduras Wool. The Florida Rock Island is the most valuable sponge of North America. It is found on the vest coast of Florida betveen Johns Pass and St. Meurks. It has a grayish brovn color and the speciaens found in deep water are superior to shallov vater specimens in texture, density, and durability. The Florida Key Wool comes from the Key Grounds of Florida and is next in value to the Rock Island, vhich it surpasses in softness but does not equal in strength, durability, and ■4bid., p. 10. Ibid., pp. 6-7. 12 cai>acity for holding vater. The Key Wool sponges have a ];>ale color and conslBt of rather veak fibers. The Bahama Wool Is Inferior to the tvo varieties mentioned pireviously. The best kinds are obtained from the vicinity of Abaco and Androe Island. The Cuba Wbol has the same characteristics as the Bahama specimens although it is less desirable than the Bahama. The Mexican Wool grows in shallow water and is the poorest of the Sheepswool sponges. It lacks softness, resiliency, and durability. It grows from a narrow base with a rather high shape and has large oscula on the upper svirfaoe. The Hbndvtras Wool resembles the Mexican Wool variety, but it is of better 1 quality and is found on the coast of British Honduras. Velvet spon^ These sponges are found in the straits of Florida, the Caribbean Sea, the Bahamas, and the waters off the coast o£ Jamaica. They were greatly decimated by the I937 sponge disease and are quite scarce today. Velvet sponges are generally cake-shaped or spheroidal, broader than high, and attached by a broad base from irtiich the sides swell out. The number of oscula varies from one to three on the upper surface. The color of the skeleton is light brown or dull yellow. Velvet sponges are very soft to the touch but are less resilient and absorbent than the Sheepswool. In commerce Velvet sjwnges are graded as follows: 2 Florida Velvet, Bahama Velvet, Cxiba Velvet, and Jamaica Velvet. The Florida Velvet is found in small quantities on the reefs between Key West and Cape Florida. They are generally rather harsh ■'•Ibid., p. 7. ^Ibld., p. 11. 33 and laore or less torn and irregular. Of the Bahama Velvets the test come from near Ahaco. These are soft, moderately strong, and veil- shaped sponges. The Cuba Velvet resembles the Florida Velvet but Is softer. Of the Honduras Velvet sponges the coast of British Honduras has produced the best. The Jamaica Velvet Is inferior to all other Velvet sponges. Uillke other Velvet sponges the Jamaica Velvet has an upright rather than a spheroidal shape, most specimens telng decidedly columnar. Grass sponge Grass sponges are found comaercially in Florida, the Bahuaas, Cuba, Mexico, and British Bondxuras. They exhibit great diversity of shape and texture but are inferior in quality, lacking in durability, usually harsh to the touch, or, if soft, exceedingly tender. Grass sponges are Imovn under the following grades in the market t Andote 2 Grass, I&y Grass, Bahama Grass, and Cuba Grass. The Anclote Grass is the choicest of the Grass sponges. It is shaped like a vase with inverted truncated cones deeply hollowed on the upper sva:l'ace. The attached base is one -third to one -half narrower than the upper rim; the sides are almost straight or sll^tly convex, and the Interior is hollowed out almost to the base. There are no oscula on the outer surface. The walls are thin at the rim of the vase and thicker toward the base. The skeletons are of a dirty brown color, harsh to the touch, and highly elastic. These sponges are used by manufacturers for cleaning purposes in machine shops J-Ibid. ^Ibid., pp. n-ii*. slne« they are especially useful vhere there Is a great deal of oil, as greasy matter is more easily vashed out of them than any other sponge. For this reason and because of their stiff surfaces they are also useful for vashing pots and pcms in the kitchen* Almost all cxirrent production, however, is sold to curio shops along the sponge docks in Tairpon Springs. The Anclote Grass is found distributed over the entire Bay Grounds. The Key Grass is more diverse in appearance, softer, more elastic, and less durable than the Anclote Grass* The Bahama Grass is round or cake -shaped vlth nunerovis circular oscula located on the upper surface* The Cuba Grass is the least desirable variety of QamBS sponge because of its extremely veak fiber texture. Glove sponge This species has a very interesting appearance, the sides being fluted vlth Irregular, vertical paralleled ridges between \rtilch lie one or two rovs of round holes from one-sixteenth to three-sixteenths of an inch in diameter. The base is almost as broad as the body of the sponge* Glove sponges are found in the Key and Bay Grovinds of Florida and in the Bahamas* The best ones come from Blscayne Bay which is part of the Key Grounds, while those from the Bay Grounds are very poor and are rarely brought In by the spongers, who call them "bread sponges" because of their excessive tendezness. Glove sponges are very soft and elastic, but due to the weakness of their fibers 2 they are alaiost worthless for commerce* ^Ibld., p. Ik. ^Ibid. 15 Reef sponge These sponges are found In the Bahamas, Cuba, and British Honduras. Those found in British Honduras are inferior to the rest. The few Reef spongss taken from the Key Grovinds in Florida are not marketed as a separate species but are included vith the Yellow sponges. Because of their limited durability these sponges bring a low price. Hardhead sponge The Hardheads come frcm the Bahamas, British EKmduras, and Cuba* Although more durable than Reef sponges, they are very similar to the Reef sponges from which they are differentiated mainly by their hardness. This species is used for activities in which great softness is not necessary, such as airplying shoe dressings and moistening stamps in offices. In general, these sponges are more durable than 2 Reef sponges. Wire sponge This sponge comes from the west coast of Florida and is known as "bastard sbeepswool" because of its superficial likeness to the Sheei>6Wool sponge. In shape it is regular, broader than high, and attached by a broad base. The oscula are confined to the upper surface but are smaller and more numerous than in the Sheei>swool sponge. Wire siwnges are seldom brou^t to market, because they lack resilience, 3 absorbency, and strength. Tbid., p. 15. ^Ibid., p. 17. 3lbld. 15 Qualities Affecting the Value of Natural Spongpg The main qvialltles affecting the marketability of sponges are color, size and shape, softness, fineness, durability, resiliency, and absorbency. Color The color of a sponge Is of little lisportance fron a functional viewpoint, although It exerts a considerable Influence on the price merely for esthetic reasons. In general, the trade prefers the lighter tones of a ^llov color. A pale yellow Is the most desirable color, and in order to obtain this color sponges are frequently 2 bleached before they are offered to the ultimate user. Size and shape The most desirable size, and to scane extent shape, depends upon the purpose to which the sponges are to be put. For exaiQ>le, users will prefer a smaller sponge for toilet purposes than for washing a car. Sponges up to approximately eig^t inches In diameter are marketed whole and are called "forms.' Sponges above an elght'lnch diameter are usually cut into pieces and are known oommercially as 'buts."^ In order to be of commercial value a sponge must be regular, massive, and free from long processes and digitations. The most •'•Ibid., p. 25. 2ibid. 3lbld. Ibid. 17 detlrable ETponsi tcacoM are the spbsroldal aad ca)ce*8hap«d. In applying a glaze to pottery, however, and In otbfsr slaiilar votk a aaooth flat eurfacQ is desired, and this is generally obtained either by eutting up the aore nassive foraM or by taking jdeces frosi a saooth- surfaced, cup*8haped sponge* Softness 2 Other thing? being equal, the better sponges are always softer. The extent of this charactttrlstle depends upon the thioknsss aad arrangenBQt of the fibers and the aaount of foreign aattw: included in them. Sponfses in vhloh the fibers are heavily loaded vith sand are Invariably harsh and conae4iuently less desirable* Fineness The fineness of the spc«0e texture differs aaong the species, tbs Mediterranean varieties being superior in fineness owr the rest.3 Finnaess also varies within the saae species, depending on the environ- sent under which the individual sponge is produced. Durability and toui^uiess These factors vary with the dilTerent speciaa and are influenced by emriroiUDeQtal conditions. In any given species, the looser the general structure and the larger and mre nuaerous its oanals the aore easily it is torn and the socoer it vears out. Pear example, the loose ^Ibld. Ibid., p. 26. ^Ibid. '^Ibid. 18 open-textured Sbeepevool epongs of Blscayne Bay Is much less durable than the denser Rock Island variety. Resilience In general, spon^s are more elastic when dry, and they gain in contpresslbility when wet* Good resiliency is indicated vhaa a wet sponge pron^tly returns to its original shape when coo^iression is renoved. Resiliency depends partly upon the size and coiqposition of the fibers but mainly upon the thoroxighness and manner of cleaning. Poorly cleaned sponges contain "gurry" and therefore axe sluggish in returning to shape after coBapression. Gurry is liquified organic Batter which results from decaiQ)Osition and is also Imown as "meat" or "milk." Absorbency Absorbenoy is a result of a combination of softness, fineness, and resilience. The quick absorbent sponges have slender fibers and close textures. The existence of large canals and cavities adversely 2 affects the amount of water that can be absorbed by a sponge. From a functional point of view this is the most important laroperty upon 3 which the usefulness of a sponge dei>ends. ^Ibid., p. 27. ^Ibid. ^Ibid. 19 Geographical Location of Natural Sponges In the Uhlted States The sponge groiinds of the Uhlted States extend over the Continental Shelf from a depth of a few feet to approximately I50 feet, and they are broadly divided into two separate areas, the Bay Grounds and the Key Orounds. The exact extent and density of the sponge ixspulatlon is not knovm, but it is believed that these two areas cover approximately 9f300 sqiiare miles of sponge- yielding bottom. An ocean floor with firm and clean objects is necessary for sponge growth, since sponges cannot attach themselves to sand, mud, or grass. Thus, bottom topog- 2 rajjhy is an important factor in the determination of the sponge beds. Sponge -bearing grounds, or "bars^* as the spongers call them, are found through the use of a "glass bucket" in shallow waters. In deeper waters they are located by means of a "sounding lead." This is a soap- covered device which, vhen it reaches the bottom, picks up samples of the sea floor, thus informing the crew of the presence or absence of sponges. This and other techniques of sponge fishing were observed by the author dtiring several trips aboard the diving craft '!E:ienl" in the summer of 196h, The Bay Grounds The Bay Grounds are located In the open waters of the Gulf of Mexico. They begin near Johns Pass, a few miles north of Taoipa Bay, and extend a distance of 160 miles, as far as St* Marks. ^ Spongers •'■Florida, State Board of Conservation, Second Biennial Report, Biennlum Ending June 30, 1936, p. 6k, ^Stuart, p. 2. ^Stuart, p. 43. 20 divide this area Into regions, such as Rock Island, Pspperflsh Kay, New Orovind, Wlthlacooohee Light, St, Martin's Reef, Anclote Key, and Highlands. The better qualities of United States sponges ccxne from the Bay Grounds, the area responsible for over 90 per cent of United States natural sponge fishing. The Key Grounds The Key Grounds consist of the reefs and keys In the Inshore waters around Key West, Florida Bay, and the lover part of Blscayne 2 Bay. Some sponge bars are also Interspersed In the area between Cape Sable and the mouth of Tampa Bay. Iftitll the discovery of the Bay Grounds In I873, the Kfey Orotmds were the only source of supply 3 for sponges In Florida. These grounds now are comparatively exhausted, and they make a smaller than 10 per cent contribution to the total sponge catch. Since sponges taken from the Key Grounds are found In relatively shallow waters they are Inferior In dinrablllty and texture to Bay Ground sponges. U. S., Congress, House, House Mscellaneous Reports IV, 8lst Cong., 2d Sess., 1950, H. Rept. 2120, p. 2. ^Stuart, p. 1*3. ^Ibld. ^. S., Congress, House, House Miscellaneous Reports IV, p. 2* CHAPTER II ECONOmC HISTORY OF THE SPONGE INDUSTRY The purpose of this chapter is to trace the economic developments in the Florida sponge fisheries from their inception to the present time. In any fishery natural elements, such as veather, marine dis- eases, and sheer luck, are important factors in determining levels of production. The importance and effect of these vmmeasurable factors on sponge fishing is studied through the examination of landing statis- tics of past years. The accvtracy of early flstery statistics in the Uhitsd States is (juestionable , and even the most recent fishery statistics are contra- dictory and lack the acctiracy necessary for a precise description of the sitiiation. In discussing this point, C* P. Idyll deplores the fact that in reporting landing figures for the State of Florida, the U. S. Fish and Wildlife Service and the State of Florida reported 2 widely differing figures. Despite their shortcomings, however, such data are helpful in Indicating trends and broad relationships which can be used to advantage in solving fishery problems and in recom- mending alternative policies and ways of action. jLanding figures indicate the aggregate pounds of fishery products caught by commercial fishermen on an annual basis. Clarence P. Idyll, How Can Statistics Increase The Catch? Florida Board of Conservation Educational Series No, 3 (Coral Gables, Fla. t Marine Laboratory, University of Miami, 1^9)f P« 5* 21 22 A historical survey of the spoiige fisheries would Indicate that the fisheries have experienced some unvisual developments since 1937, as contrasted to their normal behavior since their Inception In the Blddle 1600 's. The year I937 can be considered as a turning point in the sponge fisheries; it is pertinent to analyze the industry under two tlae Intervals! (l) the early period covering the years I893 to 1937# and (2) the later period covering events from I937 to the present time. Althoue^ there is a complete absence of data for the years 1909-1912, it is convenient for purposes of analysis to label the entire period from I895 to 1937 as the early period. The year I895 was selected as a starting point, because prior to that time no statistical information on the United States sponge fisheries is avail- able. The historical developnent of the sponge fisheries will be discussed in the following section. Historical Developnent The sponge fisheries of the western Atlantic have been coonnercisaiy known since the l&t^'s. It was around that period that Kew World sponges were Introduced to world markets by a French merchant who had 2 been shipwrecked in the Bahamas. In the IMlted States, Key West was the first and for many years the only sponge center. In all probability the natives of the keys knew about sponges and their utilization long before they became an article of comnerce, but the first shlxnent of sponges was sent frcm Key West to New York in iBhS, where they were sold for ten cents ^torr, p. 51* %tuart, p. k» 23 per pound. Prior to this time Afflsrlcan demand for sponges had 1)e«n 2 satisfied throu^ Imports from the Medlterraiiean. Beginning in the year I895, Tarpon Springs exceeded Kay West in the sale of sponges and as tine passed became the center of the IJblted States and later of the vorld sponge indiistry. At present it is estlaated that more than 93 per cent of the Uhited States sponge 3 fishing takes place in Tarpon Springs, Florida. It is Interesting to note that despite this shift in emphasis from Key .leet to Tarpon Springs, the sponge fisheries of the IMlted States are still restricted to a single state, namely Florida. The successful sale of Key West sponges in I8U9 ims followed by a continuous increase in capital lavestaent and en^loyment in the sponge fisheries of this locality. These facts vere reported in tha Rroceedings of the Fourth International Fishery Congress; however, no specific figures vere given on the amoxmt of increase in investment and employment. At first sponges were gathered by merely pulling them out of shallow water by hand. Later, as it became ljs^)Ossible to find sponges in sufficiently shallow waters, the practice of wading had to be abandoned* In order to obtain sponges from deeper waters spongers invented the sponge hook, a sharp hook attached to a pole of moderate length. The fisherman would scan the bottom of the ocean troa Tfoore, Proceedings of the Fourth Intematiooal Fishery Congress, p. ^25. ^Ibid. ^Interview with Louis Smitzes, President of Tarpon Springs Sponge Exchange, Tarpon Springs, Fla., April 6, 196**. Ttoore, Proceedings of the Fotirth International Fishery Congress, p. kQ6. 2k the bov of his boat and tear sxxmges loose vlth the hook as they csuos to hla attention. Thus, it became x)088ible to reach sponges at slightly greater depths. A continuously increasing demand for sponges, coupled with the exhaustion of the shallov water beds, pushed the sponge operations into progressively deeper waters. It became almost impossible to scan the bottom of the ocean for sponges as spongers moved into in- creasingly greater depths. In order to overcome this difficulty the o "glass bucket" was introduced, first about I87O. This was a regular bucket with a glass bottom and is still being used today by many fishermen. By means of this instrument it became possible to see the bottom of the ocean up to a depth of 50 feet in clear waters* In the early days wading and hooking were the only methods used by Key West spongers. This is easily understood since the methods of the sponging industry of the Ublted States were virtually copied from those of the Bahamas, and most of the Key West spongers were brought in from those ■3 islands.*^ There is no record of any other changes between the years 1870 and 1905. In the spring of I905, a Greek named John Oocoris with the assistance of John Cheyney, a sponge dealer, decided to try sponging methods employed in the Medlterrauoean. With this method sponge fish- ing can be extended to depths up to 150 feet, whereas spongers using ^Ibid., p. 509. ^Ibid., p. 437. ^Interview with Loiiis Smltzes, April, l^Sh, ^George D. Protos, TThe Sponge Industry of Tarpon Springs" (uniniblished paper in the files of the P. K. Yonge Library of Florida History, University of Florida, n. d.), p. 28. 25 the hooking method cannot go beyond a depth of 50 feet under the most favorable conditions. John Cocoris brought men and sponging materials from the old countiry to Tarpon Springs in order to carry out his oxperiaBnt, and ■Bde his first trip in April, 1905. This first trip vas so successful that by May, I9O6, little aore than a year later, there vere 50 diving boats at work and 35 loore were waiting for crews to be supplied, largely from the Greek islands. The first diving boats used In Florida were locally built sloops which had been remodeled to fit the new requireaentB . It was reported that these boats were not suitable for the Job; however, the author was tmable to ascertain why the earlier sloops were unfit for diving operations. 'Shs immigrants introduced boats styled after vessels in Greece. The same type boats are used by spongers today, although several Improvements, such as diesel engines and wireless comoounlca- 2 tlons, have been incorporated into the contemporary vessels. The successful use of the scaphander resulted in considerable agitation within the sponge industry, especially among Key West spongers using the hooking method. This is easy to understand since at that time sponge fishing was the number one Industry in Key West, as is Indicated by the following quotation: itoore. Proceedings of the Fourth International Fishery Congress, p. kk2. ^Interview with Louis Smitzes, April, 196**. 26 The sponge fishery is of more iB^xartance to the citizens of Key West than any other branch of business. The outlay for supplies and utensils required by the nxunerous sponge fleet, amounting to $100 or $200 per vessel each trip, is no incon- siderable factor in the industrial condition of the place, while the large cash sums -pat in circulation by the sponge buyers constitute the principal source of ready money for a large proportion of the population.-^ Despite the fact that Kay West spongers were objecting primarily for economic reasons^tbey pretended to be concerned only about the conser- vatlon of the sponge beds. For example, Mr. E. J. Arapian, a well- known Key West sponge dealer, objected to machine diving on the ground that sponges cease to grow where submarine divers have walked with 2 their heavy shoes. In an attempt to lessen the animosity of the users of the hooking method, Greek divers carried their operations well offshore into depths of 60 feet and over, but this only made matters worse because the sponges found in deeper waters were of larger size and better quality 3 and, consequently, commanded higher prices in the market.*^ The animosity of the Key West spongers was carried to the extent of burning Greek diving boats and influencing the Florida legislature in the passage of a law prohibiting the taking of sponges through diving, either with or without the scaphander, within a three-mile k limit. All such efforts proved to be inadeqviate in halting the progress of machine diving. Greek divers showed themselves to be superior to Key West hookers in gathering sponges, and eventually they •^U. S., Congress, The Fish and Fisheries of the Coastal Waters of Florida, 5Hh Cong., 2d Sess., 1897, Doc. 100, p. 37. ^Ibid., p. 6. •^Moore, Proceedlnes of the Fourth Inteimatlonal Fisliery Congress, Florida, Statutes (I9l4), c 253.692. 27 practically obtained a monopoly on all methods of sponging used on the Florida coast. H. P. Moore uses the following example to illustrate this fact. In 1909/ the schooner "Fillmore /"manned by ten Greeks, was out for 60 days and had fished in depths of 35 to kO feet, bringing in sponges that were sold for a total of $2,l80.^ A non-Greek schooner with thirteen of the most skilled hookers and under one of the best captains sponged for hQ dajre in depths of less than 30 feet, bringing in a ■3 revenue of $l,l80. The second vessel yielded $2.16 per man-day, almost 59 per cent less than the Greek vessel which averaged $3 •63 per man-day. In 1908, several sponge dealers took the initiative in establish- k Ing the Tarpon Siarings Sponge Exchange. Rrlor to the establishment of the Exohangp, sponges were sold at the various "crawls" around the city. A crawl was a shore enclosxire about ten feet square, constructed of stakes driven close together, in which live sponges were exposed to air and sun in order to accelerate maceration. As there were a number of crawls at considerable distances from each other, dealers had to waste much time in traveling fron crawl to crawl. In order to obviate this inconvenience they organized the Tarpon Sixrings Sponge Exchange. This is a non-profit cooperative or^nization whose shares are owned by the sponge dealers, and it is financed througji a 2 per cent billing ^Moore, Proceedings of the Fourth International Fishery Congress, p. Hi. ^Ibid. 3lbid., p. lfl*2. I4. Stuart, p. 35. 28 on the sales of each boat's merchandise. A more detailed description of this organization is offered in Chapter IV. The establishment of tte Sxchange gave Tarpon Springs a permanent lead over Key West. At present, all industry statistics are based on transactions which have taken place in the Tarpon Springs Sponge Exchange, and it Is estimated that such transactions amoxmt to better than 95 per cent of total industry dealings in the United States, Early Rirlod, 1895-1937 Production In 1895, the sponge fisheries were Florida's most valuable fisher- ies with 306,120 pounds of landings valued at $368,871. During that year Florida landings were 37*036,768 pounds at a value of $1,209,725. The value of sponge landings was approximately one-third of total landings. The landings of the next four most valuable Florida fisheries were valued at $555,086. The mullet fisheries were second to sponges in importance with landings valued at $310,8^7, followed by red snapper landings valued at $155,3^, oyster landings valued at $6l,'^3# and sea trout landings with a value of $27 > 170. Table 2 contains the earliest available production statistics by species for the sponge fisheries of Florida. Figure 1 indicates landings and value of landings for the period of I895 to 1936. ^Ibld., p. i^5. 2 Carter C. Osterbind, Florida's Commercial Fisheries; Markets, Operations, Outlook (State Economic Studies, No. 7; Gainesville, Fia.: Bureau of Economic & Business Research, Iftiiversity of Florida, 1955 )> p. 153. 29 o r- 8 ON 8 8 tTN o o m 100 Pounds in Thousand ^H ^^^1 "1 o m ;a :i ON o CO 30 TABLE WEIOTT, VALUE, AMD AVERAGE PRICE PER POUND OP WOOL, YELLOW Wool Yellov Year ^ Prices Per Rrices Per Founds Dollars Pound Pounds Dol Inrs Pound Boxinds 1895 231,272 363,107 1.57 29,509 11,789 .1*0 21,387 1896 1U9,72U 21*8,196 1.66 23,655 9,318 .39 1*1*,617 189T 151,h76 2U0,599 1.53 32,362 13,082 .1*0 12B,622 1898 • • • • • • ,, . * • • • • 1899 153,700 332,390 2.16 55,800 16,205 .29 76,900 1900 181,311 J*83,263 2.67 71*,'^ 1*1*, 01*5 .59 11*3,112 1901 .. .. • • .. • • • • • • 1902 • • • • • • . . t • • • • • 1903 219,33'+ »fll,562 1.88 62,001 18,390 M 83,381 190U l&^,6k5 3»+6,78«* 1.88 1*7,213 17,183 .36 51,977 1905 235,561 1*83, W* 2.05 1*5,070 19,231* M 67,1*31 1906 U3i,2li+ 801,1*37 1.86 103,938 39,151* .38 1*6,765 1907 278, 33»* 1*70,076 1.69 265,662 76,955 .29 158,211* 1908 309,681 1*81*, 553 1.56 190,711* 1*3,129 .23 109,617 Source : I895-I899 from Hugh M. Smith, HOtes on the Florida Commission, Vol. XIX for I899 (Washington; U. S. Government Print- Florida in 1900, U. 8. Coimnission of Fish and Fisheries extract Printing Office, I903). I903-1908 from Moore, Proceedings of the 31 GRASS, AND OTHaR SPONOES LAUDED IN FLOEIIDA, I695-I908 Grass other Total Prices Prices Prices Ffer Per Per Dollars Poirnd Pounds Dollars Poiaad Founds Dollars Pound 11,508 29,188 .26 .26 .23 23,952 18,315 13,086 6,502 3,990 3,171 .27 .22 »2k 306,120 386,387 236,311 273,012 331,51*6 286,01*0 1.26 1.16 .86 1*^,319 33,263 • • .19 .23 18,000 17,236 • • 5,000 7,11»* • • .28 .1*1 • • 301*, 400 367,911* 316,51*6 567,685 • • • * 1,21 1.80 9,51*1 16,166 12,U09 30,711 17,230 !i8 .18 .2k .27 .iQ .16 13 ,'199 7,712 17,030 7,y/7 1,706 12,1*77 2,600 2,687 3,812 1,583 J*08 3,96»* .20 .35 .22 .32 ,2k .32 377.915 1*1*7,31*6 291,51*6 376,195 365,092 522,926 589,891* 851*, 583 703.916 571,751 6??, 1*89 51*8,876 l!l8 1.29 1.1*3 1.1*5 .82 .88 in 1899, House Documents, Bulletin of the U. S. Pish 1). 1900 from John N. Cobb, The Sponge Fishery of froH U. 8. Fish Connnission Report for 1902 (Washington i U. S. GSovemaent Sponge FlBhe: ing Office, 1 Fourth International Fishery Congress. 32 The supply of sponge a and of any type of fishery product depends on many factors, such as period of operational activity during a given year, condition or normalcy of the beds during the same period, and productivity of the fishing fleet during that year. Sponge fishermen have no power over most of these factors. Bad weather conditions can greatly influence the amount of time that fishermen can spend produc- tively in retrieving sponges in any given year. Marine diseases also have an adverse effect on sponge production, because such epidemics invariably reduce the amovmt of sjiong^s available for fishing. From the inception of the industry until I905, sponge fishermen utilized one type of gear, that used in hooking operations. Beginning in 1905, a new method of operation was introduced to the Industry, the method of retrieving sponges from the bottom of the sea through the use of submarine divers equipped with a diving suit and helmet. Machine diving used more capital and proved to be more productive than the hooking lasthod. After 1905, the level of production in the sponge industiry dex)ended on the x^^oductivity of two types of gear, namely those of hooking and machine diving. Machine diving has an advantage over hooking in the sense that fairly rou^ sxirface waters cannot prohibit the machine divers' fishing, while hooking requires a relatively smooth surface; however, machine divers at times have been unable to locate sponge beds even under the most serene surface conditions because of poor visibility at 1 the bottom. Ttochine divers have mentioned "milky bottoms" as a kind of suboarine fog which limits visibility at the bottom of the ocean. 33 Figure 2 Bhovs that landings per craft betveen 190$ and I906 vere considerably hlg^r for diving ships than for hooking ships. Indicating the superiority of the never oethod of operation. V/hen the comparison Is made on a value of landings basis rather than a velght of landings basis, diving outfits indicate an even better situation. There are three reasons for this: (l) sponges retrieved by diving bring a higher price per pound than those obtained by hooking, becatise deep vater sponges are superior in quality to shallov vater sponges; (2) in addition to harvesting more sponges, historically speaking, diving outfits have concentrated on the more valuable species, such as the Sheepswool sponges; (3) sponges obtained by diving are in better physical condition than those obtained by hooking, since the hook used in hooking operations often damages the sponges. Table 3 shows that vlth the exception of the year 190$, vhich marks the beginning of machine diving, the catch of diving outfits percentage-vise has con- sistently exceeded that of hooking outfits. Figure 3 indicates that average prices received by diving outfits, although volatile, were always higher than those received by hooking outfits* The production of sponges for the years 189$ and I908 is shown in Figure 2* It can be seen that the Introduction of machine diving gave considerable Impetus to the quantity of sponges gathered. Between the years 1901+ and 1907 sponge landings Increased by l4l per cent, and the value of such landings went up by $2 per cent. Although sponge prices are determined by all of the conditions of supply and demand, one cannot overlook the Importance of specific factors, such as seasonality, ^ttiart, p. 29* 3h 0) (/) S i) •H >. u XI (1) x; m w w •H a (x^ •H T) 0) a hn ^ c o ft vi rn o 0) ^ s •H H u m o > H |X( Tl c d) crt Si -p t/i bl) n C •H •H T) c C o ^ •H -P 05 -P >-i en a Jh o CO o H •H •H m w > a •H •H « "S Tl ^ S3 H o a ^ o-\ M •H fl •H Cfl A! W) O C () •H W -o D I 35 (U -P ;3 CO H U a Q> > P< o CO O CD tS OJ O o xi •H +> 0) >i bD^ C O C! ft fl CD a u 0) (U bQ X! CO CO U -H 36 TABLE 3 PHRCEHTAGE DISTRIBOTION OF CATCH AMD VALUE OP LANDINGS BY METHOD OF OPERATION, 1905-1908 Year Catch Value of Catch Hooking Diving Total Hooking Diving Total 1905 97.29 2.73 100.00 90.87 9.13 100.00 1906 39.25 60.75 100.00 25.25 7**. 75 100.00 1907 39.20 60.80 100.00 31.37 68.63 100.00 1908 36.U7 63.53 100.00 33.06 66. 9^^ 100.00 Source: Moore, Proceedings of the Fourth International Fishery Congreaa. substitute products, existence of larg@ bviyers, and quality, in the determination of market prices. Other factors, such as profit and cost considerations, conqpetitor practices, product replacement rate, stability of industry price structure, credit terms, trade discount policies, promotional activities, and government regulations, may also influence prices; however, there is a complete absence of information on such factors for the early years of the sjxjnge industry. Average sponge prices declined by 36 per cent between 1904 and I907. This could have been the result of an excess in the quantity i>roduced by the prolific machine diving method of operation, the result of gathering sponges of inferior quality, or some other factor not knovn at present. As vas pointed out previously, the supply of sponges dei)ends on many natural factors over irtiich the producers have little or no control. The same is true, although to a lesser extent, for 37 tbe quality of sponges. Spongers rely on luck in locating sponge beds of a given quality, although experience does play a small role. In addition, the quality of any sponge bed hinges on nat\iral factors, such as the direction of underwater currents and the existence or absence of mlcro-orgianlsmB , irtilch cannot be controlled by man. Since It Is a non-perishable commodity. It Is possible to hold sponge supplies until market conditions beccnne favorable. Because of their limited resources, most fishermen are unable to exercise such market pover, althou^ some sponge packers have been known to engage in such practices. The exercise of market power by a minority of packers la against the interests of the majority of these firmsj however, at present their cooperative, the Tarpon Springs Sponge Exchange, has no provision to take care of this problem. Investment With the exception of a survey conducted in 1932 by Pinellas 2 Co\mty, there are no statistics available on investment in the sponge fisheries after I908. Table k Indicates investment in the sponge fisheries of Florida for available years from 188O to I963. The decline of tottO. dollars invested has not been as spectaciilar as the decline in the size of the fleet used in sponge fishing, due to the constant decline in the value of the dollar. Interview with Nick Gialourakis, owner of Nick Gialovirakls Packing Firm, Tarpon Springs, Fla., May 12, 1964. Fred K. Sage, "Sponge Industry Suamary Report," Pinellas Coiinty, Fla., C. W. A, Project 52-89. (Mimeographed.) 36 TABLE h INDEXES OF THE NUMBER OF CRAFT BI METHOD OF OPERATION OF TOTAL EMPLOYMENT AND IHVESTMENT IN THE FL(KIDA SPONGE INDUSTRY FCR AVAILABLE YEARS, 1880-1963® 1905=100 Year Investment in Hooking Craft Diving Craft Total Btaployment Citrrent Dollars Index Index Index 1880 $162,050 1900 1+9^,866 1903 502,669 190U '^17,591 1905 ^59,871 1906 i*^7,033 1907 U79,06U 1908 555,267 1932 270,000 1937 19»*0 1950 1955 i960 1961 1962 i^ll,300 1963 325,000 100 68 • • 92 6 12 T 25 2k 22 100 1025 600 558 50 117 100 100 150 108 100.00 16U.00 67.00 51.00 .60 1.10 .90 1.60 1.08 Source : I88O, I9OO, I903-1908 from Moore, Proceedinga of the FoTxrth International Fishery Congress. 1932 from "A Survey of the Sponge Industry," F. E. R. A, Project No. 52-7-31* (Typewritten.) 1962-1963 based on estimates by the President of the Tarpon Springs Sponge Exchange amd boat captains. Index numbers based on Table 6 and Table I5. *In 1932 there were 51 diving craft and I5 hooking ci^f t in the sponge fisheries of Florida. Each diving craft had a market value of $5,000 and each hooking craft a market value of $500, In I962 the fisheries had I8 diving craft and 8I hooking craft. Each of the former had a market value of $17,000, and each of the latter was valued at $1,300. By 1963 the nvimber of diving craft had declined to 13 and that of hooking craft to 80 with no change in estimated market values frran I962. 39 Betveen the years I66O and I903 Investment In the sponge fish- eries Increased steadily and becaiae relatively stable between I903 and 1908. In 1908, the level of investment in the sponge fisheries reached its peak, probably because of a tremendoiis increase in the size of the diving fleet during that year. Although statistics con- cerning investmsnt in the industry are scant, from available informa- tion one can deduce that the level of investment in the sponge fish- eries declined rapidly during the depression of the 1930*8 and has been rather unstable since I962. Table k dramatizes this situation by the use of index numbers. Taking the year I905 as a base year, total physical investment in the hooking fleet in 1963> measured in numbers of craft, had declined by 78 per cent. By using the sane base year one gets an index of IO8 for the diving fleet, meaning that between the years I905 and I963 the diving fleet increased by 8 per cent. However, one should not overlook the fact that I905 was the year in which machine diving was first introduced to the shores of the western Atlantic and that, taking I905 as a base, the boat-number index stood at 1025 In 1908, only three years later (again see Table h). Costs With the exception of the Pinellas Co\mty siorvey made in 193*+* there are no statistics available on operating costs in the sponge fisheries. This survey gives the operating costs of h^ diving craft for the first six months of 193**^. The total operating costs for the fleet are shown to be $10Jf,136 with an average figure of $2,123 per boat. ko TABLE 5 SBMI-.'^NNUAL OPERATING EXPENSES OF U9 DIVING CRAFT IN PINELLAS COUNTY, JANUARY 1 - JUNE 30, 193'+ Item Amount Average Per Craft Gas and Oil 135,731.00 i^T«i9 Food and Supplies tH,512.89 8i*T Diving Suits 6,050.00 123 Interest for Trip 6,11*5.00 125 Boat and Engine Repairs 11,052.26 225 Exchange Fees 3,6M*.85 1^ Total $10if,l36.00 $2,123 Source: Pinellas County, Pla., F. E. R. A. Project No. 52-F2-31. If it is assvmed that the next six months vere similar to the preceding six months, the annual operating expenses were $208,272 for the fleet, and each of the k9 boats had an average of $'f,246 as oper- ating costs. This figure is only $88 lower than the present average operating expenses of each diving craft. The market valtie of a boat more than tripled between 193lf and I963, and in view of this fact and the substantial increase in the average price level between 193^* and the present, the validity of the $4,246 figure looks very questionable, although one must always bear in mind that averages, unless adequately explained, are fiill of pitfalls. The per«craft operating expenses figure for 1934 was reached by dividing total operating expenses by the nvmiber of boats in operation at that particular time. In 193'4-> in the fleet contained large boats, each with six or more divers who harvested sponges in depths up to 150 feet. By contrast, all craft in the present fleet are considerably smaller and have a maximum of two divers who never go below 60 feet. It is obvious that such large boats would have had substantially higher operating expenses. The existence of such extrene values mi^t have influenced averages, giving the above-mentioned unrealistic picture of costs. To be sure, the above treatment of costs is based on fragmentary information and may be only of historical value; however, historical data are fre- quently important in comprehending current events. By relating past and present information, it is often possible to give meaning to present occurrences and to vmderstand the forces that brought such phenomena into existence. Etaployment According to a survey of Florida fisheries made by Professor Carter C Osterbind in 19^3* the number of fishermen in Florida has not tended to increase over the past half century but has fluctuated around the number employed in the industry at the beginning of the century (see Table 6). Table 7 indicates total employment and eaiploy- nent by method of operation in the sponge fisheries for the years I895 to 1908. While fishery employment has remained relatively stable in Florida, en^loyment in the sponge fisheries has declined precipitously. Between 1895 and I905 employment in the sponge fisheries increased by Interview with John Samarkos, Captain of the diving craft "Eleni,' Tarpon Springs, Fla., May 11, I96U, ^Ibid. 1(2 TABLE 6 FISHSlMEa? EMPLOYED IN COMMERCIAL FISHERIES IN FLORIDA, SELECTED YEARS, 1890-1962 Year Number of Fishermen 1890 5,1^72 1895 6,15U 189T 6,11*3 1902 9,111* 1908 9,212 1918 8,491 19S3 7,661 1927 8,275 1928 8,870 1930 7,m 191*0 8,937 191*5 6,101*** 1950 10,281 1955 ll*,332 i960 10,520 1961 10,156 1962 10,589 Source: I890-I95O from Osterbind. I955-1962 from U. S., Fish and Wildlife Service, U. S. Fishery Statistics. ^rfest Coast only. ^3 TABLE 7 NUIffiER OF CRAFT AND EMPLOYMErPfT BY MHTHOD OP OPERATION, 1895, 1900, 1903-1908 Hooking Diving Total Year Craft Fishermen Craft Fishermen Employment 1895 282 1,1^19 • • • • 1,^19 1900 38U 2,113 • • • • 2,113 1903 383 2,085 • « • « 2,085 I90U 338 1,777 • • • • 1,777 1905 337 1,7^*3 12 166 1,909 1906 2kk 1,272 69 9^*2 2,2lU 1907 255 999 78 1,089 2,088 1908 228 978 123 1,3^^ 2,320 Source : I895 from U. S., Congress, The Fish and Flaheriea of the Coastal Waters of Florida. I900 from Cobt. 1903-1905 from Moore, Proceedings of the Fourth International Fishery Congress. 3U per cent. Sponge fishery employment reached a peak of 2,320 only three years later in 1908. Although no employB^nt statistics are available after I908, by 1937 employment in the sponge fisheries had declined by one-third as compered to its I905 level. Tventy-five years later, in I962, sponge fishery employment had declined by almost 99 per cent as compared to employment figures In I905. From Figure k one can see that employment in hooking started Its decline in I905 with the introduction of machine diving. By 1907, employment in the diving fleet exceeded enqploynent in hooking, and this situation vas not reversed until 195O. kk a CO D O Jh ;a o ^^ P^ o CO +J 0) C -H 02 ^ O (0 o I o o ^5 Other things, svich as working conditions, ease of entrance and training, opportunities for advancement, and degree of occupational hazard, being equal, the level of employment in an Industry depends upon the level of wages. Wages, on the other hand, depend on the level of productivity, since a higher productivity indicates ability to pay higher wages. This condition, however, nay not ntaterlalize . Labor productivity in the sponge fisheries can be measured in terms of the value of average catch per fishennan. The value of average catch per fisherman is derived by dividing total landing^ by the total number of flsbennen en5>loyed, and it depends on two factors: (l) the weight and quality of the landed species and (2) the market price that such species will cc»mnand. A comparison of Table 8 with Table 9 shows that the value of average catch per fisherman from the very beginning was considerably higher in machine diving. This was so because diving craft not only landed more sponges per enterprise unit but also were able to market their product at higher prices per poxind. The columns showing the average price per pound of sponges in Table 8 and Table 9 show this relationship to be true for every year. This hi^ier productivity, coupled with better earnings in machine diving, appears to have caused employment to decline in hooking operations. Also, the introduction of machine diving liad a secondary adverse effect on employment in the sponge fisheries. One might say that machine diving, in addition to being more jjroductive, was also a labor-saving method of operation. Like any other capital intensive method of production, machine diving \\braham L. Gltlow, Labor Economics and Industrial Relations (Homewood, 111.: Richard D. Irwin, 1957), p. '«^. k6 TABLE 8 AVERAGE CATCH PER HOOKINQ GRAFT, 1895, 1900, 1903-1908 Year Value of Catch Psr Average Catch Craft in Per Craft Povtnds in Dollars Value of Average Catch Per Fisherman in Dollars Average Price Per Povmd in Dollars 1895 1,806 1,379 272 1.26 1900 823 1,'*78 269 1.80 1903 987 1,168 215 1.18 1904 863 1,113 212 1.29 1905 1,051^ 1,1*12 273 1.31* 19O6 781 88? 170 1.13 1907 1,008 735 180 .70 1908 1,023 796 186 .78 Soxorce : I895 fron U. S., Congress, The Fish and Fisheries of the Coastal V/aters of Florida. I900 from Cobb. I9O3-I9O8 from ^5oore, Proceedings of the Fourth International Fishery Congress. tends to vuse less labor and BK>re capital. This fact, later covtpled with shrinking lOEU'kets because of substitute competition from synthetics and diseases in the sponge beds, resulted in a precipitous decline in total eEQ>lo3mient in the sponge fisheries as indicated in Table 4* As was mentioned previously the value of average catch per fisherman concept is by no means an indication of the actxml \rages received by fishermen. It is only a n^asure of labor productivity. The actual wages received by fishermen deiiend on many additional factors, such as enqployer bargaining power, degree of intra-industiry ^7 TABLE 9 AVERAGE C.'^CH PER DIVING CRAFT, I9O5-I9O8 Year Catch Per Craft in Pounds Value of Average Catch Psr Craft in Dollars Value of Average Catch Per Fisherman in Dollars Average Price Per Potind in Doillars 1905 833 3,980 288 lfr.78 I906 5,803 9,257 678 1.60 1907 5,113 5,031 360 .98 1908 3,16U 2,987 2Tk '9k Sour ce: Moore, Proceedings of the Fovirth International Fishery Congress . competition, and fishermen's ability to find employment in other fisheries or fields of employment. There are no actual earnings figures available for fishermen in the sponge industry, vith the exception of the Pinellas County siorvey. According to this report,eamings in the spongie fisheries for the first six months of 193^^ Mere as follows 1 Average earnings for divers Average earnings for engineers Average earnings for life line tenders Average earnings for crev members $612.50 382.00 300.00 215.00 A more detailed description of earnings vill be given in the next chapter, although at this stage it might be pertinent to mention that labor remuneration in the sponge fisheries is not a set amount of wages but consists of a sharing system after the subtraction of certain costs from total receipts. The Period from 1937 to 195'^ The i^iTs folloving 1937 were full of unprecedented disturbances for the Florida sponge Industry. Factors, such as the 1937 disease of the sponge beds. World War II, coi^petition from synthetics, the disease of I9U7 (the red tide), and an acute shortage of labor, caused the sponge Industry to undergo drastic changes. The effects of these events by themselves and through interaction with each other appear to have shaped the future of the sponge industry in an unalter- able manner. Production The year 1937 marks the beginning of a seciilar decline in the sponge fisheries, for it was in 1937 that a destructive marine microorganism invaded all the knovn sponge beds in the western Atlantic, resulting in a drastic decline in sponge landings. The velvet sponges were hardest hit by this disease and vere alioost com- pletely viped out. Despite this decline in the veight of landings, however, the number of hooking craft between 1937 and 1939 increased from 256 to 301 and the nuniber of diving craft from 72 to 89 (see Table lU). The decline in the productivity of the sponge beds, coupled with an Increased number of craft, resulted in lower landings per craft. For example, between 1937 and 19l*0 landings per diving craft declined from 6,551 pounds to 3,027 pounds. In the meantime, the value of average landings per diving craft declined only slightly between I937 and 19^, from $13,259 to $11,M>5 because of hl^r prices received (see Tables 15 and 16)» ^9 As can be seen In Figure 5 the decline In landings was accom- panied by a tremendous Increase In the valvie of landings. This Increase vas caused primarily by the entrance of the Federal Govemment In the market as an active sponge buyer. During the war years the United States Ck>vemnent bought practically all the sponges landed. The existence of such a large-scale buyer caused sponge prices to sky- rocket within a very short period of time. For example, average sponge prices at the producers' level rose from $2.^9 per povmd In 1939 to $15.99 a pound In 19*46 (see Table 10). It vas such price increases that lured additional Investment into the sponge fisheries at a time when the productivity of the sponge beds was declining because of a marine disease. Although no official statistics are available on the number of craft in the sponge fisheries during the war years, In conversations with fishermen in Tarpon Springs the author was told that more than 90 diving craft were in operation during World War II. The Interaction of the 1937 disease and IVbrld War II set the stage for the final collapse vlaloh took place in 19*^9 • There were two reasons for the collapse. First, heavy government purchasing during the war years dislocated many established trade relationships. Unable to cosqpete with the government many natural sponge users had to use substitute products during the war years when sponges were scarce. It was inxpossible to recapture such users after the war, and the majority of them, indxidlng the American housewife, were lost permanently to synthetics.^ Second, an Increase in the number of ^''Sponges for War," Business Week, April 10, 19'*3# P« 30. ^Interview with Edward Riley, President of American Sponge and Chamois Co., Long Island City, N. Y., November 19, 196'+. 50 o •d 08 E-i £ OJ a (30 a 5 t 5^ 5: w .C3 4) H ^ 01 01 H bO C C •H O Tl C -ri ^ (U CO 01 tH w h 51 0\t— trOOO vo ^ t^^ i/\ Q CO vo UN tr> 0\j*vou\vo-* H H HHHHr^HHHHH rH H r-i r-i >-i mco VO UN CO CO irv a\ o t~-vo tA " - CO ITNC^ VO t~-vo a\cj poH vovo CM o OH OH -a 3 - CfSvO F-t^f-vOoO t~- ^- a5^ou^-*v5vO UN O 8 8 ' ^ J- -d- O 0\ J- o o o -* mid- -3^ oouMrMfMTv cy vd3 Q f^i>-o u\co e-i H o ^ ooiTv H o C7\^ o cotno oco t--vo\o ir\vn CO • lAirvoj CO irvifN^- iTv C— VO t~ t— m Ht~-ir\^v>t~ S^ ("-CTMTk O CO O VQ COCO CO.* H ^ t~ OV C3V C7\ ONVQ CU C\i COHCVJH HHCUH HHCM r-t 1-i 8 ^ feT* S fi 8 VO Aj • •Or-O r-VO-^ VOVO H O O O -:t C\l U^ W O C7N OJ l7\2f ITvHOJ cOCJCOfO HCUCVJCOCVI CviC\lU^CVICMN wo H CA J- O H O^ VDCp O O t^VO O 00 0\-* 00 JK f--* • •VO-4'VO t-»fN^ VO H -5 *^VO IfxifN t— -* ITNVOVO® t«-VO • 'VOCOCTx COO •»t~-CO CO CO CO C7\0J -* t-9^^ -^ vo uM^vo f*^SD coot— 0\V0 lAVO IfSvO t— O 00 O CO O ITv f5S VO ON HHHHHHHCVlHCVI r-i C\l t-i r-i iH r-t < iTS^ O CO if\^ t- irvvo QI <\) CO -* £\i -* <7v^ -* VO o ovcovoP-ir\CV'T< t-iA vo-^tvovOvovovflcOvovo t— i/v^ CO irvo^ & « fo c-vo CO cvico H mH C\J «*^VO OvCVJ or»j* iTsO VOVO H 1-4 H H H m QOO OnONCM ^ QJ CO H O Jf V.D H ON O VO r^<0 on H iJrs cy VO ro Onvo O i/NC-ir>t~i>-t~0O ir»t~o CO 0\co t— O O O O O O t-Q O U\Q KQ 0\0 \DCO u\0 t-vO O H 80 O O O O f^co otTvoHt^ovSir-cgcy on-^cuvo o <5 O O o o\ir\ u\t^HO\i-ir-iu\a\ou\ -*vor-cvj OOCyb-ONHH-it-d-OX coHJSfcvjH»r«^3-r-ioo HHHHHCJCyCUOJCU O oJdF 88888 HQO 00 CO vONCVJ VO U\ USjt OJCVJHHHHr-ir-) CO^OO OJHOJ b-CO H vo CM H H on CO ro cvj <^ f^ po po 1^ ?^^s^ mco vo w I CO CO O H O O lA ITN r=! CO t- ir\ VO Q W VQ >OifS H VO CJ C-^ O U^ t^ OJ t^ lAODvjH H rH H CU VO t-CO J- coco OJ O OJCO CUH CU<-iCVJC3CVJC30J corH J- irva\ c^ c^ §H Q H O roir\ OnOWO 881 88 evi t^ vo a\ ^ a^ •« a^ -d- H CU H 88S VDCOCVjON llTSO OVOO®COlf\^OH-:t -JoJCVJt- H H COCO CO fl > •rl s <■> U S 0 ^ •H f<. t:^ Vi 0 -p 0 1^5 >i u ra iiB>^ •-3 C\J 0> C— ON jF t— CV)-* ON ON ON ^ i-l 8 888888888 VOJtOO o tVJ 8^« CO-* -* OJ 0 Ol 0 VO VO ITN 0 ONCO •.;fir\-* 0 COOSVO H rH 1—1 H ir H ^ OJ ITvCO H H H OJ H 8^S^5ia^^S'aiS8^^R!© Opl/NO.:tQOCOCy-*H OJ <7vS£) '"^ Co H 0 vo VD t^cc CO CO CO CO vo r; h :^^t£ 88Sgi^88>5!S >a\r-i CO CO c— -d" t^ t^co \om3 O 00 ON CO co t—covcvo-^ cocot— t^ O ojfoi'> ">H tti3- cocoirNf--CNj-coirN CO CriJ* '^ fij onono) asdo OJ IfN O CVJ f>-) LP. r-i J- --t r* c5' or or cT r-T CO f COO Jt 5> J^^S2^S .8 (S CVJ( 88 ir>OJi I t~J* t-co CJ OJ t7N^- i CVJ CM H OJ 888 100 1- JCNVO ON CO CO »-! , ONCO cocNHtr\ojf-t~vDHCocyCrO[^ vaONcy od rA \Q u>, u\yo u^Ko o KO {r\ ^ roif COOjHr4HHi-trHH \Q H 01 co^ mvo t— CO ON VCTN ON CACN ON ON ON ON ON ON fn CO CO CO. OnOnOxOni, _ _ _ _ HHHHHHHHf-trHi-IHHr-» O H OJ CO.;t U\VO f-CO ON OnOnONOnOnOnOnCnOnOn •-tr-ir-ir-ir-irHMi-it-ir-i O H OJ CO ^^^^ f-l H H H >> CD g c5 « ,% § « H H T r- t) c ry 2 •C 0 ^ c • i> > C( »:i <« M n OJ § 49 u • «H tht p X3 u t^ ts a •H ^ ^ ex *l^ H •H •s m 1 M • m CO 0 rn 41 H rn •H ON • M H H 8 0) 53 a u (0 «^ U -H PM O H CO I^ bO C •W « O -H 1 1 I 1 4 -§ 1 H to 1 o (L) to I D 51^ craft at a time when sponge beds were hit by an epidemic meant that the beds were being fished to the point of depletion. Figure 6 indicates how rapidly catch i>er craft declined after 1937 • This should have aroused scHse concern about conservation of the sponge beds, but instead higher prices caused i>ractices which led to an almost complete exhaustion of the beds. After the exit of the United States Government from the market as an active buyer of sponges, average per pound prices fell from the $15.99 peak in 19l»6 to $6.26 in 1^6, Average catch per diving craft stood at IjU^S pounds in 19^9* This decline in catch per craft along with greatly weakened prices caused the number of diving craft to be reduced to kO in 19'^9# a decline of almost ^0 per cent in three years. The final blow to the industry came when the already exhausted sponge beds were struck by another disease in l^k^. After having reached a peak of $2,715,000 in 19^5 (again see Table 10), sponge landings dropped to $110,755 by 1951, a period of six years. The diving fleet, which had consisted of over 90 craft during the war, contained only two outfits in 1952 (again see Table Ik), This fluctuation in the number of craft can be explained in terms of opportunity costs. In economics the concept of opportunity cost denotes the most favorable price that can be coiananded by a factor of production, which thus tends to become the minimum cost at which that factor can be had by any user.^ Although sponge outfits are a %torr, p. 51« ^rbld., p. k6, %arold S. Sloan and Arnold J. Zvircher, A Dictionary of Economics (Hew York: Barnes & Noble, 1958), p. 23^. 55 HOO no CO asaS o covo m irvoo J- t- t- (A o tfN CU CVI Ol H CM • CO^ VD tnCVl UNVQ H t>-Q CU »AV£> CO 81 8 8 8SSSSSS8888888 tH*«**CVI** •-* ONCO CU ® O ON m^ CT\0 ® CTXWN 0\^.^ o OCUONH^-voooCAcnifwooirNCA a 8^ ■s ^ • vo OS • • • • 8 8 8 §8 O «n H H roH cnco 8?;S<2i O ( OC I CJ\ CU O t- O UN (*Sc i o\0\CQ Jt JtVOO H t>-VO ro t-Qt-Q°OvOOOOOt- tfNOp f- coco lAH CU H t-UNO O H t- PO H t~ CO CJNCO m CU onj* 888888888888 ro^ HvOHHCOvocDcoHvo CUH CU<-I-*^- r-i l~{ & Hcuoo^ O VD O Q ooo Q Q lAO t-cnirNH^ S^Snoj vo vb cue Q cnuSo vo Hcb oo CU >co S sag H H r-i VO • • • fti rorotfvvn H O J* t— po c7\t- CU -* -* ,HCO ir\ir>^-* t-u>vo muN-^ vo r-l H CU \Si'Bsa\'$\^'S\'B\ik'$s^ SNOvSv^NOxovovavON ol (T.^ (R t-co C7\ ^t-it-iH^'H H i^' H H H H H H H H H H H H H H i^ H H H & c^cno CO 8 CO O iTvcO Q VO ^ t~ I CNO H cvj o\cSc5^ ( oo t- H cu o < o < ON ( ^ J- Or-»OJ a ^ H rH H CVJ CM on f^ 88 en H . 88 mo o 'QOOWOmONOMTvOHfOHHHOO miTiCO •••••••••••••••H 8 88 8 OJ chcvi ••••••• H •p 03 t— OJ (^ OJCO vo III OJ . _ _ t-t^C3<^HQC!J u\mvoovo t— ONtAcofocnoooo CJ\ Ol OJ »/N 88888888888888 u^cooJOolOl^-u^Hr^oJOlHol \R £ nm 888 tTNO^ fc i* "k •% O 0\lfN P QOO < O CO f-l ^^^ m^n 888888: «rv oo OJ o OJ f^ ' 888 ^ • 3 (S ^^p^ -d-^ OJ O p O O-d- Q H- on I H oi-^ ^ ^ > Qj ifN m c~--* m oi on t^^ o onco oj Ovr\j-»/Nt-t~-ovQvOcnrinir\Hj- ^ rHr-lH0JOI<^0n 881 onir\< 8888 H vo O ir\ 88881 H H on t— I (^ onoj >-• cycOvovOONCo ojco H ono -cO a\0 rH o) on^ U>V^ t^CO ONO H On a\ On ON ON ONCTvON ON'^'S^'i^'^ONONONON ON Cn ON ON ON ON f-^r-^r-^r-^r-^Hr^^^^^r-^r^^ri^-^r^^^-^r^^^-^Hr^^r-^r-^r^^Hr^^r^^r-{ 57 .^ m H S ON H 8° g 3 g I H 8888 8 8 8 8888 888 8 8 88 8888 • • • -3 • • 'SSSSSSSSSSISS m^ -*•••• 'S***!!! -*vOt- ..•. ro ....•• • • • ■ • *H^H * * " '|4 Jt nrOOO W CVJ O OJ O O O OO 0\C0 H VO «rv Q O CO.* H 0\VD Q f^irwOv pr^O C^F-0\VO • • • • 0\ • • • o roH t-H 01v5-5 VO POVO cuvo HOOCJCJ * * ' jr\ vo mroH CVJ or>OJ VO CM-*-* <*iO CVl iH H OJ H CO O VO H • • • • ^00 CO 10 • SI • t~-* t— cvj t— iTkONH^ o\pn irvo • ••••••••••••• CO OnO\^ ON'CTkl— O\0S"o\'3\ 0\ • • lf\ • ONCO • • • • • H CVI H CO CO O -^ »fN w cvj a\ \o r-i^\QQi en t— CO CT\ w tr9P ' jF O O ?S«5 po <-» VO -* covo t- mco O pn r-l H CVJ ^ CU J* ON • • * • 0\-d; H C-CO > OSVOOO (ViOVDHJi- 0\0\0 t-C»S ■ sess M Pti^'S.s sis" |>-C0 ON copriro ON 0^ ON w. w. w . w . ^ .. -. f-iHHHHHHHH 58 specialized type of fishing craft, when yields in sponging tall too low it becomes necessary for seme outfits to convert to other types of fishing. For example, after 1952 many diving craft converted to shrimp boats. This exodus of outfits ceune to an end when the remaining ciraft could earn a satisfactory return, that is, when the earnings in the sponge fisheries were equal to earnings in the next easiest accessible type of fishery. The reduction of the fleet also had a beneficial effect on the productivity of sponge beds; with fewer fishing outfits in existence sponge beds could be fished less extensively. This reduction in fishing effort gave the almost depleted sponge beds an opportunity to recuperate. As the sponge beds recuperated catch per craft improved. Assi;imlng that there is no change in the price level, increasing catch per craft means higher earnings. Higher earnings in turn attract more Investment into the fisheries, and this condition continues until the last craft attracted to the sponge fisheries earns an amount equal to irtiat it would have earned in some other type of fishing activity. A practical application of the afore -mentioned relationship can be obseznred in the antic lifted eGumings behavior of the shrimp fisheries during 1953 and 1957. In the shrimp fisheries these years were characterized by very hlj^ landings per craft, and each of these years was followed by a large Increase in the size of the fishing fleet In 2 the shrln^ fisheries. Of course, such conditions will be met only under the xx>8tulate of labor and capital mobility. To the extent that ^Interview with Louis Smltzes, May, I96U. ^Carter C. Osterbind and Robert A. Pantier, Economic Study of the Shrimp Industry in the Gulf and South Atlantic States (Gainesville, F3^. ; Bureau of Economic & Biosiness Research, University of Florida, 1965 Jt P« 23» 59 factors of production are iiimoblle,the production of a particular economic good vlll not resxtond readily to changes in the level of earnings . The degree of mobility is not the same for hooking and machine diving. As can be seen in Figure 7 hooking craft enter into and exit from sponge fishing more readily than diving craft. This is due to the fact that diving, as compered to hooking, is a more specialized operation. It takes more effort to convert diving outfits into other types of fishing boats, ^riiereas hooking outfits can be easily adapted to other types of fishing. Also, unlike hooking, machine diving is a highly skilled operation, and such skills cannot be easily transferred to other types of fishing at the same level of earnings. In other words, diving craft personnel may be as mobile as other fishemen In obtaining less skilled Jobs, but they have less horizontal nobility since no other type of fishing operation has use for submarine divers. Investment Based on current market values expert opinion has estimated 1^63 investment in the spongs fisheries to be approximately $325*000 (again see Table U). This figure is restricted to investanent in the fleet alone and does not Include money invested In shore facilities, such as the Tarpon Springs Sponge Exchange, or other auxiliary activities, such as investment in the packing establishments. Figure 7 shovB fluctuations of physical Investment measured in number o: craft in the sponge fishery. It can be observed from the chart that the number of hooking outfits has fluctuated moi« widely Kenneth E. Bouldlng, Economic Analysis (3rd ed.; New York: Harper & Bros., 1955), p. 2l5T 60 •H ■P CO «^ O 00 -d "d CO >H o •H o o o W to U Xi 0) CO o o I 61 TABLE Ik NUMBER OF CRAFT AND EMPLOYMENT BY METHOD OF OPERATION, 1937-1963 Booking Diving Year Flsbenaen Fishermen Total Enrploy- Va'f t . Craft aent /X cut w Regular Casvial Total Regular Casual Total 1937 256 380 380 72 569 569 9^9 1938 290 1*10 1*10 72 509 509 919 1939 301 1*89 1*89 89 63lf 631* 1,123 19'tO 175 233 k6 279 67 1^51 i^51 730 19»H 19^ 19^3 I9H 19^5 19U6 19'f7 19»*8 19^9 28 57 57 io 223 ! 223 280 1950 28 59 59 6 36 36 85 1951 29 60 60 3 12 12 72 1952 U6 96 96 2 12 12 108 1953 27 75 15 90 1* 28 28 llQ 195^ kQ 67 25 92 9 5^ 5k lk6 1955 39 1*1* 1*6 90 11* 66 S 72 16? 1956 U5 57 38 95 17 66 1 2 78 173 1957 59 63 65 128 13 1*2 1 2 5^ 182 1958 Ul 67 20 87 10 53 5 58 11*5 1959 37 73 • • 73 8 56 6 62 135 i960 23 58 • • 58 12 60 1 2 72 130 1961 81* 67 81* 151 12 60 1 2 72 223 1962 81 69 30 99 18 108 108 207 1963 • • • • 13 78 78 78 Source: U. S., Fish and Wildlife Service, U. 3» Fishery Statistics » 62 than the number of diving outfits. The reasons for this pattern will be explained in the follovlng section. Although diving outfits have always been fever in number than hooking outfits, with the exception of a few years, they have alwa^ landed a larger percentage of the total catch (see Table 17 ). The same table also indicates that for each year the percentage value of landings credited to diving craft has always exceeded their percentage contribution to physical landings, thus shoving that throughout history the diving fleet has maintained its ability to ccamnand better prices for its products. As can be seen frcaa Figure 6 productivity per enteiTorise unit has always been highest for diving craft. This has been true without exception, even for years \thBn the entire diving fleet has landed fewer sponges than the entire hooking fleet. The recent upsurge in the nvnaber of hooking craft is not of great significance, since a majority of such outfits do their fishing as a sideline or on a part- time basis. The number of diving craft seems to have stabilized during the last few years, mainly due to a shozrtage of qualified divers . Figure 8 and Pigvire 9 show the relationship between the number of craft (physical Investment) and catch per craft for hooking and diving outfits respectively. One can readily deduce that as the number of craft decreases the productivity per enterprise unit tends to go up, but this increase in productivity per craft - assuming no drastic decline in sponge prices - will attract outfits that had previously left sponging for more lucrative fishing activities. Figure 10 illustrates the concept of stable equilibrium in the sponge fisheries; however, the relationshiiw pictured in Figure 10 will occur 63 bO a •H M O O bO •H o a to 03 to •H -p f^ V( bO O G O bO P, O CO •H ^ 0) o ^ O -P -p U tH (U (9 •9 ^ s, •H 6k T) Si C CO •p aj bO o o p. Men c 0) ^ o t^l ON -P ITS lied in the description hold tnie. A change in user tastes or preferences may change the meurket demand to such an extent that any fleet size based on a biological equilibrium may have no economic meaning. For example, if Biost ovxrent users of natviral sponges decide to shift to synthetics^ Intensity of fishing effort as determined by fleet size and level of sponge population would be of limited economic significance. Also, a change in the relative in^rtance of imports covild sharply alter the market share and subsequently create unforeseen disturbances among the operators of sponge craft. It is obvlouis that the existence of such conditions could preclude the orderly adjustment described in the following paragraphs . Sponge landings and cost of fishing effort are measured along the OY axis; the OX axis measures physical investment or the number of craft In the sponge fisheries. The curve labeled L-, is a landinigs function, and it has a steadily diminishing sloije because of the lav of diminishing returns; that is, as successive tmlte of fishing craft are applied to a fixed amount of sponges, the amount of average landings per fishing craft, after a certain point has been reached, vill decline. Any short run shifts in this cvirve would depend on vmcontrollable natural elements, such as the diseases which hit the sponge beds In 1937 and I9U9, and on the intensity of fishing effort as determined by the numiber of craft in the sponge fleet. Curve N is a cost function, and its sloiie represents the assumption that additional fishing effort will have no inflationary effect on the prices of factors of production. ^Boulding, p. 589« 67 This Is a reasoziable assunQ)tlon in vlev of the fact that currently there are about seven former diving craft that could readily be made operational were It not for the current labor shortage. Also, any new craft constructed for the sponge fisheries vould constitute such a small percentage of total ship construction that any inflationary effect on the prices of factors of production would be negligible. Curve N also includes a noiTial return on investment which the owner of the fishing outfit could have earned in some other type of fishing activity. Point E in the diagram represents an equilibrium position. At E productive factors used in sponge fisheries have been placed in their highest paying employiaents , and there is no incentive for the owners of these productive factors to move their resources from sponge fish- ing to another type of fishing activity. Since E represents an equilibrium position, at E, ox ntaaber of craft are landing oy amovoat of sponges with all enterprise xmlts making a normal return on their Investment, Suppose that a marine disease were to hit the sponge beds, greatly reducing the amount of sponges available for fishing. This would mean a downward shift of the landings function from L^^ to Lg. A drastic decline in the amount of sponges available for fishing will have em adverse effect on the productivity of each craft; that is, when the same number of craft have to share a smaller quantity of sponges, catch per craft will decline. Assuming that there is no change in market demand, this will make sponge fishing less attractive, and there will be a tendency for some craft to leave the fleet. The ^Ibld., p. 566. ^Ibid. 68 rate of exit vlll depend on the intensity of the disease plus fishing conditions in other types of fisheries. A reduction in the size of the domestic sponge fleet may also occur as a result of a change in the relative importance of imports* In 1957, 238,550 pounds of natural sponges valued at $1,415,571 were inqported. Inqports have declined steadily since then and in I963 were 83,888 pounds valued at $805,103 (see Table 39). This drop in the relative share of inqports vas caused primarily by the narrowing of the price differential between domestic and imported sponges. The substantial price advantage enjoyed by foreign producers has tended to diminish since I96I (see Table 3^)» primarily beca\ise of supply shortages encottntered by the principal foreign producers. The increase in domestic sponge production and in the size of the sponge fleet since 1961 may be attributable to developments in foreign lands over which the f ishexioan has no control, rather than to any fluctuations in the domestic sponge population and/or changes in the cost of fishing. By the same token, should foreign countries be able to solve their supply problems, in the future the relative is^)ortance of Imports may improve. Such a situation is likely to create excess capacity in the domestic sponge fisheries regardless of the condition of the dotaestic sponge beds; however, in either case an adjustment in the size of the fleet will take place eventually. K. in the diagram represents the new equilibrium position, and it was reached after x^x number of craft left the sponge fisheries. At E-|^, OX]^ number of craft are landing oy^^ amount of sponges. In the absence of additional doa»stlc or foreign natural disasters this reduction of fishing effort due to the reduction in the number of 69 craft, coupled with proper consex'vatlon practices, will tend to Increase the sponge i)opulatlon, thus pushing the landings function upward. In addition to the sponge population and intensity of f ishlngj the level of equilibrium landings vlll also depend on con- servation laws. By placing legal limits on the size of spoiages that can be harvested, conservation authorities can move the level of equilibrium either to the rig^t or left of the above diagram. Currently, both Florida and U. S. laws prohibit the harvesting of sponges with a diameter of less than five inces when wet. This is done in order to give young sponges a chance to propagate themselves, since three to four years need to elapse before a sponge larva can 2 reach the legal fishing size. To be sure, the equilibrium positions described in the above paragraphs may never materialize in actuality. The concept of equilibriiim indicates a position which provides no incentive or opportunity to move. An enterprise unit which is in equilibrium is obtaining the highest possible return on Its factors of production and is maximizing its profits. Any changes from this equilibrium position will cause a decline In profits. Changes in market demand, in costs of production, and in the state of technology may constantly shift the equilibrium position, because the enterprise unit facing such cban0es will have tc readjust the employment of its factors of production If they are to be utilized at their highest paying capacity. Since firms in disequilibrium will tend to move toward a %torT, p. 67» ^Ibld., p. 17. 70 TABLE 15 AVH^AGE LAMDIRGS PER DIVIRG CRAFT, 1937-1962 Catch Value Value of Average Price Per Craft of Average Average Catch Per Pound Year in Catch In Per Fisherman in Pounds Dollars in Dollars Dollars 1937 6,551 13,259 1,678 2.08 1938 6,69^ 11,916 1,686 1.78 1939 k,26h 10,56U l,i^5 2.48 19»*0 3,027 11,1^5 1,698 3.78 19^*1 • • • • • • .. 19te ,, • • • • • • 19»f3 • * • • • • • . 19M* , , • • • • • • 19^5 , , • • • • ll*.33 I9U6 . . • • * • .. 19«*7 .. • • • • «. 19W ,, • • .. • • 19^9 1,»^58 10,307 1,81*9 7.07 1950 1,517 9,280 1,5^7 6.12 1951 2,133 11^,961 3,71*0 7.01 1952 6,900 39,'*00 6,567 5.71 1953 2,375 18,825 2,689 7.93 195^ 1,011 8,310 1,385 8.22 1955 1,129 8,221 1,599 7.28 1956 1,19»* 10,018 2,182 8.38 1957 877 5,256 1,265 5.99 1958 1,380 13,519 2,661 9.80 1959 2,663 29,605 3,820 11.12 I960 2,583 21,966 3,661 8.50 1961 2,583 26,712 l*,l*52 10.3** 1962 2,111 19,278 3,213 9.13 { Source: U. S., Pish and Wildlife Service, U. S. Fishery Statistics 71 TABLE 16 AVERAGE LAHDIMOS PER HOOKIIC CJIAFT, 1937-1962 Catch Value Value of Average Price Per Craft of Average Average C^tch For Pound Year in Catch In Per Fisherman in Pouxids Dollars in Dollars Dollars 1937 62U 1,035 700 1.66 1938 kzQ 1,018 519 1.72 1939 31*9 737 1^53 2.11 19'*0 229 TOO »^39 3.05 19'H • • • • 19'*2 . • • • • 19*^3 .. • • 19'^^ • • • « 19^5 • • h.35 19^ « • . . 19U7 • • . . 19**8 ,. • • 19'*9 371 2,090 1,027 5.63 1950 1461 2,653 1,263 5.80 1951 338 2,278 1,101 6.7^* 1952 2U3 1,376 659 5.65 1953 289 1,9^9 585 6.75 195»^ 125 9^ ^93 7.56 1955 1^5 3,501 1,517 7.22 1956 207 1,598 757 7.72 1957 566 3,007 1,386 5.31 1958 388 1,970 928 5.08 1959 162 1,'«5 722 8.78 I960 U70 1,981 786 '♦.22 1961 70 9^9 305 7.81 1962 323 sse 692 6.90 ! Snvircei U. S.,, Pish and Wildlife Service, U. S. Fishery Statistics. 72 TABLE IT PERCEHTAGE DISTRIBOTION OP LANDIBGS AHD VALUE OP LANDINGS m METHOD OF OPERATION, 1937-1963 Catch value of Catch Year B(x>king Diving Total Hooking Diving Total 1937 25.29 7l<.71 100.00 21.73 27.27 100.00 1938 20.1*6 79.53 100.00 19.88 80.12 100.00 1939 21.66 78.31* 100.00 19.08 80.92 100.00 19^*0 16.51 83.1*9 100.00 13.79 86.21 100.00 19IH « • • • • • • • • • « • 191*2 • • • • • • • • • • • • 191*3 • * • « • • • • • • • • 19M* • • • • • • • • • ■ • • 19*^5 23.71 76.29 100.00 8.97 91.03 100.00 191*6 • • • • • . • • • • • • 19»*7 * * • • • • «• • . • • 191*8 • • • • * . • • . . • • 191*9 15.11* 8i*.86 100.00 12.1*3 87.57 100.00 1950 58.6I* 1*1.36 100.00 57.33 1*2.67 100.00 1951 60.1*9 39.51 100.00 59.55 1*0.1*5 100.00 1952 1*1*.80 55.20 100.00 i*i*.55 55.1*5 100.00 1953 1*5.09 5l*.9l 100.00 1*1.13 58.87 100.00 1951* 39.71* 60.26 100.00 37.77 62.23 100.00 1955 5U.U7 1*5.53 100.00 5l*.26 1*5.71* 100.00 1956 31.1*2 68.58 100.00 29.69 70.31 100.00 1957 7U.55 25.1*5 100.00 72.20 27.80 100.00 1958 53.51* 1*6.1*6 100.00 37.1*0 62.60 100.00 1959 21.98 78.02 100.00 18.20 81.80 100.00 i960 25.81* 71*. 16 100.00 11*. 71* 85.26 100.00 1961 15.99 8i*.01 100.00 12.57 87.1*3 100.00 1962 20.89 79.11 100.00 16.1*7 83.53 100.00 Soiurce: U. S., Pish and Wildlife Service, U. S. Fishery Statistics. 73 nev equllibrlvm, the signlf icemce of this concept lies in tbe fact that It Indicates the direction in which econcoiic chansss can be expected to move. Costa In an Attempt to obtain current operating statistics for the diving fleet in the summer of IdSif^ the author interviewed nine diving craft captains in Tarpon Springs, Florida, by tising the inter- view guide appended to this study (see Appendix A). At the tine the s\irvey was conducted only eleven diving craft were in operation in the sponge fisheries, and the fliMiings of this suirvey as shown in Table l8 can be considered as representative of the total population. Taking the operating expenses in Table 18 and multiplying them by the nualber of craft in diving gives $^,3^^ ss the total operating costs of the diving fleet. This is considerably lower than the available total operating costs figure of $208,272 in 193^, mainly due to the fact that the nvimber of craft has declined by Jk per cent between 193**^ and I963. The reasons for cost differences between 193lf and I963 were explained in the preceding discussion of the early period (see pages 39-**!). Either because of their ignorance of tbe subject or their unwill- ingness to cooperate it was not possible to obtain cost data from sponge hookers* Personal observation by the author, coupled with opinions of fishermen in Tarpon Springs, revealed that operating expenses do not constitute an Isqportant factor in spongs hooking. 7^ TABLE 18 AVERAGE OFBRATINO E3CPEICES OF NIKE DIVHJG CRAFT, 1963 Item Dollars Fuel and Oil $ 9&^ Painting and Overhaul ^^97 Food and Supplies .*.. 1|367 Engine Repair ^^26 Diving Suits 300 Interest on $U,000 Working Capital 320 Exchange Dues » **^ Total $'*,33^ Average Deviation .«••.• I36 Source: Survey of boat captains in Tarpon Springs, Fla., by the author. May, 1964. anployaent As can be seen in Figure k employment in the sponge fisheries has been declining steadily since 1939. UP to 1950, employment in machine diving exceeded that in hooking, but beginning in 1950# employ- ment in hooking has exceeded employment in diving. The hooking fleet can be credited with having a better employment record since 1950, because tbsre are more casual fishermen in this type of sponge fishing. For example, dvuring I96I, 56 per cent of the fishenaen employed in hooking were casual vorkers. Very little capital invest- ment is needed for hooking, since all that is reqiiired is a glass ^Casual fishermen are defined by the U. S. Bureau of the Census as fishermen who receive less than half their annual income traa. fishing. 75 bucket, a pole approximately 20 feet long vlth a hook attached to the end, and any boat that can be Banned by two people. It Is estimated that not more than $1,300 is needed to eqvdp such an operation. Although detaching a sponge with a 20- foot pole requires some skill, such skill can be acquired with relatively little training and is not comparable to the elaborate skills needed in machine diving. Consequently, many aged fishermen and persons \rtio have other occupations in Tarpon Spring and Ksy V^st have found the hooking type of spongs fishing to be a profitable side line. Table 16 Indicates the value of average catch per fisherman in hooking opera- tions. TbB productivity of such fishermen is very low when the figures are ccmpared with the value of average catch per fisherman for diving operations in Table 1$. In calculating the value of averaeps catch per fisherman the value of total landings was divided by the total nuBiber of fishermen, including casual fishemen. This has deflated the productivity figures for regular fishermen in hooking and machine diving, but in no way has it disguised the productivity relationship between fishermen in hooking and machine diving. Qsployment in diving has been relatively stable between I960 and 1963* This is due mainly to the fact that it has been inqpossible to 2 attract younger men into this occupation. With the exception of one, all 26 divers employed by the diving fleet today are divers of Greek descent \^o migrated to this country before World war H. The median age of these divers as of August, I96U, was 59 years. Any expansion in employiaent that has taken place during the last decade has almost '''Interview with Louis Smitzes, Nay, 196^. 2lbid. 76 exclusively come from the ranks of ex^divsrs who took shore Jobs after the I9U9 sponge disease. Professor John F* Storr of the State University of New York conducted a study of the Gulf of Mexico ccanner- clal sponges In iriilch he found that the diving craft vlth the youngest diver (all over UO years of age) had a catch over 50 per cent greater than any other craft in the fleet in 1957* This does not strike one as something unexpected, since in a type of activity, such as diving, in which physical fitness is important, one would expect to find a positive relationship between physiccLL fitness and productivity. Younger divers, in addition to being able to spend more tine under water, are capable of operating at greater depths. These two factors make it possible for them to explore new su^as and harvest sponges which cosmand higher market prices* As can be observed frwa Table I5 averags productivity figures per fisherman have been steadily increasing during the last six years. This Improvement in productivity is priiaarily du& to two factors: (1) a general recovery of sponge beds from the disease of 19^^91 and (2) a scarcity of diving craft despite this recovery, due to a shortags of qualified machine divers. The sponge industry has tried to solve this manpower shortage by importing divers from the Mediterranean, but such efforts have proved fruitless thus far. After entering the Iftiited States imported divers often leave diving for more remunerative employment in Detroit or other industrial centers of the North.-' •^torr, p. 55. ^Interview with Loxiis Smitzes, April, 196^. ^Ibid. 77 Atte]iq;>tB are being made by tbe Tarpon Springs Sponge Exchange to bring divers over k^ years of age trtm. the Mediterranean* The Tarpon Springs Sponge Exchange Board of Directors reached this decision on the hypothesis that it vould be difficult for divers of this ags to find alternative employnent opportxinities * This may be an expedient solution to the acute shorta^^ of divers in the short run, but in tbe long run any industry's survival depends on its ability to attract labor and capital. Dnploying older divers vlll affect the averagp productivity of fishermen, but this nay not prove to be very laqportant since it has been pointed out previously that such productivity depends largely on tbe condition of the sponge beds rather than any effort exerted by oan. The Inportant thing is to find divers vho can function even if their perfomance is soiaevhat haopered by age* Importance of the Sponge Industry to Florida and the United States The past and present econc»alc significance of the sponge fisheries can be measured in terms of past and present performance in areas such as production and employment. In 1963> Florida fisheries landed 172,319,000 pounds of sea products at a value of $27,718,000 (see Table 19 ). The contribution of the sponge fisheries vas only $387,261, a very small percentage of tbe total value. In 1895, the sponge fisheries vere Florida's most valuable fish- eries, credited with one-third of the total landings for that particular year. A comparison of Table 20 vlth Table 21 shows that while other types of fisheries have been enjoying economic gains ^Ibld. 78 TABLE 19 QUAHTiry AHD VALUE OF LAHDINGS^ BY CCMMEECIAL FISHERIES IN FLCeiDA, SELECTED YEARS, I88O-I962 10,663 643 37,037 1,210 7k,0&7 3,389 135,965 5,167 131,839 6,250 118,801 3,61*5 187, U9B 5,005 243,81^ 18,836 118, ln8 15,985 206,887 31,523 170,850 30,889 172,319 27,718 Year Pounds Dollars i860 1895 1908 1918 1928 1934 191^0 19^5 1950 1953 1962 1963 Soxirce : 188O-I953 from Osterblnd, Florida's CommBrclal Fisheries, 1962 from U. S., Bureau of Canmerclal Fisheries, United States Fisheries, I962, C. F. S. No. 3*^71, Annual Stunmaryl 1963 from U. S., Bureau of Conraercial Fisheries, Florida Landings. *Value in current dollars. ^Foxmds and dollars in thousands. sponge fisheries until vesry recently have been experiencing nothing but deterioration. Taking the year I895 as a base year, between I895 and 1963 the index indicating the quantity of Florida landings increased to 503 while the index showing their value went from 100 to 2291. In the sponge fisheries landings between I896 and I962 declined by 80 per cent while their value went up by only 52 per cent. It is obvious that the sponge industry has not kept pace with the growth of other fishing industries. The contribution of the sponge fisheries in the provision of enqployraent has been unimpressive. While employment in 79 TABLE 20 INDEXES OF QUAHTiry AND VALUE OP LANDIJCS BY COMIERCIAL FISHERIES IN FLORIDA, SELECTED YEARS, 1895-1963 1895«100 Year 1895 1908 1918 1928 193'* 19J*0 19*^5 1950 1953 1962 1963 Qviantity Value Index in Founds Index in Dollars 100 100 200 280 367 1127 356 517 321 300 506 J+lU 658 1557 320 1321 559 2605 505 2553 503 2291 Source: Based on Table 19* fisheries has sll^tly increased since the early 190O's, employment in the sponge fisheries has declined by almost 100 per cent (ag^in see Table k), Althou^ thft sponge fisheries served the nation veil during World Veur II, measured in monetary terms the contribution of the Florida sponge fisheries to the total Gross National Product in I963 vas $367,261, which can be considered as even less than a drop in a bucket. Viewed in this light one may conclxide that the sponge fisheries of Florida are of little econcmic value to Florida and the Ibiited States. This, of covirse, is a very limited interpretation. It has been men- tioned previously that the sponge fisheries of Florida are a unique 80 TABLE 21 100 100 313 125 8«A 160 221^ lUl 377 Ikk 500 585 9^9 1378 kl 603 88 703 13^ 857 7^7 lk2 600 INDEXES OF reODUCTION AND AVERAGE miCE PEE POUND OP FLORIDA SPONGES, SELECTED YEARS, 1896-1963 l896«100 Catch Valiie of Average Price Year Index Catch Index Per Pound Index 1896 100 1906 250 1926 178 1931 158 1936 261 19»*1 85 19^ 69 1951 7 1956 13 19SI 16 1962 20 1963 23 Source: Based on Table 2 and Table 10. product of the state of Florida, and in terms of tourist attraction they rank favorably with other Florida landmarks. Judging by the number of tourists seen daily on the sponge docks in Tarpon Springs, one may speculate that indirectly through tourist expenditures the sponge fisheries add equal or perhaps more value to the econozoy of Florida than they do through their landings of sponges. A great number of retail outlets selling curios and providing sea food in Tarpon Springs capitalize on the sponge fisheries in their efforts to attract tourists. ^Interview with Louis Smitzes, May, 196^. CHAPTER III THE reODUCriON OP NATIRAL SPONGES Sponge Fishing Methods and Auxiliary Proeedtzres In Chapter II attention vas given to economic developoents in the United States sponge fisheries. Some of the production factors vere dealt with in terns of the economic significance that such activities had on the developoent of the fisheries. This chapter discusses production trcm a microeconomic viewpoint. The various productive activities which vere viewed from an aggregate viewpoint in the previous chapter are now analyzed from an operational per- spective. The following paragraphs examine the organization of firms in the sponge fisheries, their operating procedures, and distribution of earnings. An attempt is also made to discover the extent to which such factors affect supply and employment dependability in the industry. Consnercial sponges are harvested by wading, nude diving, femezen diving, dredging, hooking and machine diving. The market value of a sponge often depends on the method by which it has been obtained, since sponges taken from deep waters have qualities superior to those harvested in shallow waters. Curing the sponge When the living sponges are brought to the boat they are at first squeezed by the crew to initiate the maceration of the living material. 81 ae The next step Is to place the sponges on the deck vith the root dovn to facilitate the draining out of the gurry. In order to expedite the death of the living matter in the sponges the cxrew often trods on them with their hare feet. In order to avoid the drying of the sponges diuring this decomposition of the soft tisstie they are covered by a wet burlap sack. To assure iiniform decaying sponges are turned several times since uneven or excessive decomposition reduces the market Aralvie of the product. Under sunny skies this process of decaying will usually last no longer than one day, and the following day the sponges are ready for their final cleaning. Final cleaning starts by washing the sponges several times with sea water, since washing them with fresh water tends to make sponges look darker. After the final rinsing the sponges are thrown forcibly against the deck to knock out the dead shrimp and other foreign material that may have lived in the larger canals of the sponges. Then the outer surfaces of the sponges are scraped with short-bladed knives to remove the last traces of the skin. Finally, the clean sponges are strtmg on rope yams, technically known as "stefani," and tied to the rails of the boat for drying. After drying the stefani, each consisting of I50 sponges, are stored in the forward hold of the boat. The selling of sponges by fishenaen The information presented in this section is based primarily on the author's personal observation and information collected fr(»i residents of Tarpon Springs in the sumaer of 196^*. ^Interview with John Samarkos , June, I96U. 83 After the fishermen return to shore the sponges are stored In the Tarpon Springs Sponge Exchange. At the Sponge Exchange there are about one hundred Jail- like cells* Each captain occupies one or more cells depending on the amount of his catchy and he deposits and keeps his sponges in the cells until the day of selling. Prior to the sale the boat crev strings the sponges on yam 5 feet long, known in the trade as bunches. The nuoaiber of sponges on each bunch depends on the size of the strung sponges. Whenever sponges are available for sale the buying and selling takes place twice a veek on Tuesday and Friday at 9; 30 A. M., but not on Good Friday. If on the market day there is more than one captain desiring to sell his catch, then the selling order is determined by drawing a ballot. The Tarpon Springs Sponge Exchange bills the captain for 2 per cent of his sales for the services of protection, storage, and auctioning that it provides. If the captain is a member of the local Greek Orthodox Church another 0.3 per cent is withheld and donated to the chiurch of St. Nicholas In Tarix>n Springs. The sponges are sold to the packers at auction. A epongB auction is carried on in a silent manner with the packers caz^fully examining the sponges, while at the same time marking their bids on pieces of paper. The packers are experienced buyers, and their offers are based on the size and quality of sponges, this being established through a visual examination. The auctioneer awards the sponges to the hic^st bidder, provided the seller considers the amount adequate. The seller is permitted to refuse an offer if he believes that the price is too low. Bids often 6i^ differ by a fev dollar a, and the prices paid for any variety of sponge depend to a large extent on their size and other qualities as described in Chapter I* Units of Operation Of all the possible operational methods only hooking and machine diving are being practiced today by sponge fishezmen in the Uhited States. Althou^ the analysis of the fisheries in the previous chapter was undertaken in terms of a sponge fleet, one must not for- get that this term in no vay iaqolies any cc»mon ownership or central- ized direction of activities. As a matter of fact, of the thirteen 1 diving outfits in operation in 1963 > none had more than one owner. The same is true for hooking operators. It will be convenient to think of each craft in the sponge fisheries in terms of a separate enterprise. The objective of each entez>prise unit is to maximize its landings. The conlbination of the three factors of production, that is, capital, managemsnt, and labor, in an effort to achieve the enterprise objective will depend primarily on the size and ccxnplexity of the operation. For example, in hooking operations it is not unccnsnon for the owner — capitalist to be also the manager and captain and to provide at least half of the labor requirements of the enterprise. On the other hand, one often finds separation of ownership and management in diving operations. Of the thirteen diving outfits operating in 1963) four or ajxproximately 31 2 per cent were characterized by absentee ownership. Generally •'purvey of nine diving craft captains by the author in Tarpon Springs, Fla., May, I96U. 2lbid. 85 speaking, in sponge fishing as in many other forms of production, as the size and con^lexity of the enterprise increases so does the division of labor. Such Increased specialization Increases the number of people engaged in the supply of the productive feuitors necessary to discharge the enterprise objectives. In 1963 » there vsre thirteen diving outfits in the sponge fish- eries of Florida. Between 1962 and 1963> the number of craft in the sponge fleet vas reduced by five, largely due to an absence of quail- fled divers. The median length of a diving craft was 1*7 feet. The median age for each diving outfit was 3^ years. The newest craft was 22 years of age, while the oldest craft was constructed ^7 years ago. These diving outfits had an average market value of $17,000, which by fishery standards is considered to be a substantial investment. Due to their small size, intermittent nature of operations, and widely scattered locations, it was not possible to determine the precise number of hooking craft for the year 1963* According to the statistics released by the Bureau of Commercial Fisheries, there were 81 hooking outfits in 1962. Althou£pi the Bureau publishes statistics on casual workers, no such distinction is made for casual employment of capital. Informed sources in the sponge fisheries are of the 2 opinion that most hooking craft harvest sponges on a part-time basis. The same sources estimate the number of hooking craft to have been around 80 in 1963. Such craft usually have a length of about I5 feet. Most of them are propelled by a motor; however, there cure some that ^Ibld. ^Ibld. 86 entploy oars and sails. The capital required to iindsrtake such an operation may vary widely depending on the size of the boat, type of notor, et cetera, with $1,300 quoted as an average figure by most hookers In the trade. Distribution of earnings The following discussion will center around practices In machine diving operations. The process of distributing earnings has been institutionalized In this type of sponge fishing. At the beginning of each trip it is the owner's responsibility to furnish the ship with all the x^cessairy equipment. The owner Is expected to pay for all major repairs and to have the craft in perfect operational condition. In addition, it is the duty of the owner to supply his crew with advance payments, known as "platlka," from the time they have agreed to work for his until the final settlement of accounts approximately six months later. Owners are expected to take care of any emergencies that may arise in the families of their crew, and if tlK final proceeds are not adequate to cover the advances made to the crew, owners are expected to write off such losses. Currently, each diving craft consists of six members— the captain, two divers, an engineer, a lifeline tender, a cook, and a deck hand. With the exception of one case, the captain was always one of the divers. The rest of the crew is hired by the captain for a duration of six months. Crew members have no stake in the operation except the investment of their time. Their remuneration depends on the value of the catch plus the shares which each one is entitled to receive from ^Interview with Louis Smitzes, July, 196k, 87 this catch. It vas reported that the fomier depends on the size of the catch and its marloet price; the latter depends at any given tlias on the ccaaplexity of skills supplied by each crew laeBiber. The shares of the participants are also Influenced by the amount of the operating expenses, such as groceries, fuel and oil, diving suits, and minor rex>aiirs. One may say that, in a sense, at the beginning of each six months the craft is tximed over to the crev, which is then responsible for all operating expenses plus any damages to the cjraft dvnring the trip. After the deduction of all the specified expenses the remainder is divided by the participants in the operation as follows; First diver 2 shares Second diver 2 shares Engineer 1*5 shares Lifeline Tender 1.5 shares Cook 1 share Deck hand 1 share Boat 3 shares Total 12 shares When the captain is not the owner the latter gets 2.5 shares, with 0.5 share going to the captain. Thus, the remuneration of each fisherman is contingent upon th* success of the individual fishing trip. This sharing system offers a strong incentive to the fishermsn to obtain the largest possible catch and at the sane time to keep operating expenses at a minimum. If the trip proves not to be ^torr, p. 60. 86 successful the Ofvner theoretically loses nothing except depreciation on his investment and interest, either laiplled or actual, incurred in equipping the craft. However, \rtien a trip proves to be unprofitable owners are expected to write off the advance paynents made to the 1 crew. In hooking operations the pattern of distribution of the proceeds from the catch is less rigidly defined. Due to the large nuinber of part-time workers and to the ease of operation, attempts to institu- tionalize the distribution of earnings have not been successful. Most hooking operations consist of two people working from one boat. A rather common practice among those ene^ged in hooking on a full- time basis is to deduct all operating expenses from the proceeds and then to divide the remainder by 2.5 > each individual receiving one share and a half share going to the owner of the boat* Figure 6 and Figure 11 Indicate that enterprise units engaged in diving operations have been laore productive than those engaged in hooking operations. For diving outfits the catch per entesTprise unit has always been higgler both in terms of weight and value. Figure 12 indicates that labor has tOso been more productive in diving operations. This is to be expected, since the productivity of cmy combination of labor and capital tends to increase as the ratio of capital to labor goes up. The value of average catch per fisher- man is higher in diving than it is in hooking. This is an indication of the higher productivity of fishermen in diving, but the actual remxineration received by each fisherman in diving will depend on the •^Interview with JohnSamarkos, May, 196*^. c, D a) CO •H ^^ ft U Q) ■S ^ W •H ;h u O (I) H n< (^ M Ch W) n a •H en T) Q) G •H ^ u ^ ai V) bf) •rt 01 U^ ^1 (I) (1) > w < G o Ch ft O CO (1) (1) 3 ,G H -p (rt > o o o CO CJ ON o f ON D I a 90 i ^ a 1 ^ B W w c •H C8 S^ H bD CO CO <: nt selling transaction it was isipossible to obtain a more accurate market value than the price asked by the present owners. In 1963 > the average diving craft claimed 2.^ shares out of the total proceeds. This was equivalent to $1^,720, or a gross retvim of approximately 27*76 per cent on invested capital. As explained before, the element of risk and operating expenses inherent in sponge fishing are spread among all participants in the process of production. This is In contrast to other types of economic activity where all risks rest wholly with the entrepreneur or investor. To be sure, craft owners are still subject to the risk of losing their total investment^ that is, the ship may sink or they may be unable to recover the money paid in advance to the crev. It is possible to purchase insurance to cover sinking, but without exception no owner carries such insurance because of its very high cost, between $900 and $980 a year. .'\lthough such steep insxir- ance rates Inqply rather high loss experiences among marine vessels in general, this experience appears not to be applicable to the sponge fleet. Since the oldest craft in the sponge fleet is kf years old and the newest has an age of 22 years one can surmise that fishing craft in the sponge fleet have had a rather favorable accident record. •^Interview with John Samarkos, May, 196^. 2ibid. 3see page 85. 93 Owners are responsible for any oajor repairs needed to make the craft operational prior to the beginning of each semi-annual fishing trip. However, in informal conversations with the author, crew mem- bers cited cases in which dishonest craft owners deliberately neglected proper care and maintenance, since any repairs that occur during the trip are deducted from total receipts before arriving at the value of a share. Since owners take a reduced risk, a return of 27«76 per cent may be an excessive remxmeration for the functions they pearform. Under present conditions and barring any unforeseen developments it Is possible to recoup the entire Investment in a diving cxuft in a period of a little over three years. It Is obvious that such excess earnings by craft owners cannot last over a long period of time. It has been explained in ttos previous chapter that excess earnings may attract additional entre- preneurs into sponging and that as the number of craft exploiting given sponge groxmds goes up landings per craft and, consequently, returns on each owner's Investment will go down. The high level of present earnings can be explained in terms of a quasi-rent. The z«tum on any factor in temporarily fixed supply is called a quasi- rent in econoBxlc terminology. It has been mentioned prevloiasly that, due to an acute shortage of divers, the size of the diving fleet was reduced by 3U per cent from I962 to I963. The improvement of sponge bed productivity coupled with a smaller fleet has increased the aaiount of catch per craft. Present craft owners will keep receiving ^Alfred Marshall, Principles of Economics (8th ed.j London: Macmillan Co., 1922), pp. &14-&15. 9^ this quasi-rent until the supply of labor can be Increased, either by Importing divers from the Mediterranean or by training local people. It is possible that part of these excess earnings by one factor of production, namely capital, can be appropriated by labor, but even under conditions of the present labor shortage this is not likely to happen for several reasons. First, all of the present divers are elderly peoi)le with little alternative Job oi)portxinities elseiAerej second, such people are culturally tied to a minority conanunity in Tarixjn Springs and are unvilling to take chances in a foreign environ- ment. It was reported that the majority of these fishermen migrated to tl» United States in the early twenties, but most of them still speak only a few words of English. Third, most of these people have a certain pride in their occupation; their involvement in tlieir Jobs is romantic as well as economic, and one may assume that they would not think of moving or quitting even under the most adverse conditions. In short, this represents an unusual situation where the workers have not taken advantage of their increased bargaining jwwer. Dependability of Supply It has been pointed out in the preceding chapter that, given the size of the fleet, the supply of sponges at any time dei>endB on natural elements, such as weather conditions and marine diseases. It can be observed in Figures 13 through 16 that sponge landings from 1961 to I96U have generally followed the same trend as total Florida landings, indicating that sponge landings like any other fishing activity depend largely on the clemency of the weather. Of course. 95 Figure 13 . Monthly Comparison of Total Florida Landings and Sponge Landings, 1961 ■ Millions of Pounds 18- lb • ^ 14- \ / 12 • ^ 10 . 7 ■ Thousands of Pounds 5 ' 3 • 1 ■ / / / \ ' \ / \ / N / X / X / V / \ 1 \ 1 \ 1 \ I \ 1 \ \ \ JFMAM J J AS OND Florida landings Sponge landings Source: Based on Tables 22 and 23. 96 Figure Ik. Monthly Comparison of Total Florida Landings and Sponge Landings, I962 - Millions of Pounds A 20 ■ / \ 18- / \ / 16" A / \j Ik- \] 12 . 10 ■ 5 • 3 ' 1 • Thousands of Pounds N S \ \ \ \ ' \ ' \ ' \ / \ / / \ / \ 1 s ; \ 1 \ \ \ \ FM AMJJA S ON D — Florida landings Sponge landings Source: Based on Tables 22 and 23. 97 Figure 15. Monthly Comparison of Total Florida Landings and Sponge Landings, I963 20 1« 16 •■ li^ ■ 12 10 Millions of Poimds Thousands ' of Pounds / \ s • \,- - JFMAMJJASOND Florida landings Sponge landings Source: Based on Tables 22 and 23. 98 Figure l6. Monthly Comparison of Total Florida Landings and Sponge Landings, 196^ 16 Ik 12 10 Millions of Pounds 3 1 Thousands of Pounds A -I I L. JFM A MJ JAS OND Florida landings Sponge landings Source: Based on Tables 22 and 23. 99 J- t m 5 o 100 In Instances where the sponge beds stiff er from an epidemic disease ^ sponge landings nay move In an opposite direction from total landings if such a disease affects only the sponges and no other inhabitant of the ocean. For the years I96I to 196k the conditions of the sponge beds can be described as normal. It can be seen that sponge landings attributed to the months of August and December have consistently been lover and not in accord with total Florida landings. This is so because very little sponge fishing is performed during these two months. Traditionally, the sponge fleet returns to port early in Avigust and December for the celebration of religious festivities and 2 a sort of semi-annual settlement of earnings. This is also the tine when the craft tmdergo any major repairs or overhauling that may be necessary. Figure 17 shows sponge landings by months for the past four years; with the exception of I963 and part of 196^, landings as measured in pounds have gone \xp. Constant iaqprovement of catch can be taken as an indication of the recovery of the sponge beds. Sponge landings have decreased in I963 and part of 196'^, but this decrease was the result of a reduction in fishing effort cavused by a shortage of qualified machine divers rather than an unhealthy coitdition in the sponge beds. Supply and inrlce relationship Figure 18 compares average per pound xxrlces received by sponge fishermen with average per poiind prices for all fishery products since 19^ • As the chart indicates, average sponge prices have fluctuated ^Interview with Louis Smltzes, June, 196^*. 2ibid. 101 Figure l8. A Comparison of Average Per Pound Prices Received by Fishermen and Sponge Fishermen in the United States Cents 19^6 1950 Sponge Prices 195^ 1958 Fish Prices 19b2 Source: Based on Table 2k. 102 TABLE 22 FLORIDA LAMDIBGS BY MOBTHS, I96I-I96'* Founds tfonth 1961 1962 1963 196I* January 1J+,625,V18 11,687,661* 11,815,097 13,101,828 Fehrvary 11,970,11*2 11,81*5,11*6 10,783,361* 10,6ll*,230 March 13,626,1+93 10,739,310 13,002,772 10,836,582 April 15,266,660 10,917,31*0 ll*,891,300 15,724,086 May 15,5i*l,Mf9 16,585,191 12,061,689 16, 171*, 562 June 19,686,96'* 12,35l*,288 13,612,1*53 16,186,81*2 July 15,1*50,751* 19,018,981* 20,137,71*1* 11,552,690 August 13,957,106 21,780,056 18,138,030 11,990,636 September 17,880,870 11*, 1*77, 191 32,896,1*32 12,816,281 October 16,668,825 15,1*31,087 ll*,76l*,688 13,185,1*92 November I8,5l9p0l*2 15,370,1*18 11*, 761, 100 • • December l6,393,eo»+ 18,61*3,31*1 17,601*,619 • • Total 189,587,527 178,81*9,916 172,319,178 82,61*0,076 Source: U. S., Bureau of Coomiercial Fisheries, Florida landings. more than average prices for other fishery products. It has been pointed out previously that quality and supply are the two main factors deter- mining the prices received by sponge fishermen. In Table 10 a conqiari- son of average prices and total quantity landed reveals that with a few exceptions every increase in quantity landed was accompanied by a decrease in the average price received by sponge fishermen. Comparison with Earnings in Fisheries According to the I96O United States Census of Population the asdlcm income of fishermen in Florida was ^,113. In i960, the value of average catch per hooking craft was $1,961. Assuming no costs and 103 ■Jt ♦ chuwo • A H H 1 O H H : i^*^ ^ H H H 1 • •« '(^ J:r • • H OJ ^ Jt try t~-if\m o ^ H IfKCU CO CM en P CO m ^00 CO ^ :^:^s s^ H •^ •^ fl CM CM 4 91 • '^ ON • • VO fH V^ H US H ^ ^ >R • • ^5 • § H CO CO H a.l love rass ool ellov 1 B°^ (rt CO C5 C5 Pt H « • USOOO >R • CM CO t- CM H •« ^ CO ^ CO H00;3t • f-i ,-i t-i CO ^ O J* H ■^ •^ 1 ►^ CM CM S H ONCO m ::^^^> H w CM OO H t^d^ _^ ^ : ^'^ v8 H ^ n CO CO ^ C^t^ro • 00 CM CO • H W t- H •* J- ir\ CO • roc7\ CM H •> •» >» CO J- S §1 UNO ir\ • • o V? H •» VO VO H CO ro ^ • • u> • «f\ . . Vf\ . u\ H J- ^ -* ^ ON CM U> • co'mS C7\ lACM « H •> •^ CM CM CO :^SI oo r-i H •^ •» t-t -:*• ir\ <: ^ Q CO ?? • • ir»H t^ H H o\ ON ^ . • H • r-t • • irv • ir\ H •^ •^ -* Jt H » 8) love rass ool ellov 1 &°a E-i CO 1 o a:x >* 10l+ t J- o>co • CVJ vo s H ■^ u CO m • Sn ON OJ g 1 to H CO ^ .s^a^ H •^ H H H t~\0 I'N CO ^ ; l^vo d H «^ H H § H «< •k H CU PO O\V0 l^H »A t^ H H )?l f- ■p H •% •^ rOH J- <: « 0 H H • H cvj H ^ C~H0O >^ • OOH VO H H ■^ •* ir\ V£) ro 0 lAvo H >5^ • 00 H VO CVI H •* •» ^ ^ iTvH r- « •coxrQ • 00 ^ -* ^ H *\ r- CO H rA HOO s ^ • ^ GO ITN rocu VO i-i IfN lA i-t « fe 0) ca 0 s P4V1 a > «0 H H Q ^°a 0 aj 0 H H M 0 «J H ii 03 0 0 s >H ^ "^ I • • ! • H m • OVO t- U ^ ^ 1 H CO S « : :SS VO H •^ ^ H H • VO CVJ 00 % ^ H H ^ ^ • • • • • • • • • H m miAH ON *H ^ .v^gv^ 0 VO H CO CO 1 ^ ::»^ 00 H •^ Jt -=^ H IfNCO ro ^ • • CO t*- r-t •* •> tf\ UN J- CO H •^ •s ^ {r\ • coco f- u H ^ ^ 1 fO J- « H •^ ^ VO t>- H VX) t- ^ ■?. H ^ if\ ir\ M h°t love rass ool ellow 5 0 0} 1 0 0 ;» >H 105 TABLE 2i^ AVERAGE PRICE PER POUHD RECEIVED BY SPOKJE PISHBRMER AMD BY FISHHRMEN IN THE UNITED STATES, 19^-1962 Year Prices Received By Spozige Fishermen Dollars Prices Received By Fishenaen (^nts 19'»6 1947 191*8 1950 1951 15.99 10.55 6.26 6.85 5.93 7.00 7.01 7.16 8.22 7.13 7.09 8.23 1952 5.68 8.20 1953 7.39 7.9^* 195U 7.89 7.55 1955 7.32 7.05 1956 8.16 7.08 1957 5.52 7.39 1958 7.28 7.86 1959 10.61 6.76 i960 8.30 7.15 1961 9.9'* 6.98 1962 8.66 7.1*0 Source: U. S., Bureau of CouBierclal Fisheries, United States Fisheries, I962. 106 dividing the value of total landings per hooking craft among 2.3 shares, with each fisheman receiving one share and one«half share going to the boat, the average annual wage in sponge hooking was $268.80. This figure is considerably lower than the median incone of fishermen in the state and explains why many people in hooking outfits have additional Jobs. In 1960y the value of the average landings per diving craft was $21>966 (see Table 15). Althoi»gh It Is not possible to obtain operat- ing expenses for I960, assuming that they were similar to those of 1963 > earnings available for distribution after the deduction of operating expenses amounted to $17>632. The earnings per share amounted to $1,^9.33 with divers receiving an annual wage of $2,938.66, engineers and lifeline tenders an annual wage of $2,20lf, and deck hands and cooks a wage of $1,^9.33* The above calculations indicate that with the exception of hooking earnings In the sponge fisheries coeo^pare favorably with earn- ings in other types of fisheries. Divers, engineers, and lifeline tenders had Incomes above the median earnings of fishermen. Even the least skilled person, such as a deck hand, earned more in machine diving than a relatively skilled worker did in hooking, primarily due to the higher capital labor ratio in machine diving. It is Interesting to note that higher than average earnings in diving have not induced additional fishermen to enter this activity. Evidently the higher earnings received by divers are not high enough to conQ)ensate for the risks Involved in this occupation. Also, fisher- men with low earnings often can find superior opportunities in other industries which may enrploy labor more productively than machine diving* CHAPTER IV THE MARKETING OF NATURAL SPOTGES From the very Inception of the sponge fisheries in the United States sponges have been sold at auction. The inipllcations of ths atictlon procediire are discussed later in this chapter. At Key Wfest, vhich retained its aonopoly of the sponge trade until l69^» a vharf was set apart as a sponge market with the buyers paying a fee propor- o tional to their purchases. By 189^, Tarpon Springs had developed into a large-scale sponge market, and by the turn of the century it had passed Key West in Importance. Before 1906 sponges vere sold at irregular times at the various crawls in Tarpon Springs. This arrangement vas inconvenient for sponge buyers, as the cravls vere several miles avay from the city and from each other. To obviate this difficulty sponge buyers, known in the trade as packers, organized the Tarpon Springs Sponge Exchange 3 in 1908. The establishment of the Sponge Exchange, coupled with the development of machine diving and the discovery of the Bay Ground sponge beds, made the city of Tarpon Springs the capital of the sponge business in the United States. ^Stuart, p. 35. ^U. S., Congress, The Fish and Fisheries of the Coastal Waters of Florida, p. 43. ■^Stuart, pp. 35-75 • 107 108 The Taurpon Springs Sponge Exchange The Tarpon Springs Sponge Exchange Is a shareholding cooqpcmy with all its shares owned by its inembers. Over 90 per cent of the sponges produced in the United States are sold throxigh the Sponge Exchange. Membership in the Sponge Exchange is a prerequisite for all purchasers who buy sponges throxigh the Sponge Exchange. Theoretically, non- members can obtain sponges by purchasing them through inembers, but no such practice has taken place for the i>ast two decades. All local packers in Tarpon Springs hold membership in the Sponge Exchange. Organization The Tairxion Springs Sponge Exchange has a seven-member directing council \rtiich consists of a president, vice-president, secretary- treasiurer, and four directors. These officers are elected by ineinbers annually on the third Tuesday in January. The Sponge Exchange has a constitution and by-laws which regulate all transactions taking place at the Exchange. In addition to the seven'member directing council the Sponge Exchange eoploys an auctioneer and a secretary, the latter on 2 a part-time basis. Operations The Tarpon Springs Sponge Exchange provides boat owners with storage facilities and insures their product against theft and fire while in storage. There are over 100 cell-like cages on the premises of the Sponge Exchange where boat owners store the hairvested sp(^ges ^Interview with Louis Smitzes, June, 1964. ^Ibid. 109 from the time they are brought ashore until they are sold to members of the Spon^ Exchange. Whenever sponges are available for sale the buying and selling take place twice a veek on Tuesday and Friday, except Good Friday. All auctions start iiroiqptly at 9t30 A* M« If on the auction day more than one boat owner %rl6be8 to sell the order of offers is determined by drawing a ballot. A sponge auction is conducted in a rather silent fashion with the buyers critically examining the bunches of sponges for quality. Upon finishing their examination buyers write on a piece of folded paper the highest price they will pay for a bunch of sponges* A definition of this term was given in Chapter III. The highest bidder is awarded the sponges , provided the seller considers the amount satisfactory. Owners can refuse to sell at a price they consider too low. In such cases their sponges are auctioned later the same day or on the following day. For the services provided, the Tarpon Springs Sponge Exchange charges the seller 2 per cent of the amovmt of his total sales. From such billings the Sponge Exchange defrays the expenses that might be required in promoting the Interests of the industry. Owners, B^eabezsof Greek church, are charged with an additional 0»3 per cent, and this amount is donated to the treasury of the St. Nicholas Greek Orthodox Church in Tarpon Springs. ^Ibid. ^Ibid. no Evaluation of operations Since the Tarpon Springs Sponge Exchange was organized by the packers, most of Its activities are geared tovard furthering their interests. The Exchange is in a position to assist fishermen in their operations through a more meaningful classification of landing figures. For example, by classifying landings by region it might be possible to predict depletion of spongie beds for the various fishing regions. Such Information, coupled vith some industry regulations, might be used to direct f ishenwn to fish in other regions until the depleted beds have a chance to replenish themselves. Conservation of sponge beds can also be accomplished by classifying landings as to the sise of the cavight species. Consistent catches of smaller species may indicate potential supply problems, since a systematic harvesting of young sponges will adversely affect the future of the sponge grounds. Tarpon Springs Sponge Exchange officials recognize the value of such information, but they feel that it would be unrealistic to install such a system with the present personnel, which consists of an auctioneer and a part-time secretary, and they are financially unable to employ more people. The Exchange has concentrated most of its activities in the area of politics, and in 1963, it was instrumental in influencing the General Services Administration to purchase all its natural sponges 2 from Tarpon Springs packers. Prior to fiscal year lS63t the Federal Government bought most of its natural sponges from distributors located •^Ibid. o Interview with George Arfaras, owner of George Arfaras Backing Firm, Tarpon Springs, Fla., May 13, 196'*. Ul outside Florida. In the same year the Exohange, primarily through political Influence, played an Important role in the enactment of a state law which directed all state agencies to purchase Florida- produced sponges. This law, as explained in the next chapter, has failed to accojoplish its objective. At x>resent the Tairpon Springs Sponge Exchange is attempting to obtain the permission of the Uhlted States Immigration Service to 2 import more divers fr(^a the Mediterranean. This attitude is easily understandable, because the analysis of packer operations in tlie following x>Qragraphs indicates that most packing firms are unable to obtain enough sponge volume to break even. Although Importation of divers may alleviate packer problems in the short run, the Exchange has not considered the long-run effect that such a policy might have on the earnings of sponge fishermen, sponge prices, and the avail- ability of sponge supplies. These matters will be dealt with In greater detail in the conclusions of this paper. Packers At the Tarpon Springs Sponge Exchange sponges are auctioned to busiziess firms known in the trade as packers. All axich firms are located in Tarpon Springs, and they are responsible for the creation and operation of the Exchange. The process of sponge buying has been explained, but It should be noted here that the methods used by packers to determine the quality of a given bunch of sponges are canpletely sensory and ^Ibid. Inteirvlew with Louis Smltzes, June, I96U. 112 qualitative. The test methods used in quality deteinalnatlon are derived from long years of experience and depend on the use of sight, touch, and smell. Most of the information on packers was obtained through a survey conducted in the svmmier of 196^ among the eleven pecking firms vhlch vere in operation during that period in Tarpon Springs, Florida. Although the stirvey covered the entire popiJilation of packers, due to suspiciovis attitudes and a lack of records it was not possible to collect much meaningful information from these businessmen. An English translation of the original Greek interview guide used in the sxnrvey is presented as Appendix B* Operations Natural sponges sold at the Exchange to the packers are for the most part devoid of foreign material, but they may contain scuae frag- ments of rock or dead shrimp. Also, the shape of seme of these sponges is irregular or the size too large to auiX the requirements of buyers. At the packing house all foreign particles are removed and any irregu- larities on the surface of the sponge are sheared off by clippers known as "psalldistades" in the trade. Packers estimate the waste from such clippings to average between 1^ to 0 per cent of sponge purchases depending on the coi^jositlon and quality of the purchased species.-" For exai^le, the Rock Island Wool sponges normally require less ^Interview with John Kouremetis, owner of John Kouremetis Packing Firm, Tarpon Springs, Fla., May 19, 196^4^ • ^Ibid. ^Survey -of packers in Tarpon Springs, Fla., by the author, July, 196t^. 113 clipping as compared to Grass sponges which, because of their size and shape, demand extensive shearing before being offered to the market. In the past such waste was sold to manufacturers of roofing paper and steam pipe insulation. During the war when there was a p shortage of sponges such trinmings were sold for y) cents a pound. At present, packers are unable to dispose of such clippings and extreme care is exercised to reduce such waste to a minimum. After being carefully clipped sponges are separated by size and quality. The first step is to separate the sponges into two groups, "forms" and "cuts." Forms are sponges in their whole natural shape. Cuts are sponges cut either from larger form sponges or from sponges that have been distorted by the clipping out of a diseased part or a crabhole. Cut sponges are further classified into firsts, seconds^ and thirds, depending on quality. These classifications are then assorted by size, the grading depending on the number of sponges required to make a pound. The sizes are ones, twos, twoi! to threes, threes to fours, fours to sixes, sixes to eights, eights to tens, tens to twelves, twelves to slxteens, and sixteens to twenties. The sizing is done by passing the specimens through standardized holes in a piece of veneer. After having performed the above-mentioned functions packers sell the sponges to wholesale distributors located primarily in ■^tuart, p. 38. ^Ibid. ^Interview with Mike Samarkos, owner of Samarkos Brothers, Inc., Tarpon Springs, Fla., May 20, 196**^. Interview with Louis Smitzes, June, 196^. New York City, Chicago, St. Lovils, and Cinciimatl, with Nev York City being the oost iioportant market. It is known by the trade that some packers sell their products directly to users. All surveyed packers were aware of the existence of such selling, but none admitted doing 80 hiinself because this is considered by the trade to be an unethical practice. The amount of sales outside the established distribution channels is not known, but in view of its clandestine nature one may assune that it could not be a large percentage of total packer sales. Also, because of their rather United financial resovtrces packers could not afford an aggressive selling policy. 2 Iftitil 19^1, packers sold sponges by weight. Because of the limited supply of sponges and their hi£^ price packers gradually developed a practice known as "loading" by which the weight of sponge shipments was increased through the addition of all kinds of foreign 3 materials to the species. In later yecurs this practice became so extravagant that at times up to 100 per cent wei^t was added by foreign materials, which not only were difficult to insert into the sponge but had to be removed from it before it could be sold to the h ultimate user. In 19^1, to obviate this unethical practice and under pressure from the Federal Trade Coamission packers in Tarpon Springs resolved to sell sponges by piece instead of weight. One may assume that loading had an adverse effect on sponge users, although it is ^Ibid. ^Ibid. ^Robert B. Bennett, Background Information for Voluntary Grade Standards on Natiural Sponges, U. S. Fish and Wildlife Service Special Scientific Report, Fisheries No. 273 (Washington: U. S. Government Printing Office, 1956), p. 53. *^Ibid. 115 ioq)os8ible to measure the number of users vho may have switched to substitute products. Distributors in New York City mentioned that their customers still examine sponges for rocks and other veight- addlng foreign matter. Backers sell sponges in burlap bales corded with Jute rope and marked with a card giving the date, the kind and grade, the weight, and the number of pieces in each bale. The size of the bale depends on the number of pieces ordered by the distributors. It is custooary for packers to sell F.O.B point of purchase vlth the distributor paying the freight charges and making his remittance in 60 days. Although bales shipi)ed by packers are of no standard weight, packers indicated that orders of 25O-3OO pieces are the most frequently received. They estimated that the material cost in packing such a shipnant is approximately 30 cents .^ Personnel Table 25 shows that most of the firms engaged in packing are small family operations. The typical firm is managed by a rather elderly husband and wife team with the children and other relatives assisting in the operations. As can be seen In Table 25 the ratio of relatives to non-relatives is hlg^, indicating that such enterprises might not survive if they had to pay going wages for the performance of functions necessary to rirn the business. Because of their lov profitability such firms have been unable to attract the type of personnel that could lead an enterprise to grow throiigh exploring llntervlew with Robert Slnenberg, partner in Florida Sponge and Chamois Co., New York, November 18, I96U. ^Interview with George Arfaras, May, 196'*. 116 TABLE 25 TOTAL NUMBER OF FULL-TIME AHD PART-TIME EMPLOYEES OF ELEVEN PACKING FIRMS IN TARPON SffilNGS, FLC»IDA, AND THEIR RELATIONSHIP TO THE OWNi» Number Total Full-Time Ftaployees Total Part-Tiioe Employees Relatives as a Percentage of Finns Non- Relatives Relatives Non- Relatives Relatives of Fiai-Tlme Workers 1 1 3 2 0 25 2 1 3 0 0 25 3 2 0 2 0 100 k 1 0 0 5 100 5 1 1 1 0 50 6 1 2 0 0 33.3 7 1 1 2 0 50 8 2 0 0 0 100 9 2 0 0 0 100 10 1 0 2 0 100 11 2 0 1 0 100 Source: Svurvey of packers in Tarpon Springs, Fla., by the author, July, 1961^. unexploited opportunities and reaching out for new markets. As a rule the owners of these establisbasnts have shown little effort since the inception of their firms to change their operating procedures or try new methods in order to better serve their customers. The colimm "Relatives" in Table 25 incltides the owner or owners of the enteri)rlse, inasmuch as, in addition to managing the enterprise, all owners perform non-managerial duties such as bookkeeping, cleaning the premises, and clipping sponges. Two of the surveyed firms employed clerical workers, one each, end only the two largest firms employed clippers on a full-time basis. The other firms perform this clipping 117 fiinction by hiring help on a part-time basis or, as in the majority of cases, the clipping is done by the owners themselves. For exanqple, a husband and vife team can trim a $10,000 purchase consisting of approximately 1,00-1,200 sponges in about a veek. Part-time clippers can always be found among the ranks of idle or retired fishsnaen, and they are paid on an hourly basis at a ciarrent hourly rate of $1.50 .^ Evaluation of operations In 1932, there were fifteen firms engaged in sponge packing in the city of Tarpon Springs, and in 1933* the number of such firms in- creased to sixteen."^ It is possible, although not likely, that a businessman would Invest capital in a field beset with supply and demand difficulties. Although this may be a highly specxilatlve assumption the fact that an additional firm was added in one year can be interpz^ted in terms of a favorable market outlook, which also implies that no supply problems were anticipated at that time. Between 1933 and 1963 sponge production declined by 83 per cent; however, for the same period the number of packing firms showed only a decline of 31 per cent. Of the currently operational packing firms k none has been in this kind of business for less than 30 years. Despite shrinking markets and a chronic shortage of sponges to sell, such firms try to maintain their image as sponge packers. At present, only three firms are engaged in packing on the basis of selling sponges as a full-time activity. Most of the remaining firms derive •'•Interview with Mike Samarkos, May, 196^. ^Interview with George Arfaras, May, I96U. 3sage, p. 3. Survey of packers in Tarpon Springs, Fla., by the author, J\ily, 196**. U8 TABLE 26 PACKER SALES BY LINE OP PRODUCT, 1963 Number Sponge Sales as Souvenir Sales Brush Real of a Percentage of as a Percentage Manufac- Leather FlrKS Total Salee of Total Sales turing Estate Processing 3 100 • • • • • • 1 20 10 • • • • 70 1 • • 20 80 • • 2 50 50 .. • • 1 20 50 • « 30 2 30 70 • • • • 1 20 80 • • •• Source: Survey of packers in Tarpon Springs, Fla., by the author, July, 1964. better than three -fourths of their receipts from activities shovn on Table 26, but due to their emotional involvement such persons still prefer to be called packers and do their best to reflect such an image. The custonary markup of packers is 25 per cent on the cost of purchases.^ As was pointed out previously, lack of record keeping aiBoug packers was such that no aeemingful data could be developed. Of the three bona fide packers the largest two are credited with buying between 75 to 60 per cent of the annual sponge i>roduction for the past several years. This figure was consistently mentioned by all packers, including the owners of the two enterprises doing such buying. Table 27 indicates the financial strength of the two largest packing firms as estimated by Dun and Bradstreet. As will be demonstrated in the folloxfing pages, with the present production of natural 8i)onges most firms could not break even if they Interview with Mike Samarkos, May, I96U. 119 TABLE 27 FINANCIAL STRENGTH OF ELEVEN SFQIR3E PACKEEtS IN TARPOT SraiNOS, FLORIDA, I963 Total Assets Number of Firms ^ 5,000 - 10,000 3 10,000 - 20,000 1 20,000 - 35,000 1 35,000 - 50,000 2 75,000 -125,000 2 Ti.a. 2 Total Firms U Source: Dun and Bradstrect, Reference Book, 1964 (New York: Dun & Bradstreet, 1964). had to rely on the sales of sponges alone. While surveying the sponge Industry in JUne and JviLy of 1964, the author lived in a house owned by the owner of the firm which has been mentioned previously as the third firm engaged in full-scale packing. Due to such close associatjon it was possible to obtain accurate data on expenses and profitability of an average size bona fide packer (see Table 28). The other two pack- ing firms were very vincooperative in disclosing infonuation concerning even rough approximations of expenses and other phases of their opera- tions. The financial strength of this establishment as estimated by Dun and Bradstreet is between $35,000 - $50,000. The site of the business is owned by the owner; his annual purchases for 1963 were $39,963, and his sales during the same year amounted to $50, 9^3 • The owner performs all the needed functions except the clipping of sponges which is done by part-time labor as the need arises. During I963, $684 120 vas paid to clippers for trinming approximately 5*700 lbs. of sponges. Based on these relationships the approximate cost of clip- ping one pound of sponges is about 12 cents. Packers mentioned that it takes $2.25 vorth of biirlap and cproximately 6s per cent of the sponge distributors in the Utaited States are msmbers of the Sponge and Chamois Institute. This indicates that statistics provided by 196»». ^Ibid. ^Ibid. Purvey of packers in Tarpon Springs, Fla., by the author, July, 325 the Institute are of considerable value for the following reasons. (1) Data provided by the Institute constitute the only available inforiBBtion on sponge sales at the distributor level. (2) A large number of distributors hold Bttmbership in the Institute and cooperate with it in the collection of statistical data. (3) Kon-aember distributors constitute a small percentage of the total distributor population and are responsible for an even smaller percentage of total sponge transactions at the distributor level. Officials of the Sponge and Chamois Institute estimate that non-member sales constitute less than 2 per cent of total distributor sponge sales. (k) All known chamois distributors sure members of the Institute. As will be pointed out in discussing distributors, sponge and chamois are products of a complementary nature. In order to be successful as a sponge distributor a firm has to inclxide both items in its product mix. Evaluation of operations The only natural sponge statistics available at the distributor level are those gathered by the Sponge and Chamois Institute. The Institute compiles anniial figures of natural sponge sales and chamois 2 sales as reported by its members. It also compiles statistics on total natural sponge Imports fraa data published by the Bureau of Census. ■^Interview with Mrs. Elizabeth Wallace, November, 196U. ^Ibid. ^Ibid. 126 In spite of its limited staff and facilities the Institute does a remarkable Job, but there is much room for improvement. For exeun- ple, it would be very helpful to know sales by type of customer of the distributor in order to get a better picture of sales trends. At present, no such figures are kept by the Institute, primarily because members object to excessive paperwork. Mrs. Elizabeth Wallace, Executive Secretary of the Institute, is currently attempting to per- suade members of the value of importing such information which might be useful for conducting their affairs more efficiently. Distributors Distributors constitute the next link in the marketing of natural sponges. In 196^^, there were eighteen natural sponge distributors in the United States. Most 8X)onee distributors are located in and around 2 ports on the eastern Atlantic coast. This is a natural developnent since, as can be seen in Table 29> imports have alvrays constituted a rather large percentage of the total natural sponge supplies in the United States. Most of the information on distributors was obtained from records supplied by the Sponge and Chamois Institute and by inter- viewing the owners of six firms located in the states of New York and New Jersey. According to Mrs. Elizabeth Wallace, these six firms are resi>onsible for better than 80 per cent of the sponge sales at the distributor level. Two attempts to obtain information from all known distributors produced no response. ^Ibid. ^roid. 127 TABLE 29 DOMESTIC AND IMPORTED SPONGES AS A PERCENTAGE OP TOTAL SUPPLY 193^-1963 Dome s tic Imports Tots ll Year Per Cent of Total Per Cent of Total Quantity Value Quantity Value Quantity ValUB 193'^ 50.30 63.06 49.70 36.91* 100.00 100.00 1935 37.76 56.83 62.21* 43.17 100.00 100.00 1936 50.1*2 6l*.69 1*9.58 35.31 100.00 100.00 1937 k6,kl 6l*.87 51.59 35.13 100.00 100.00 1938 ^,86 61.05 1*5.11* 38.95 100.00 100.00 1939 ua,66 68.16 51.31* 31.74 100.00 100.00 19^ 30.80 58.96 69.20 41, 04 100.00 100,00 I9UI U7.50 72.1*7 52.50 27.53 100.00 100.00 19^ 61.02 73.1*8 38.98 26.52 100.00 100.00 19^3 lf8.85 71.71 51.15 28.29 100.00 100.00 19M* 60.8U 72.95 39.16 27.05 100.00 100.00 19*^5 66.99 77.1*3 33.01 22.57 100.00 100,00 19lt6 33.04 1*5.62 66.96 5l*.38 100.00 100.00 191*7 36.12 1*2.61* 63.88 57.36 100.00 100.00 191*8 17.31* 15.26 82.66 84.74 100.00 100.00 19i*9 22. U 19.55 77.89 80.45 100.00 100.00 1950 6.18 5.19 93.82 94.71 100.00 100.00 1951 5.90 1*.92 94.10 95.08 100.00 100.00 1952 12.31 10.22 87.69 89.78 100.00 100.00 1953 6.28 7.28 93.72 92.72 100.00 100.00 1951* 7.27 9.59 92.73 90.41 100.00 100.00 1955 13.69 15.15 86.31 84.85 100.00 100.00 1956 11.98 15.76 88.08 84.24 100.00 100.00 1957 15.69 ll*.75 84.31 85.25 100.00 100.00 1958 13.37 13.77 86.63 86.23 100.00 100.00 1959 lk,UQ 19.18 85.58 80.82 100.00 100,00 i960 16.67 19.81 83.33 80.19 100.00 100.00 1961 27.1*7 31.10 72.53 68.90 100.00 100.00 1962 31* .22 33.17 65.78 66.83 100.00 100.00 1963 39.99 32.1*8 60.01 67.52 100.00 100,00 Source: Based on Table 40. 128 In addition to marine sponges, distributors deal in chamois, a product which is used in cleaning, drying, and polisliing surfaces. This product is used in conjunction with sponges under most circum- stances and is of a complementary nature. During the last decade natural sponge distributors have begun to sell synthetic sponges, a substitute product. Table 30 shows distributor sales since 1951 ^7 line of product. Intermittent supplies of natiiral sponges couplwd with high prices forced all distributors toward substitute products, that is, synthetic sponges under private brand names. By selling a large number of units of synthetic sponges at lower prices, distributors have been able to increase the sales volume of the complementary product mentioned previously. This strategy has enabled these firms to increase their total sales volume and make a handsome profit through an acceleratedtumover of the complementary good bearing a high markup. This can be better understood through an examination of the data presented in Table 31* In 1953, natural sponge sales contributed 39*69 per cent to the distributors' total sales volume. The contribution of the complemen- tary product, chamois, was 60. 31 per cent (again see Table 31). Ten years later in 1963 » the contribution of natvural sponges to total sales volume had fallen to 12.97 per cent while that of the complementary product increased to 71.92 per cent. Between 1953 and I963 natural sponge prices were relatively stable, both at the producers' smd distributors' levels (again see Table 10). The same held true for chamois prices for the sane span of time. Since prices were stable ^Ibid. 129 between 1953 and 1963» a drop In percentage contribution to total sales volume indicates that fewer units of nattiral sponges were sold In 1963* The reverse is true in the case of chamois. Cheuaois sales as a percentage of total sales increased by 11.61 per cent in ten years. Since there were no price increases during that period this indicates that more physical units of chamois were sold in I963 than were sold ten years ago. The expansion in chamois sales is due primarily to an increase In synthetic sponge sales. In I963* synthetic sponge sales were only 1^.11 per cent of the distributors' total sales volume. This is 11 .61 per cent less than the natural sponge sales of all distributors in 1953» ^^ because of the low per> xmit price of synthetic sponges, it represents an increase in the physical units sold of the absorbing material. Since chamois Is a complementary good to any absorbing material, an Increase in the sales volume of synthetic sponges has resulted in a higher sales volume for chamois. Operations Distributors obtain their supplies of natural sponges from packers in Tarpon Springs and various foreign countries, primekrily Greece. The customary method for dozaestic purchases is F.O.B. point of origin. Imports are handled on a C.I.F. point of destination basis. Distributors contact potential buyers through the use of the telephone and travelling salesmen, depending on the size of the firm. Since most buyers are located in and around New York City most selling is done via the telephone.-'- Only four of the largest distributors Indicated the use of salesmen. •^-Interview with Robert Slnenberg, November, l$6k. 130 TABLE 30 SALES IN DOLLARS OF NATURAL SPONGES, SYNTHETIC SPONGES, AND CHAMOIS AT THE DISTRIBUTOR LEVEL, 1951-196^ Year Natiiral Sponges Synthetic Sponges Chamois Total 1951 2,951,970 1952 2,516,379 1953 2,U02,223 195^ 2,ltK),721 1955 2,29^,er!k 1955 2,413,700 19?? 2,21*1,033 1958 2,055,089 1959 1,919,958 i960 1,666,127 196I 1,336,254 1962 1,639,144 1963^ 1,207,051 196U* 773,622 1,142,874 1,275,789 1,409,652 1,406,332 1,245,722 4,602,427 3,749,342 3,649,742 3,281,171 3,627,368 3,445,089 3,207,861 2,804,320 3,059,791 3,245,136 2,998,395 6,153,822 6,692,352 3,965,661 7,559,397 6,265,721 6,051,965 5,421,892 5,922,242 5,858,789 5,448,894 4,859,409 4,979,749 6,054,137 5,610,438 9,202,618 9,306,235 5,985,005 Soiirce: Sponge and Chaniois Institute records (in the files of the Institute). ^Natural and synthetic sponge figures for 1964 cover nine months only, and chamois figures for 1964 cover six laonths. Table 32 shows distributor sales of natural and synthetic sponges as reported by distributors to the Sponge and Chaisols Institute. No such data are available for the years prior to I962, but a comparison of the available figures for two years shows that synthetic sponges have gained ground in all these designated categories. The category "Trade" appears to be the most profitable outlet for natural sponges, since more than 90 per cent of the natural sponge sales were absorbed by this market. This broad category of "Trade" consists of wholesalers and Jobbers catering to the needs of the Janitorial, paint, ceramic, automotive, and lithographic trades. Not a single firm among natural 131 TABLE 31 DISTRIBOTOR SALES OP NATURAL SPONGES, SYHTHETIC SPONGES, AND Ca\MOIS AS A PERCENTAGE OF TOTAL SALES, 1951-196*^ Natural Synthetic Year Sponges Sponges Chamois Total 1951 39.05 • • 60.95 100.00 1952 t^0.l6 59.84 100.00 1953 39.69 60.31 100.00 195*^ 39.U8 60.^ 100.00 1955 38.75 61.25 100.00 1956 m.2o 58.80 100.00 1957 41.19 58.81 100.00 1958 42.29 57.71 100.00 1959 38.56 61.44 100.00 i960 27.52 18.88 53.60 100.00 1961 23.82 22.74 53.44 100.00 1962 17.81 15.32 66.87 100.00 1963 12.97 15.11 71.92 100.00 Source: Based on Table 30. TABLE 32 DISTRIBOTOR SALES OF NATURAL SPONGES BY TYPE OF CUSTC»4ER, 1962-1964 Year To Trade Institutional Federal Government Natural Synthetic Natural Synthetic Natural Synthetic 1962 1963^ 1964^ $1,346,808 $1,192,970 1,081,256 1,159,423 685,431 1,116,711 $270,758 $18,937 105,158 43,551 65,863 28,731 $21,578 $190,773 1,519^ 203,858 100,217 Source: Sponge and Chamois Institute records. °After June, I963, the Federal Oovemment started piurchasing its natural sponges directly from the lovest bidder among packers in Tarpon Springs . 1964 figures are for nine months. 132 TABLE 33 DISTRIBOTGR SALES OP NATURAL SPONGES TO TRADE CUSTOMERS Type of Customer Per Cent of Total Sales Janitorial Trade 30 Paint 30 Ceramic and Pottery 30 Tile Setters ^ Miscellaneous 3 Total 100 Source: Based on a svurvey conducted by the Sponge and Cbaooia Institute, 196*^. sponge distributors keeps records shoving natural sponge sales by type of customer within the three broadly designated categories of "Trade," "Institutional," and "Governiaent " (ag^in see Table 32). With the encouragement and cooperation of the author an attempt vas made by the Sponge and Chamois Institute to obtain a classification of sales by a finer breakdown of customer type. The results of this survey are shown in Table 33 and are based on the opinions and educated guesses of six members of the Institute. The remaining members either could not furnish any information or refused to do so. All distributors interviewed by the author have indicated a preference for imports over domestically produced natural sponges. The reasons for this preference follow, (l) In general, foreign producers have proved to be a more reliable source of supply than the domestic sources. Bad it not been for Imports, especially those from the Mediterranean, all iisers of natural sponges would have shifted to synthetics during the acute shortages of sponges which followed the blights of 1937 and 19^1. (2) Usually distributors have to clean ^Interview with Edward Riley, November, 196^. 133 OJ a H J- o ,Q a\ p. H CO &< o d •H o +i CO -d 5J (U e CO a S 13l» TABLE 3^^ COMPARISON OF AVERAGE PER POUND miCSS OF DOMESTIC AND IMPORTED SPONGES 193»*-1963 Price Per Pound In Dollars Year Doiaeatlc Spoagsa Imported Sponges 1931^ 1.36 .81 1935 1^ .76 1936 x.€l .93 1937 3.82 1.00 1936 iM 1.11 1939 2.^9 1.11 19^*0 3.66 1.13 19''H 6.79 2.33 19i*2 9.2<» 5.22 19^3 12.39 lf.67 19Mf 13.27 7.6U 19*^5 llf.OO 8.29 19l»6 15.99 9.J«) 19^7 10.55 8.03 l$k8 6.26 7.29 1^9 6.89 7.75 1950 5.»3 6.91 1951 T.OO 8.U1 1952 5.68 6.85 1953 7.39 6.38 195^ 7.89 5.87 1955 7.3a 6.20 1956 8.3£ 5.9^* 1957 5.» 5.9^ 1958 7.28 7.01 1959 10.61 7.53 i960 8.30 6.72 1961 9.9»^ 8.3tf 1962 8.66 9.08 1963 7.01 9.71 Source: Based on Table 10 and Table kO, 135 and vash Florida sponges, because this process is often neglected or done very superficially in Tarpon Springs. This vashing and drying process obviously adds to the cost of the sponges and has an adverse effect on distributors* profits. Ho cleaning and washing is needed with Imported sponges, a factor which makes them more desirable from a distributor's point of view. (3) As can be seen in Figure 19,with few exceptions average prices of isiported sponges have always been lower than aArerage prices of domestic sponges. As a matter of fact, the price differences are larger than those Indicated, because Figure 19 compares average doraestic prices obtained by fishermen with average Import prices paid by distributors. Adding packer markups and transportation costs from TJirpon Springs to distributor locations will obviously raise domestic sponge prices considerably at the distributor's level, (U) Althou^ most users ask for Florida Rock Island sponges, distributors state that the majority of them could not tell the differ- ence between Florida and Imported sponges, ^ Distributors substantiate this contention by the fact that in order to avoid losing customers because of price increases they singly hold the price line by offering inqwrted sponges as Florida sponges. (5) Since most xisers cannot tell the difference between domestic and imported sponges, distributors ceui and do sell low-cost iBQwrted products at the same price as the domestic product. A higher markup on la^wrts gives distributors an incentive to carry them and push them more aggressively. ■'■Interview with Robert Sinenberg, November, 196'*. ^Ibld, ^Ibld, Wd. 136 TABLE 35 FINANCIAL STRENGTH OF NATURAL SPONGE DISTRIBUTORS WHO ARE MElffiERS OF THE SPONGE AND CHAMOIS INSTITUTE, 1964 Total Assets Number of Pinaa $ 25,000 1 50,000 1 100,000 5 300,000 2 500,000 1 Total 10 Source : Thomas' Register of Manufacturers, 1964 (New York: Thomas Publishing Co., 1%^), ^Eight member firms and the other seven customers buying from the packers but who were not memibers of the Sponge and Cbamols Institute were not listed in Thomas' Register* Facilities Table 35 shovs the financial strength of ten sponge distributors as reported in the 1964 edition of the Thomas Register of Manufacturers. The stedian firm In 1964 had total assets of $100,000, vhlch is consid- erably hlgt^r than the assets of the median packer (again see Table 27) or producer of natural sponges. This financial strength coupled with more sophisticated managenent has placed the distributors In a position of channel leaders in the distribution of natural sponges. Unlike packers in Tarpon Springs, who are mostly order takers from distributors, distributors attempt to reach and enlarge their markets throtJtgh more sophisticated marketing techniques. Tor example, the Sponge and Chamois Institute was instrtotental In developing a fovirteen-mlnute film entitled "Sponge - Treasure of the Sea," vhich has been f lined in cooperation with the Bureau of Commercial Fisheries. This film has 137 been shown to television and theater audiences In the lAilted States in order to acquaint them vith natural sponges and arouse their intexrest* The Harrlsburg test market vhlch vas conducted in I963 vas also promoted by the Sponge and Chamois Institute In order to sell 2 more natural sponges to ultimate consumers. The results of this experiment will be described in Chapter VI. Distributor premises indvide varehouses, bleaching facilities, and various machines for the cutting and packaging of synthetic sponge blocks. Chapter V gives a more detailed account of synthetic sponges handled by natural sponge distributors. The nxaiber of per- sonnel employed by distributors differs widely depending on financial size and diversity of operations. For example, American Sponge and Chamois Coorpany, the largest natural sponge distributor, had 90 employees in 196h.^ The majority of these workers, however, were used In the handling of synthetic sponges and chamois. By contrast, a smaller firm had only five employees, two of whom were employed in k the office. Evaluation of operations Previous discussions have indicated that distributors, by virtue of their financial size, proximity to markets, and Intimate contacts with most users, can be considered as the most inflvientlal group in the distribution of natural sponges. Since nat\iral sponges constitute only one of the three main product lines carried by these firms, one can ^Interview with Mrs. Elizabeth Wallace, November, 196U. ^Ibid. 3lntervlew with Edward Riley, November, 196**. interview with Robert Sinenberg, November, I96U. 138 work on the a priori assumption that the effort that distributors exert in selling any of these product lines will be directly related to the contribution that the psirticular product line makes to total firm profits. The clarification of this point is of paraaovmt importance for the sponge industry of Florida, inasmuch as its well-being depends on the aggressiveness which distributors exhibit in selling Florida -produced natural sixsnges. On the other hand, distributor effort behind any product line will depend on the contribution that the product can make to distributor profits. This evaluation hinges on the assumption that distributors as a group are interested in maximizing their profits. Although much has been said about the validity of the profit maxijnization motive, its application here conforms very accurately to the description of distributor behavior, and it can be used as a means of predicting their behavior in the future. Such prediction in turn may prove very useful for Florida B-pongevB, since under the current distribution system their well- being depends on the activities of distributors. Among the three main lines carried by the distributors the absorbing commodities, synthetic and natural sponges, are substitutes for each other, while both are cOTiplementary to chaaaois. It follows that a rational profit-oriented businessman will attempt to combine his product mix in a fashion that will most faArorably affect his profits. Since both absorbing ccnmiDditieB are complementary to chamois, chamois sales wiU be most favorably affected by the con^le- ment that sells at the lowest price* %ilton H. Spencer and Louis Slegelman, Managerial Economics (Homewood, Ill.s Richard D. Irwin, 1959), pp. 125-127. 139 It was pointed out previously that in most Instances incentives to carry a product will be determined by the contribution that the product makes to total profits, either by itself or in conjunction vith other products. An atteii^>t vas made by the author to obtain information on profitability by product lines carried by distributors, but since most businessmen consider markups on products to be confiden- tial it was impossible to obtain such information directly. The con- clusions which follow are based on fragnentary information, several assun^tlons, and deductive reasoning. It is possible that they might not conform to sense specific instances, but they are useful for pur- poses of analysis and prediction of futvire developments. During an interview with Mr. Milton Cohn, President of the Gulf and West Indies C one would expect distributors to make a larger profit on the sales of imported sponges. The most popular size of natural sponge is the 6^7 Inch size which retails for $2.70 and costs the distributor 90 cents. Adding the above -derived 85 per cent markup gives $1.67 as the price at vrtilch the distributor would sell such a sponge to the trade. This $1.67 divided Into total distributor sponge sales of $1,207,051 In 1963 shows that 722,785 pieces of sponges were sold in that year under the assumed conditions. A comparison of the seuae calcxilation for synthetic sponges indicates that for each piece of natural sponge sold "Sponge and Chamois Institute, Test Market Repiort," A report to the members pirepared by the Sponge and Chamois Institute, New York, 1963 < P- 5- (Mimeographed.) Interview with Milton Cohn, November, 196^. lUl distributors sold 53 pieces of synthetic sponge. Since sponges, either nattiral or artificial, go with chamois like ham and eggs the artificial product had the ability to sell chamois by a ratio of better than 53 to 1. All distributors vho are members of the Sponge and Chamois Institute sell only real chamois, which is an imported ootoiscdity. In 1962 and I963, the Itoited States Imported $2,358,576 and $2,667,209 worth of chamois, respectively. Table 30 indicates that members of the Sponge and Chamois Institute sold $6,153,922 worth of chamois in 1962. The same table indicates that chamois sold by distributors in 1963 amotinted to $6,692,352. Assuming that there were no other costs and no sales out of previously held inventory, distributors had a markup of 163 per cent in I962 and I58 per cent in I963 on their sales of chamois. This ixidicates why distributors have been willing to sell synthetic sponges below the customary ijrices. This entire concept may be demonstrated by the diagram in Figure 20. The actual relationships involved may not be linear as pictured in the diagram. The objective of the diagram is to show a conceptual relationship, not an actual measurement. This simplification is applied to many diagrammatic explanations of demand and supply rela- tionships. Even if the actual relationships are of a curvelinear natiire, a linear depiction shows the relationship more sinqply and as clearly. Lines AB and AC show the familiar relationship between price and quantity, that is, as the price decreases more units are sold. The ■'■Sponge and Chamois Institute, Bulletin, XXXI (August 12, 196^), li+2 Figure 20. Relationship of Synthetic Sponge Sales to the Sales of Chamois Price of Absorbing Good in Dollars A K 60 9 \ Quantity of Absorbing Good r \ in Units 3 / 50 x? 5 ; CO ^1 CO H o O c •H 30 \ 5 7 / CO •H s i Ch o 20 \ ^ / CO 10 \ Source : Richard H. Lef twich, The Price System and Resource Allocation (New York: Holt, Rinehart 8e Winston, 1961). 1U3 vertex AD measures sales volume of the complementary good; given that the price of the absorbing conmodlty la $9, only one unit of it will be sold and this will generate an additional $10 in sales of the con5)lemBntary good. When price is lowered to $3, seven units of the absorbing canmodity will be sold and this will generate additional sales of $50 of the conqplementary good. Since synthetics were able to expand their share of the market primarily by selling at low prices, this would indicate that the product is price elastic. Users of complementary products are interested mainly in tte total price for the family of products rather than the price of each individvial product. Faced by high prices of Florida sponges distributors resorted to a strategy of substitution in order not to lose their chamois business becatise of the rising sponge prices. Their willingness to give generous discoxmts on synthetic sponges is explained by the fact that such a strategy increases their sales of chamois, which provides them with a rather generous markup. Under these circumstances it is obvious that were it not for some die«hard customers, distributors would have little incentive to push domestically produced natural sponges. To summarize, the distribution channel of natural sponges origin- ates with the fishermen vho sell their product to the packers through the Tarpon Springs Spongs Exchange. The product is sold by the packers to the distributors, who in turn sell it to various types of users and retailers. The firms constituting the distribution channel are of rather small size. Most of them, especially those operating In Florida, are family-type 0{>eratlons. Because of successive management ■'"Interview with Robert Sinenberg, November, 196*4^. Ikk inbreeding such firms have done very little in terms of exploring new market opportunities or exerting effort to better serve their existing markets. The majority of them have historically been merely order takers and done practically nothing to stimulate demand for their product. This chapter has traced the process of marketing sponges from the time they are caught by fishermen until their final sale. Although poor record-keeping and suspicion toward an investigator has made a great deal of information unavailable for further analysis, this is the most comprehensive treatment in existence on the subject of sponge distribution. CHAPTER V COMPSTITK^ Iniporta Imports of marine sponges for consun^rtlon were 238,550 pounds valued at $1,U15,571 In 1957 (see Table 36). They dropped sharply after I96O, and in I963 ware 8e,888 pounds valued at $805,103. This drop in imports is attributable primarily to the naarrowing of the price differential betveen domestic and imported sponges (see Table 3U), It has been mentioned in the previous chapter that historically prices of imported sponges have ustially been lover than domestic sponge prices. This differential has tended to disappear in recent years, primarily because of supply shortages encountered in the principal supplying country, Greece. Such price increases have had an adverse effect on sponge consun^tion, and experts are of the opinion that synthetic sponge manufacturers vill take over more of the market as time passes. Table 36 shows Ifaited States natural sponge in^wrts by covintry of origin since 1957 • A cursory examination of the table shows that B»8t American imports have coiae either from the Mediterranean or the western Atlantic. In accordance with this x>attem the following paragraphs will deal with sponge production in the principal producing countries in the Mediterranean and the western Atlantic. ^Letter from Leslie Robinson, Commodity- Industry Analyst for U. S. Tariff Conmission, Washington, D. C, February 25, 1965* 11^5 Ik6 H 3 en • W cuco C^ s CO 3 H UN 3S S SM ass .^ . , (V) fw :J) r-J « • ( '-^ c?\ ir\ tf\ t— >- 4^ ^ u^co m Irv H 30 • jt • '-^ • H iA O H 3 ^ S •«•••* n c~ «n J* o Cr3 P8 H t- CO H 9^ >R a I w •iR • * • • H^ .H Cj HOD 1 ON • r at • CO lONCMA fU ^ O Oi m\Q O U\ 00 ^ TABU 36 imrm ffsteea xmhbis or stomsa ey couriry of origih, 1957-1963 1957 1958 1959 I960 1S61 1962 1S63 Country Pounds Dollars Pounds Dollars Pounds Dollars Rninds Dollars R>und6 Dollars Pounds Dollars lK>und6 Dollars AXgtn* • • .. • • 313 2,946 • • • • Babuu siiioe 59)899 3)179 7)615 1)586 5,266 2)IWf 8,032 80 280 10,416 'e)772 5)107 9,200 BeleluB .. .. 968 1,395 251 2,753 • • • • • • • • • • • • .. • • Ouada ,, • • • • .. ,. • • • • • • *• • • 2,659 2,481 ., ,, cute 81»,917 308,662 85,262 329,596 62,91'* 247,320 76,261* 294,746 18,917 63,390 85 622 • • ,, Cyprus • • • • .. .. .. • • • • • « .. .» • • .. 1,301 12,466 Sgypt .. • • • • .. .. • • • • • • 55 625 135 3,676 110 2,605 19"* it,225 2,056 2<*,856 2,711* 38,309 327 5,oas 329 l*,li*3 557 7,268 474 8,142 CSrMoe 103,217 m3,>*e6 7»»,198 720,606 85,WJ6 806,211 &7,639 808,425 58,7l»9 610,428 65,017 668,327 66,054 679.380 Italy 1(08 2,398 1,066 10,806 882 3,«*53 630 7,906 115 1,030 i»r 1,586 31 446 Jhoalca .. «• • • • • • « .. • • • • «* .. *I»D .. • • 326 360 • • .. • • .. 393 6,249 tBtanon 13)129 130,187 23)038 231)37'^ '*)3»*9 91,366 8,531* 69,818 5,902 56,500 32,865 106,608 7,644 70,493 Ubya ., • • • • • • • • • • .. • • ,, Mlta .. • • 9B6 9,688 • • • • • • • • ,. NbxIco .. ,, 261 859 ,, • • ,, ,, ,, Fhillppinea .. ,, • • • • • • • • ., ,, Spain ,, ,, • • ,, ,, • • ,, • • «• Swlturland ■• • • », •• 914 1,891 ,, ,, • « Byria 2,121 ae,i58 *5»*5 3,500 « • • • 2,510 27,409 .. • • 1)259 14,480 Trieffte .. ,, 111 2,7»*3 22 328 • • • • ,, Tunisia .. • • • • ,, 263 1,355 174 1,793 • • Turksy 3ii58 8,576 2)2^5 10)885 2)98U 15,633 8,831 40,749 8,586 40,100 40 396 .. IkiltaA IC1na according to Trade with Greece, the quarterly Journal of the Athens Chamber of Commerce and Industry, there were seven- teen sponge fishing accidents, five of which resulted in death. ^ •'•Ibid. ^Ibid. ^Ibld. 1U9 TABLE 37 GREEK SPONGE FRODUCTION, TOTAL EXPORTS, AMD EXPORTS TO THE UNITED STATES, SELECTED YEARS, 1936-1963 Exports to the Year Production All Exjwrts in Poxinds In Pounds® Exports to the U. S. in Pounds* U. S. as a Percentage of Total Exports 1936 liH,700 167,100 2,400 1.44 1937 93,900 129,300 2,300 1.78 1938 86,900 101^,700 3,000 2.87 1939 77,900 51,300 3,300 2.43 19^*7 331,000 169,1+00 51,600 27.22 I960 $1,228,000 $808,425 65.83 1961 1,335,000 610,428 45.71 1962 19^,550 1,267,923 668,327 52.55 1963 202,424 679,380 • • Source: 1936-1939f 19^7 from Stuart. I96O-I963 from Trade with Greece and U. S., Tariff Commission, Annotated Tariff Schedules . **Weight converted to value after 1947. At present Greece is the major sponge producer in the world. Table 37 shows Greek sponge production, total exports, and percentage of such exports shipped to the United States for selected years. Although most of the Greek sponge landings are destined for foreign markets, the amovmt exported is considerably higher than domestic production because Greek exports Include domestic production plus the production bou^t by Greek sponge merchants from other countries. In 1964, for example, Greek sponge merchants purchased 10,400 pounds of sponges from Syria, the entire Syrian production for that year, to be exixjrted to other countries.^ ■'•Letter from George M. Lane, American Vice-Consul in i\leppo, Syrian Arab Republic, December 29, 1964. 150 Greece has become the moat important sponge supplier of the United States. As can be seen in Table 38 in I963, 48 per cent of the total United States sponge suiyply cane from Greece. This consti- tuted almost 80 per cent of total sponge imports for that year. In 1963, the sponge fishing fleet of Greece consisted of I03 craft. The conqjosition of this fleet by method of operation was as follows: 78 craft engaged in machine diving, 8 trawls, 10 femezen boats, and 7 unspecified, presvanably hookers. This fleet was manned by 1,125 seamen of wtiich 583 men were classified as divers. Firsthand local information from all sponge producing countries and a survey of secondary sources show that Greece is the only coxmtry where sponge fishing is not considered as a declining industry. Between 1936 and 1963 > Greek sponge landings Increased from l4l,000 pounds to 202,'»£'+ poirnds, approximately 30 per cent (again see Table 37 )• This is in contrast to what happened in other major sponge producing countries. The superior position that the Greek sponge fisheries hold among other sponge producing nations is attributable to the following factors, (l) lAilike the sponge beds of the western Atlantic, the Mediterranean sponge beds have been relatively ^n^n^lm«» to marine diseases. During the WorHWar II years when western Atlantic sponge beds were being fished intensively, sponge fishing in the Mediterranean was interrupted. This interruption of fishing led to an increase in the sponge population, which was reflected in the higher amounts of landings which followed the war years. (2) His- torically speaking, Greek fishermen have been very receptive to the adoption of new methods amd techniques of operation. All known ^Vokos, Trade with Greece, V, 31. 151 TABLE 38 SPONGE TRADE WITH GREECE, 1956-1963 Greek Inqports as a Percentage Greek Imports as a Percentage of Total SpongcB Available of Total Sponge Imports In the U. S. in the U. S. Year Quantity Valvte Quantity Value 1956 39.31 1+8.59 kk,66 57.68 1957 36.48 52.60 1*3.27 61.60 1958 33.66 46.1e 38.8!* 58.81* 1959 1*5.16 53.53 52.78 66.23 i960 39.16 51.75 1*6.99 64.53 1961 k3.7k 51.77 60.31 75.14 1962 1^.37 53.36 70.50 79.78 1963 ^7.82 56.98 79.69 84.38 Source: Based on Table 36 and Table 39* improveaients and changiBB in sponge fishing, such as the glass bucket, travling, machine diving, and most recently skin diving, vere either intiroduced or readily adopted by Greek sponge fishermen. By contrast, with the exception of the United States, the remainder of the vorld's sponge fishing has never passed the stage of hooking. Even in the United States machine diving is a method practiced by Greek-Americans. (3) Because of its value as a source of foreign exchange the govemmsnt of Greece has played an active role in supporting the Greek sponge industry. Such support has taken the form of bilateral treaties in the negotiation of fishing privileges for Greek spongers in foreign vaters, increased hospitalization, pension and retirement benefits for sponge divers, and the establishment of a divers' training school in Kalymnos to assure a continuity of supply of divers. (4) Aggressiveness -'•Ibid., pp. 32-34. 152 is another factor vhlch characterizes the Greek sponge Industry. When unable to harvest sponges In their national waters Greek fishenaen have not hesitated to fish in foreign waters, even in the absence of permission todoso* (3) In 1963) the average Greek diver was 2^ 2 years old. In other words, the average Greek diver was axrproximately half as old as his American counterpart. It Is obvious that yoimger divers can descend to greater depths and stay underwater for longer periods. Unlike American divers who never go below 60 feet, the 3 average diving depth for Greek fishermen is l40 feet. These factors have enabled the Greek sponge Industry to gain a practical monopoly on the fairly inaccessible sponge beds which, as was i)Ointed out previously, are populated with sx>onges of the best quality. k Italy. —There is very little sponge production in Italy. Italian sponge fishing is being performed on a handicraft scale and, currently, a comparatively limited number of fishermen is devoted to 5 this activity in the areas of Leghorn, Trlpanl, and Torre del Greco. These fishermen utilize self-propelled boats and two»or three-pronged hooks for harvesting sponges. Italian sponge production was 5>000 pounds valued at $11,200 in 19^3. By 1963* annual sponge landings had fallen to 1+00 pounds at a value of $1,280. According to Information obtained from the American Embassy in Rosae, Italy imported 87,780 pounds ■^-Letter from Cohen, November, I96U. ^Vokos, Trade with Greece, V, 31. 3lbid. Letter from Theodore J. Hadraba, Counselor of Einbassy for Comner- cial Affairs of the American Qabassy in Rome, Italy, November 20, 196U. ^Ibld. 153 of sponges valued at $160,000 In 1963* Imports do not show country of origin, but presumably Greece and Turkey are the main suppliers. Sponge exports in the same yesur totaled 32,560 pounds valued at $160,000 and went mostly to Switzerland and Japan, These latter sponges primarily represent imported natural sponges that were processed in Italy for export. Lebanon.— At present, Lebanon is the second-largest producer of 2 sponges in the Mediterranean. Local consumption is negligible and export figures give a fairly accurate reflection of total production. Most fishing is done by hooking and fernezen diving. The latter is the method used solely by Greek fishermen who were Imported from Greece by the firm of Massad Antakly and Company. Total Lebanese exports in lS6k were estimated to be worth $17^1,000.3 Syria . —Sponge landings in 1964 consisted of 11,000 pounds of poor quality sponges valued at $600. All of the 196'+ Syrian sponge produc- tion was sold to a Greek merchant. Because of the poor condition of the sponge beds and the uncontrolled fishing in the area the Syrian government has decreed that sponge fishing will be permitted every alternate year.^ Turkey.— This country's sponge producing areas are scattered along the coasts of the Mediterranean and Aegean Seas off Turkey and the southern coast of the Sea of Marmara. There is practically no local demand for sponges, and the entire production is exported to llbid. ^Letter from John C. Weisert, Commercial Attache of tha American Embassy in Beirut, Lebanon, January U, I96U. ^Ibid. TLetter from Lane, December, 196'+. I5h TABLE 39 TOTAL AVAILABLE SUPPLIES OF SP0NQE5 IN THE UNITED STATES PROM FRQDUCTION AMD IMPORTS, 193'*-1963 year Dcctsstlc Production Imports Total Supply Pounds Value Pounds Value Pounds Value 193'+ U85,000 662,000 479,307 387,730 964,307 1,049,730 1935 372,000 611,000 613,143 464,211 985,143 1,075,211 1936 616,000 1,029,000 605,683 561,738 1,221,683 1,590,738 1937 5'46,000 1,085,000 581,906 587,620 1,127,906 1,672,620 1938 521,000 7^*5,000 428,664 475,238 9^9,664 1,220,238 1939 1*09,000 1,019,000 1*31,536 519,04l 476,035 840,536 1,495,035 1,434,763 19*^0 231,000 81*6,000 588,763 750,041 19*H 201,000 1,36U,000 ???,117 518,107 423,117 1,882,107 19«*2 184,000 1,700,000 117,528 613,010 301,528 2,313,010 19^3 186,000 2,305,000 194,781 909,205 380,781 3,214,205 19^ 192,000 2,51*7,000 323,581 944,459 315,581 3,491,459 19»^5 19'+,000 2,717,000 95,596 791,979 289,596 3,508,979 19»*6 li^,000 2,590,000 328,281 3,087,321 490,281 5,677,321 19»»7 118,000 1,21*5,000 208,653 1,674,818 326,653 2,919,818 19»*8 li*,k6^ 1^5,937 355,015 2,5&r,305 429,'*79 3,053,242 19^9 68,700 1*70,580 242,000 1,937,000 310,700 2,407,580 1950 22,000 130,500 331^,000 2,329,000 356,000 2,459,500 1951 15,800 110,755 252,000 2,142,000 267,800 2,252,755 1958 25,000 11*2,100 178,000 1,248,000 203,000 1,390,100 1953 17,300 127,916 258,000 1,628,000 275,300 1,755,916 195^ 15,100 119,179 191,107 1,124,113 206,207 1,243,292 1955 3lf,300 251,100 216,348 1,3»H,69B 250,648 1,598,792 1956 29,600 21*1,566 217,507 1,291,567 247,107 1,533,133 1957 M*,i*00 21*4,958 238,550 1,415,571 282,950 1,660,529 1958 29,1«X) 214,025 191,044 1,338,443 220,444 1,552,468 1959 27,300 289,520 161,975 1,220,275 189,275 1,509,795 I960 37,300 309,497 186,511 1,252,764 223,811 1,562,261 1961 36,900 366,646 97,405 812,384 13^,305 1,179,030 1968 »*7,98l 415,720 92,218 837,702 140,199 1,253,482 1963 55,238 387,261 82,888 805,103 138,126 1,198,364 Source: 1934~1944 fxrom U. S., Deportaent of Commerce, Foreign Commerce and Navigation of the United States; 1945-1963 from U. S., Tariff Commission, Annotated Tariff Schedules. 155 western Europe with very little of such exports reaching the United States market. In I963, Txirkish sponge exports were 112,607 pounds valued at $hl9,02&.'^ Western Atlantic countries From 1934 to 1939 approximately one million pounds of natural sijonges per year were consumed in the Ifaited States. Inqwrts supplied about 50 per cent of the total domestic consumption (see Table 29 and Table 39). As can be seen frcaji Table 40, befoi« World War II Cuba and the Bahama Islands supplied almost 100 per cent of the imported natxaral sponges. Taking the mean figure of the total sponge inqports from 1934 to 1939, the period immediately preceding World War II, we find that the United States inqported an average of 523 > 373 pounds of natural sponges per annum during that time. By applying the same procedure to imports from Cuba and the Bahamas, we find that their sponge exports to the Itoited States averaged 322,810 and 178,8^9 pounds per annum respectively for the same period. In other words, on the average Cuba contributed 66 per cent of total sponge in^wrts betwen 193*+ and 1939, while approximately one-third of total United States sponge imports during that period came from the Bahamas. In 1937, a blight hit the sponge beds in the Bahamas. The same epidemic later infected the fishing grounds of Cuba and Florida, as has been laentioned in previous chapters. Although this disease had a disastrous effect on all known sponge beds in the western Atlantic, the Bahama beds were the hardest hit. The Velvet sponges in the ■4ietter from Arthur C. Lillig, Commercial Attache of the American Embassy in Ajnkara, Turkey, November 20, 196^. 2stuart, p. 58. 156 Bahamas vere completely destroyed, and after 1937 the Bahama Islatids ceased to rank among the principal sponge producers of the world* Althou^ no production figures are available, one csm reach a conclusion about Cubem 82»nge production after the 1937 disease by examining Cuban sponge export statistics. Since there is practically no local demand for sponges in Cuba, exported quantities give a fairly good indication of levels of production. United States iiiqports from. Cuba between 19'iO and 19^ declined from k6hf^Q9 pounds to 101,317 poimds, a decline of approximately 77 per cent, but by 19**^ Cuba was supplying more than 90 per cent of the total Uhited States sponge inrports (see Table kO), This situation was a logical development caused by the war. When the war cut off the European markets virtually all sponge production in the western Atlantic was shipped to the United States.^ After the war the import situation underwent a drastic change. Mediterranean sponge fishing, which was interrupted during the war, was 3 resumed and expanded, primarily by the Greek sponge fleet. Because of the short supply of sponges from domestic sources and other western Atlantic nations, caused primarily by the diseases in 1937 suid 19^9« imports from the Mediterranean increased trezaendously. By 19'^9 Cuba was exporting only about 13 per cent of the total Uhited States sponge imports, the Bahamas about 0.2 per cent, while the remaining 87 per cent ^Ibid. p Richard A. Kahn and Lois B. Sandven, Sponge Production and Inter- national Sponge Trade of the United States, U. S. Fish and Wildlife Service Fishery Leaflet I70 (Washington: U. S. Government Printing Office, 19'*6), p. h. ^Stuart, p. U8. 157 TABLE kO TOTAL UNITBD STATES IMPORTS FRCM CUBA AMD THE BAHAMAS, SELECTED YEARS, 193^1963 Cuba Bahamas Year Pounds Dollars Founds Dollars 193»* 309,502 262,813 13l*,779 55,861* 1935 389,167 313,357 192,306 65,583 1936 363,680 387,073 189,973 97,039 1937 315,922 363,698 227,056 133,632 1938 271,^ 3^*3,783 11*1,195 68,639 1939 277,12'* 288,2^2 187,783 119,105 19'K) U6U,589 503,681 38,998 1*0,351 19»H 185,636 1*43,096 21,662 19,2Mv 19»»2 101,317 569,620 9,1*81 17,562 19^*3 191,636 803,615 572 3,038 19*^^ U8,076 899,629 2,61*9 14,652 19»*5 62,898 513,733 87 450 19^ 70,23^ 608,151* 121 400 19^7 32,098 261,31*8 17,686 75,843 19kQ 1^,505 235,91*1 880 8,970 195** 36,850 153,1*58 • • • • 1955 H,86l 16?,U81 • • • • 1956 71,23'+ 267,006 22,224 58,426 1957 8l*,9l7 308,662 31,1*06 59,899 1958 85,262 329,596 3,179 7,615 1959 62, 91^* 21*7,320 1,586 5,266 I960 76,26J+ 29l*,7l«6 2.11*1* 8,032 1961 18,917 69,390 80 280 1962 85 6?P 10,1*16 1*2,772 1963 • • • * 5,107 9,200 Source: 1934-1944 from U. S., Eapartment of Commerce, Foreign Cc»inierce and Navigation. 1945-1948, 1954-1963 from U. S., Tariff CoBBoissionj Annotated Tariff ScbedULles. 158 was supplied by the countries of the Mediterranean. All United States imports from Cuba were suspended on May 24, 1962, thus elimin- ating Cuba as a source of natural sponges. At present, sponge imports from the Bahamas and other western Atlantic countries constitute a very small percentage of total imports (again see Table kO), and over 90 per cent of the United States sponge imports come frcM the countries of the Mediterranean. Later in this chapter recognition will be given to the fact that synthetic sponge imports from Europe affect both the natural and artificial domestic sponge market. Excluding the Ifeited States, all sponge fishing in the western Atlantic is done by hookers. No diving eqviipment is used, and no deep- sea fishing has ever been attempted.^ Almost all landings are tendered to the highest bidder at public auctions and then processed and baled for export. Batabano, on the southern coast of Habana Province, is the center of the Cuban sponge industry, while the Sponge Exchange of Nassau is considered to be the center of the sponge industry in the West Indies.-^ Sponge cviltivation Because of their high regenerative power sponges can be grown from small cuttings. The discovery of sponge culture by means of cuttings is attributed to an observation made by F. Cavolini in 1785 Richard A. Kahn, The Legislative Situation on Sponges (N.p.: U. S. Fish and Wildlife Service, Branch of Cwanercial Fisheries, n.d.), p. [3]. Sttiart, p. 52. ^Ibid., p. 58. 159 en H I •d +> to J'covocmo CVJt^CU ^ «^ a^ v^ «^ «^ •« OQOVt^lTVCO W C^ ^ On CO Q^gi : : : ; ; 00 m ft) COONtA* • • • • t^O>H m n CO cs I? a so rooa cy m OSQqPvfl • ♦ •UN H CTvO t- • • • J* §§g o m H • • • O CVl • • • H 98 fc-o tr *> o roc-o 'W •floOx OJ O vfl CO 2\o m ocO • ro • tr\ro g I iS d -lr-ir-ir^r-i 150 §1 I i h ^ 2^ a yt ■a IQ 5-p 3£ £ Co tr\ fi'S t~- ra cvj ro rn CM cvi vo 6 vvo ^ r- cy -3- -;»• t~-H> COH VO H VO HCO CVJ ON CVJ 0\ (M ON •^ v^ VH t^ «k K H^ lAOJ VOCO mCNH H CO H ir\H ro W CO ITv^OO fi CU 0^ W H w ^ u> cnu^^r^^- u^M5 0\H ft] rp vr>co OJ u^oco •^ •» a, •« •« <\ r-( r-i H e-i r^ cvj on SO »rk t~vo ■^ ^ ^ OJ H H H W H H H t-VO^t-:* OMTk^ ITNVOVO t-ir>o tTNCO fo ( VO COCVJ ' «^ ^ «« H ONCAJ- CO ON rOVO ONCV) iTMfV OJ W CJ W CJ CO lr\^^ O CONO u\ O ^ CO VO Q H ( [5) CO IfNO rS «rv ri IfNVO t>- VTN UN r-J VO f-CO CJNO H Ql l?Nlf\lA^SO\sO \S ON ON ON ON ON OS ON H H H i-l r-t H H 161 that sponges cut into pieces would attach to foreign bodies and grov. A docxinent published in I897 mentions a Mr. J. Pogarty of Key West conducting a series of successful experiments in propagating sponges from clippings, but the iniblication also hastens to add that artificial 2 propagation of sponges did not receive much attention in Florida. This method was put into operation by the British colonial govemment in the West Indies during the early 1930's. The colonial government granted concessions to interested individuals, permitting 3 them to plant sponge cuttings in designated areas at Andros Island. The technique of sponge cultivation consists of cutting a mature sponge into 8eg^sent8 two or three inches in diameter and attaching the pieces to cement discs, flat rocks, stakes, or non-corrosive wires which will support the sponge cuttings Just above the bottom of the sea. The sponge must be cut with a sharp knife to avoid crushing. Both the mature sponge and the cuttings must be protected from prolonged exposure to direct sunlight and must be kept in clean sea- 5 water, as rainfall or freshwater will quickly kill the sponge. The ideal bed for sponge cultivation is relatively flat, free from excessive currents, and has a normal salt concentration. The water must be deep enough to avoid disturbance of the bottom by wave action. ^Moore, Proceedings of the Fourth International Fishery Congress, p. 550. ~~~~ ^U. S. Congress, The Fish and Fisheries of the Coastal Waters of Florida, p. 9. 3 John F. Storr, The Sponge Industry of Florida, Florida Board of Conservation Educational Series No. 9 (Coral Oables, Fla.: Marine Laboratory, University of Miami, 1957)* P. 26. TPiemey, p. 1?. ^Ibid. 162 yet not deeper than three or four feet so that workers may plant and harvest the sponges without much difficulty. Artificial culture was shown to be practicable until the 1937 sponge blight. From 1935 to 1937 "ore than lUO,OCX) sponges were raised In the Bahamas, and more than 700,000 cuttings were planted at 2 Tvimeffe, British Hondiiras. Unfortunately, the mortality rate of 1939 VAs particularly high among the cviltlvated sponges, and the beds 3 were almost completely destroyed. Also, at tenets to cultivate sponges In locations appearing desirable but in which no natural sponges have been fotmd growing have led to the discovery that starfish and certain types of crab prey on the young sponges and kill them. In spite of its theoretical feasibility and recomnendatlon by many marine biologists this approach has neArer received much attention from United States sponge fishermen, primarily because cultivated sponges have not proved to be any more immune to meurine diseases than natxirally grown sponges.^ Synthetics Approximately 30 years ago Americans had never heard of synthetic sponges . Today better than 90 per cent of all sponges sold In the ■4bid. 2 "Sponges," Encyclopaedia Britannica. 3ibld. ^Stuart, p. 60. 5Florlda, State Board of Conservation, Ninth Biennial Report, 191*9-1950, p. 1+6. "Cellulose Sponge Institute, An Absorbing Story (N.p.: Cellulose Sponge Institute, n.d.), p. fsj. 163 1 United States are made of synthetic materials. They are xmiversally u sed in an infinite variety of ways arovmd the home, in business o establishments, and in various other types of activities. The natiiral sponge vas the only type available in this country until 1936 when the cellulose sponge, perfected in France in 1932, •5 was introduced here.-' Response to the product was slow xintll 1937, \iben a blight hit the natural sponge beds in the entire western Atlantic area. Shortly after that, World War II ended the importation of sponge supplies from the Mediterranean, and tht: shortage became acute . The United States was faced with the problem of obtaining sponges for both military and civilian use, and it was then that the synthetic sponge came into the public eye. As a result of constant Improvement, euaQ>le supplies, and lower prices, synthetic sponges vere able to displace natxural sponges from many uses in a period of approximately 30 years. Three different kinds of synthetic sponges are currently sold in the United States: vinyl, urethane, and cellulose sponges.^ Vinyl sponge The Simonlz Corporation was the only domestic producer of vinyl sponges. The company discontintjed the production of vinyl sponges in ■4bld. ^Ibid. 3lbid., p. [3]. 4bid. ^"Sponge Profits in a Squeeze," Chemical Week, IXC (October 27, 1962), k6. 16U 1 1961, and since then it has concentrated on the urethane variety. Today vinyl sponges constitute an insignificant projxwtion of total synthetic sponge sales. Those foiind on the market are either sold from accumulated domestically produced inventories or are of foreign 2 origin. Urethane 8ix>nge Ui-ethane sponges are easy to produce, a fact which explains why there are so jnany companies producing them.-' According to Chemical Week it is conceivable that a handy do-it-your-selfer could purchase the needed materials from a single supplier and froth up the stock in k a basement tub. Urethane sponges are priced below the cellulose product, but unlike cellulose sponges they do not absorb water unless totally imnersed in it, and they dribble water when removed from imaersion. For this reason natural sponge distributors and cellxaose sponge producers prefer to call urethane ijroducts cleaning aids rather than sponges. As a matter of fact, scMne people in the sponge trade are of the opinion that tu^thane products have hampered rather than promoted synthetic sponge sales, because users who buy a urethane sponge suid become dissatisfied with its performance may not purchase another synthetic sponge in the future. Market penetration of urethane sponges llbid. ^Ibid. %bid. '^Ibid. 5lbid. 165 is estimated to be betveen 10 and 15 per cent of the total synthetic sponge market, with 10 per cent considered as the figure closer to reality. Cellulose sponge Cellulose 8x>onge8 are considered to be responsible for betveen 80 and 90 per cent of total synthetic sponge sales. Cellulose sponge sales in the United States climbed from $16 million in 1953 to $31 million in I963 (see Table kj), Ibilike the synthetic products made of vinyl and ure thane, the cellulose sponge is a very close substitute for the ocean-grovn sponge. Cellulose sponges soak up from 20 to 25 times their veight in water; they develop no odor; they float and can be made in any size and shape. They do not scratch smooth surfaces, are relatively long-lasting, can be dyed almost any color, are available in a virtually endless supply, and ccnqpared to natural sponges are very Inexpensive. These qualities of cellulose sponges, when caa^ared. to the qualities of natural sponges on pages I6-I8, Indicate that with the exception of durability the cellulose sponge is as functional as the natural product. As a matter of fact, several distributors are of the opinion that certain brands of synthetic sponges are as durable as the natural product.^ The trade also anticipates that in the future the artificial product will excel natural sponges even in durability. In addition to comparing favorably on a functional basis, cellulose sponges show a superiority over natural sponges in the process of marketing. Due to ^Ibid. ^Interview with Edward Riley, November, 196^. 166 tbelr vide variety of colors, attractive packaging, and ease of display, the synthetic sponge has always been given preference over the natural sponge by the majority of retailers and other middleinen. These characteristics, along with pricing and promotion which will be discussed later, have given the artificial product a cooqpetltlve advantage over the natural sponge. Production. —At present, there are four domestic producers of cellulose sponges: they are Du Font; General Mills' 0-Cello Division in Kankakee, Illinois; Nylonge Corporation in New York City; and 2 Burgess Cellulose Company in Freeport, Illinois. At the tine that this study was being conducted the Burgess Cellulose Coispany was negotiating the sale of its cellulose sponge business to the 3M Corpor- ation of St. Paul, Minnesota. The fact that this multifflllllon dollar market is covered only by four manufacturers is primarily attributable to technological reqxilrements . The technological process of cellulose sponge fflanufactvirlng is hl^ily specialized and requires a rather expensive capital Investment. ^ The i)rime Ingredient used in the production of cellulose sponges is the cellulose, basically wood pulp which has been treated and If refined into white sheets which reseisble blotting x>aper. A second ingredient is sodium sulfate salt in crystals, made in a variety of 5 sizes from slightly larger than a pea down to almost a powder. ^Interview with Robert Slnenberg, November, 196U. ^"Sponge Profits in a Squeeze," Chemical Week, IXC, k^, ^Ibid. ^Letter and vinpublished material from Peter G. Kerby, Production Vice-President of Nylongq Corp., Nev York, December 28, 196^. 5lbld. 167 These salts laake tbe holes In the finished product. The third Ingredient Is either vegetable, cotton, or hei^ fiber cut to precise lengths. It acts as a binder for the cellulose and other fibers In much the same manner as the reinforcing rods used to strengthen concrete and gives the sponge greater tensile strength and resistance to abrasion. In making cellulose sponges the sheets of cellulose are soaked and mixed In a solution of water and then treated vlth carbon blsiilf Ide and caustic soda until there Is a resulting Jelly-like substance called viscose. To the viscose are added the proper quantities and sizes of salt crystals and reinforcing fibers. To all this Is added the dye or pigaent which gives the resulting sponge blocks the desired pastel 2 color. These substances are then mixed carefully In accordance with a time-tested formula which produces the proper even distribution of 3 all the elements in conqplete uniformity throughout the mass. The mix is then poured into rectangular block-shaped molds, much like giant loaves of bread, and the molds sure cooked xmtll the material coagulates and the cellulose is properly regenerated from the viscose complex.^ Each step in this process is carefully controlled with rigid timing, tenqperatvires, et cetera, as dictated by years of experience and experimentation in order to produce a uniformly high-grade end 5 product.'^ ^Ibid. ^Ibid. 3lbid. ^Ibid. 5lbid. 168 During the cooking process most of the salt crystals melt and run off, leaving the holes which have been i)replanned through the specification of the sizes, quamtity, and dispersion of the salt crystals in the mixing procedure. Fine pore sponges are made by using only the ixjvdered salt and smaller crystals, coarse pore sponges by using a range of crystal sizes varying trcm small to large .^ After the sponge block has been removed from the cooking mold the last vestiges of salt &re removed by thoroughly washlr;^ tb» block, vhlch is then run through successive bleaching, washing, and softening batha and sprays. The end result is a large oblong block over a foot square and several feet long of the desired soft pastel color, ready for slicing and packaging. The slicing is done by an automatic cutter, insuring uniformity of length, width, and thickness in every piece of each size marketed. The packaging in plastic or cellophane bags and 3 shipping cases completes the process. Market structure.— Despite the fact that there are only four producers of cellulose sponges in the United States cellulose sponges k can be found vtnder a plethora of brand names. With the exception of Du Pont all producers provide various types of buyers with private brands. In addition, many sponge distributors and other types of middlemen sell only Imported synthetic sponges under their own brand names.'' For example, the ,\jiierlcan Sponge and Chamois Company in Long ■4bld. ^Ibid. 3lbid. "Sponge Profits in a Sq\aeeze," Chemical Week, IXC, ^3. 5lbld. 169 Island City, New York, the largest natural sponge distributor, lo^rts its synthetic sponges from Novacell in France and Aktiebolaget Cello- plast, a Swedish conqpany located in Stockholm. At this point it may be ax>propriate to point out that due to their confidential nature the four domestic synthetic sponge producers were extremely reluctant to provide detailed information on their operations. Most data obtained were fragoented and of a general nature. In order to axrive at some Bsaningftil conclusions it was necessary to supplement such information with deductions and opinions of distributors and other knowledgeable jjeople in the trade. Invariably private brands are priced a little lower than the customary retail prices for identical synthetic sponges that have national brand labels. For example, the Nylonge Corporation produces and markets sponges under the Nylonge brand and xmder several other brand names, including such well-known conqpanies as Sears, Roebuck and Montgomery Ward. Distribution . —Correspondence and personal interviews with officials of the four domestic cellulose sponge producers have indi- cated that these producers sell their product through wholesalers, automotive brokers, and major chains. Inasmuch as sponges are used primarily for cleaning pxirpose a, distribution very much parallels that of other cleaning items, such as soaps, detergents, scouring pads, and bleaches. For this reason the two smaller manufacturers admitted that their products could not be distributed as extensively as those of Du Pont and General Mills, because the latter two had a very well- established distribution network of cleaning products. To cope with ^Interview with Edward Riley, November, 196^. 170 this situation the tvo smaller pirodvicers have tried to obtain as great a volvone as possible through the vise of private brands. In addition, all four producers sell sponges directly to manufacturers for conversion to various cleaning devices, such as block sponge mops, sponge cloths, soap dishes, and dish mops. Except for Du Psnt all the producers market their products under both national and private brands, and with the exception of General Mills all producers sell sponges only In cut up sizes. General Mills sells synthetic sponges 2 both In blocks and cut up sizes. Cellulose sponges marketed under private labels are carried by many types of firms, such as department stores, mall-order houses, hardware wholesalers, and sponge distributors. Such firms can obtain their supplies from any domestic piwlucer except Du Pont or from several cellulose manufacturers abroad. Most of them, especially those inrportlng sponges from other coxintrles, purchase cellulose sponges in loaf -like shapes several feet long, slice the oblong shaped cellulose into consumer size sponges, package them in cellophane bags, smd sell them under their own brand names. With the exception of a few, most of these concerns are relatively •a small firms with limited local markets.'' The majority of the smaller k firms use foreign sources of supply; however, even when they buy from Letter from T. G. Lyoam, Household Specialties of E. I. du Pont de Nemours 8e Co., Wilmington, Del., Janviary k, 1963* Letter from T. A. Schneider, Sales Manager of Chemical Division of General Mills, Inc., Kankakee, 111., January 8, 1965* 3 "Sponge Profits in a Squeeze, Chemical Week, IXC, ^3' 4bid. 171 domestic producers, the producers do not consider them as part of their regular channel of distribution. For exanrple, both Burgess and Nylonge view private brand sales as a means of using excess capacity and consider such customers as concpetltors rather than part of their regular distribution channel. Rrlces This feeling of antagonism between national brands and private 2 brands is due primarily to the letter's pricing strategy. Despite Increases in production costs and rises in the general jarice level synthetic sponge prices have not risen appreciably since World War II."' As a matter of fact, the tendency has been for prices to go dovn rather than up. This deflationary price trend has been caused primarily by the small Independent firms who market synthetic sponges vmder private brand names. For example, a 6xlfx2-^ inch MAR-VEL synthetic sponge, a brand represented by the Gulf and West Indies Con^tany of Hew York City, retails for 59 cents or less in many stores where it Is carried. A comparable size bearing a national brand would retail for not less than 69 cents according to Mr. Milton Cohn, President of the Company. Coiig)etitive poaitlon In 1950, Richard A. Kahn, Chief of the Economic and Cooperative Marketing Section of the United States Fish and Wildlife Seirvice, •'■Letter fxxw Kerby, December, 196'*. "Sponge Profits in a Sqvieeze," Chemical Vfeek, IXC, k^, 3lbid. ^Interview with Milton Cohn, November, I96U. 172 estimated that natural sponge sales at the user's level had a value of $7> 060,000, vhlle synthetic sponge sales to users amounted to $13,317«300. Presuaably these figures include imports and domestic production. Since the two products are very close substitutes for each other one may assume that a suiamation of the natural and synthetic sponge sales represents total market demand for the absorbing coimnodity. Based on this assumption, in 19^ natural sponges had a 3^*70 per cent share of the total sponge isarket. In I963 the conqposite market includ- ing imports vas estimated to be in the vicinity of $40 million, with 2 natural sponges sharing approximately 10 per cent of this total* It vas pointed out i>reviously that for many users the cellulose sponge is a very good substitute for the natiural itroduct. This is the opinion of the majority of distributors selling both kinds of sponges, although the tvo products have never been cosqpared under scientific laboratory conditions. Sellers of natvural and synthetic sx>onge8 are of the opinion that natural sponges are moire durable than synthetics; hovever, they quickly emphasized that this superior dura- 3 bility is confined only to the Rock Island variety. Even if this contention is true many users either are not avare of such a superiority or else this quality of superior durability is not considered to be Important enough by them to significantly differentiate the natural k product from the synthetic. As a matter of fact, many tradespeople Tlichard A. Kahn, "Is the Natural Sponge Fishery Doomed by Synthetic Sponges?" Proceedings of the Gulf and Caribbean Fisheries Institute, Third Annual Session (H.p., Rovember, 1950^ P« \^^^ 2 "Sponge Profits in a Squeeze," Chemical Week, IXC, h^. Interview with Edward Riley, November, 1964. '^Ibid. 173 contend that certain features of artificial sponges, such as color, shape, and availability, maije a more favorable impression on the user than the durability claim of natviral sponges. Since from a func- tional point of view the two products are considered to be substitutes for each other it follows that under these conditons user preference vould be Influenced primarily by price. To be sure, prices do not have to be identical, because such factors as individual tastes and preferences nay induce soiae users to pay a higher price for either product, but any such difference vould have to be vlthln a reasonable range. In 1930, ei survey conducted by the United States Fish and Wildlife Service among natural sponge distributors and retailers selling natxiral spongss stated that k6,^ per cent of the respondents indicated high prices as the most important reason for the decline in natural si)onge sales. According to the same survey, at that time the average unit value of natural sponges sold vas $1.13» and the unit value of synthetic sponges was ^9,3 cents. The survey concluded that some customers indicated a willingness to pay up to 75 cents per piece for natural sponges but that beyond this price they would shift to 3 synthetics. In I96U, a 6x4x2^ inch good quality synthetic sponge retailed for 59 or 69 cents, the former representing a private brand and the latter a national one. Both brands could be bought for about 10 cents less ^Kahn, Proceedings of the Gulf and Caribbean Fisheries Institute, p. [2]. ^Ibld. ^Ibid. Interview with Milton Cohn, Hbvember, 196^. 17^^ In certain types of cut-price eetabllshments, such as drugstores and discount houses. During the same period a Rock Island sponge of a comparable 6^-7 inch size retailed for ^.70, a price difference of I2.ll."'" In 1950, the price difference between natural and synthetic sponges was 63.7 cents per average vmit value. Although the Fish and Wildlife Service does not describe average unit value, assvuaing that this represents a 6x4x2^ inch size for synthetics and 6 1^ - 7 inch size for natural sponges, which are the most popular sizes, the price difference between natxaral and synthetic sponges has increased by almost 30 per cent in fo\irteen years. Synthetics are such close substitutes for the natural sponge that they clearly affect the elasticity of the latter. It is a well known fact that synthetics are being used across the country for purposes in which natural sponges were foinasrly utilized, and one need not engags in a marketing survey to prove this point. Under euah conditions it is obvious that an increase in the price difference between natural and synthetic sponges would adversely affect the market share of the former. This fact has been demonstrably verified by the events that have taken place during the past few decades. Imports Although seme of the smaller firms selling synthetic sponges purchase them from foreign manufacti^rers, ijqnrts have never been an Importemt factor in this area. For example. Table ^3 8ho\/s that in 1963 Imports constituted an infinitesimal proportion of total ^Ibid. 175 synthetic sponge sales, less than 1 per cent« This contrasts sharply with the natural sponge situation as shovn In Table 29 vhere more than two-thirds of the available sponges vere supplied through imports. There are several reasons for the inability of in^nrts to displace the domestic product. First, unlike most firms that produce or sell natural sponges the synthetic sponge industry is characterized by 1 rather large amounts of capital investment. As a matter of fact, two of these firms have assets totaling millions of dollars and are con- sidered to be among the largest corporations in the United States. Second, the tariff policy of the United States has afforded synthetic sponge producers a degree of protection which is strongor than the protection given to natural sponge producers. A congjarison of Table kk and Table k3 shows that for each category synthetic sponges have been glvsn better protection than natxrral sponges. Third, either because of conge, vhich has replaced dishcloths and washcloths in many households. By extruding a cellulose sponge around a cotton core Du Pont makes mops with 8i>a£^ttl-like strands, and by attaching ^Ibid., p. 50. 2 Interview with Mrs. Elizabeth Wallace, November, I96U. 179 wooden handles to sponge blocks it iorms them into attractive, aiodern- looklng dish mops. A larger size of the dish mop serves as a floor mop. Also popular Is a removable sponge block attached to a BkOp handle with a device for squeezing vater frc»i the sponge without wetting the hands with dirty soapy water. Tiny cellulose sponges containing a silver polish are also on the market. Hospitals are using cellulose and urethane sponges as wound packing material In surgery, a function which formerly was performed by the natural product. Because cf Its confidential nature it was not possible to obtain detailed information on the subject of strategy from synthetic sponge producers; however, the exan^les cited in the above paragraphs indicate that such firms have always capitalized on market trends in formulating their marketing strategies. For example, product lo^rovementB, such as sponge -cloths, sponges with silver polish, and sponge -«iops, capitalize on treads of convenience, leisure, health, and beauty- consciousness. Innovations in packaging have been geared to take advantage of the self-service trend. iUso, the distribution of syn- thetic sponges has kept up with changes in consumer-buying habits. As opposed to the limited number of places where one can purchase natural sponges, synthetics can be found in supermarkets, service stations, department stores, discoxint houses, and variety stores. Obvloiisly, this flexibility in distribution has greatly Increased the consumer's exposure to tbs product. This is in sharp contrast to the historically rigid distribution pattern of the natural sponge. •'•"Sponge Profits in a Squeeze," Chemical Week, IXC, 50. 180 Recognition and profitable exploitation of market trends by a firm implies that it has the ability to study and understand the consumer. In a consumer-oriented society the success of a business depends on hov well it serves the consumer, and the quality of such service is a fvinction of understanding the consumer. In addition to capitalizing on martet trends producers of synthetics have achieved grovth by constantly finding nev users, such as hospitals and beauty salons, for synthetic sponges. Unlike the natural sponge industry which is characterized by a philosophy of sticking to tradition the synthetic sponge industry reflects a strategy of planned iimovation. Protection and Subsidies Protection At present, cojmnercial sponge resources of the United States are protected both by an act of Congress and by the laws of the State of Florida. The act of Congress - Public Law No. 172, appxroved August 15, 191'*; 38 Stat. 6921 - prohibits in waters of the Gulf of Mexico and the Straits of Florida which are outside the limits of territorial Juris- diction of Florida the capture of sponges measuring less than 3 inches in diameter when wet. This act also forbids the landing, curing, possession, or sale of sponges smaller than the established 5 inch size and provides penalties for violators. The laws of Florida con- tain essentially the sans prohibitions with respect to catching and marketing sponges within the territorial limits of the state. State law also prohibits the use of diving equipment for taking sponges within the territorial limits of Florida and specifies that hooks used l8i in removing sponges from the bottom of the sea be ^ Inches vide (see page 26). It can be easily inferred that the objective of these laws is to protect the species rather than the interests of the members of the sponge industry. For example, fishermen can catch all the sponges possible as long as they do not land sponges less than 3 inches in diameter vhen wet. Such a law may be useful for the preservation of the sponge beds, but it is of little or no benefit to certain eleiaents of the sponge Industry. As will be explained later, the interests of the sponge population, the fishermen, and the paclcers and distributors are not necessarily ccoBpatible. Table kk shows the current duty rates for the varloxis species of Imported sponge. A comparison of Table kk and Table k^ shows that synthetic sponges, which have a much superior stronghold on the United States market, have been given more protection than natiiral sjionges. On Janviary 2U, 1955 » the Sponge Industry Improvement Committee of Tarpon Springs sent a resolution accompanied by 2,000 signatures to President Dwight Eisenhower, Senators George Smathers and Spessard Holland, and all lAiited States Congressmen from Florida urging increased tariffs on imported sponges and the prohibition of sponges less than 5 Inches in diameter. This venture was unsuccessful in increasing tariff rates on imported si>onges, but it did accomplish 2 its latter objective. Interview with George Prantzis, President of Sponge Industry Improvement Conmlttee, Tarpon Springs, Fla,, July, 196U. ^Ibld. 182 Subsidies Like many other troubled industries and segnents of the American society spongers have long been trying to obtain the assistance of governmental bodies both at the federal and state level. Heavy govemiaent purchases of natural sponges during V/orld War II created a prosperity among spongers vhlch they are not likely to forget. After the cessation of hostilities, however, high prices and unreliable supplies forced the Federal Government to shift to the use of artifi- cial sponges. It vas not until 19^3 that through the efforts of Bepresentatlve Wllliaa C. Cramer the name of Florida natural sponges 2 vas restored to the General Services Administration catalog. Table U6 shows Federal Government purchases of natural sponges since 19^. It was not possible to obtain any figures prior to 1962, since such data were destiroyed according to governmental ix)licy. Table k6 indicates that prinarlly due to the pressures from vested Interest grottps the Federal Government has increased its purchases of natural Florida sponges, but it is also apparent that government purchases of artificial sponges have been going up at a faster rate. For example, in fiscal year 1961* the Federal Government purchased $2,029,7lfl worth of synthetic sponges as compared to $7**»X95 spent on Florida natural sponges. It is this large expenditure for synthetics that vhets the appetites of spongers and motivates them to capture part of this business, mainly through political pressure. Tarpon Springs lobbyists were also successful having a lav passed by the Florida Legislature in I963. According to this law, "all ^Ibld. 2lbid. 183 TABLE k6 FEDEEtAL GOVEPHMENT PURCHASES OP NATURAL ,-Mro SYOTHaric sponges, selected ya^Rs, 19^^196*^ Natiiral Synthetic Ratio of Synthetic Year (Dollars) (Dollars) to Natural Sponges 19'*8 23,W*5 7i»,703 3.18:1 1962 kk,^kO 1,903,873 1*2.7^:1 1963 61,070 1,581*,830 25.95:1 196*^ 7^,195 2,029,7^1 27.35:1 Sources: 19^*8 from Kahn, The Legislative Situation on Sponges, 1962-196^ from letter fron H. A. Abersfeller, General Services Admin- istration Camniissloner, January I9, 196**. county officials, boards of county coianlssioners, school boards, city councils, city commissioners, and all other public officers of state boards and conmissions charged vith the letting of contracts or the making of purchases shall, in the purchase of sponges, always specify sponges grown, cultivated or otherwise produced in Florida, whenever such sponges are available and price, fitness, and quality are equal." Unfortunately, the passage of this law did not measure up to the expectations of Its proponents because of the manner in which the text was phrased. Most state officials have interpreted the term "produced in Florida" to be inclusive of synthetic sponges, cmd since such sponges can be obtained at much lower prices the synthetics have been given preference by state purchasing agencies. As of August, 196'^^, no state agencies had purchased natural sponges under this law, 2 much to the disappointment of the Florida natural sponge industry. Florida, Statutes {196% c. 370.162. 2lnterview with GSeorge Arfaras, July, 196U. CHAPTER VI CONCLUSIONS The present chapter vill atteurpt to reach some conclusions, chiefly on the basis of the analysis contained in the previovis chapters. Such conclusions in turn will form the cornerstone of the recommendations which vill follow. Since in a free enterprise system the fate of any economic good is determined by the Interaction of factors, such as supply and demand, advertising, sales promotion, selection of channels of distribution, product image, and pricing policies, the following discvission will deal with these factors both through an examination of historical data and from information obtained through a market experiment. Supply and Demand Availability of substitutes is the most important factor deter- mining demand elasticity. Inasnaich as synthetic sponges are a vez*y good substitute for natural sponges, one could make an a priori state- ment that the demand for natural sponges is highly elastic. Both the Kahn survey conducted in 1950 and current opinion expressed by sponge distributors indicate that price is considered as the main factor causing sales of natural sponges to shrink. Table 3^ shows that between 1932 and 1953 the average larice of domestic natural sponges ^alph H. Blodgett, Our Expanding Economy (New York: Rinehart & Co., 1955), p. 260. 181+ 185 rose from $5*66 to $7*39« an Increase of 30 per cent* During the saine years the quantity of marketed domestic sponges declined by 31 per cent. As can be seen from Table 3^t between 19^ and 1953 average prices of Imported sponges were relatively stable, but the price increase In domestic sponges may have been responsible for the k^ per cent In- crease In Imports during that period. This situation reversed Itself exactly ten years later. Between 1962 and 1963 average Import prices vent up by 6*9 per cent, and this price Increase vas accompeuoled by an 11 per cent decline In the quantity lntported (again see Table 3^)* During the same period average domestic prices declined from $6.66 to $7*01, by I9 per cent. This price decline coupled vlth higher import prices resulted in a 30 per cent increase in the marketed quantity of domestic sponges. All these facts further corroborate the allegation made earlier concerning the price elasticity of the product. The degree of price elasticity can fxurther be demonstrated by applying the concept of cross elasticity. Cross elasticity of demand meastires the extent to which various products are substitutes for 1 each other. If products are substitutes for each other the cross elasticity between them will be positive. A high cross elasticity coefficient would indicate that the products are close substitutes for each other. Between I95O and I963 sponge prices at the packers' level rose by I8 per cent (again see Table 3^). Since the industry engages widely in cost plus pricing we may assume that this iras reflected at the retail level. In 19^0, synthetic sponge sales Leftwlch, p. U5. 166 amounted to $13,317,800 with an average unit price of 1^9*3 cents. This means that approximately 27>013,793 units of synthetic sponges vere sold in 19^0. In 196^ synthetic sponge sales vere estimated to be in the vicinity of $38,000,000 with the most popular size selling 2 for 39 cents. Assuming that the 1950 price of >f9*3 cents and the I96U price of 59 cents reflect units of coiiq;>arable size and value, unit sales of synthetics between 1950 and 196'*^ increased by 37,392,986 pieces or by 136 per cent. Althotigh in reality other things are seldom constant, if for the sake of demonstration one could disregard other variables the result would be a cross elasticity coefficient of 5.1. It Is obvious that the existence of such a good substitute is certain to make the demand for natural sponges highly elastic. An elastic demand coupled with high prices appears to have slowed down the turnover of natural sponges in many selling outlets, which in turn has limited the distribution of the product. Slow turnover is the main conqplaint of all middlemen in Justifying their refusal to 3 give the prodxict a wider market exposure. In advising the natural sponge industry Mr. Hugh Parker, a vice-president of the J. Walter Thompson Coiqpany, recosmended wide distribution for the product, since most people buy sponges on impulse. He alao suggested the brand name '^iton" in order to differentiate natural sponges from substi- k tutes. Although this recommendation was Instrumental in triggering ■'•Kahn, Proceedings of the Gulf and Caribbean Fisheries Institute, p. [2]. ^Letter from William E. Smith, Cellxilose Sponge Institute, Chicago, December 10, 1964. 3spong5 and Chamois Institute, "Test i4arket Report," p. 12. TiStter frcM Hugh Parker, Vice-President of J. Walter Thonqpson CooQiany, to Theodore Cantouris, a sponge distributor, August 27, 1963* 187 TABLE kf CELLULOSE SPONGE SALES, 1953-1962 Year Dollars 1953 15,500,000 195^ 20,300,000 1955 23,000,000 1956 2if,600,000 1957 2iv,800,000 1958 26,600,000 1959 27,200,000 i960 27,900,000 1961 30,100,000 1962 31,000,000 Source: Letter from William E. Smith, Cellvilose Sponge Institute, Chicago, 111., December 10, 196^^. the Harrisburg test which will be explained later, the Kahn survey conducted In 195O and an examination of historical data clearly indi- cate that a strategy of product differentiation vould be of limited value in advancing the interests of the natural sponge Industry. In view of the elastic demand for the product a logical policy for attaining extensive distribution must rest upon the assumption that the supply of natural sponges is relatively elastic, but this assumption is nullified by the historical interaction of supply and demand in the industry. For example, prices of sponges have tended to rise faster than the quantity of sponges supplied whenever the demand for the commodity increased. This is most vividly illustrated in Table 48 which shows the behavior of the industry during World War n. As an Increase in demand caused spongy prices to go up rapidly during the war years, the quantity of the product supplied was very unrespon- sive to such x>rice changes. 188 TABLE 1^8 ANNUAL PERCEHTAGE CHANaE IN SPONGE LANDINGS AND IN AVERAGE SPONGE miCES, Sinnge Landings Average price Percentage Change Percentage Year in Pounds per Pcnrnd in Landings from Change in in Dollars Previous Year Price from Rrevious Year 19'tl 231,000 3.66 19*^2 201,000 6.79 -13 85 19^*3 18^^,000 9.2i* - 8 36 19kk 186,000 12.39 1 3'* 19»*5 192,000 13.27 3 7 19^6 19l^,000 lJ*.00 1 5 Source: Based on Table 10 The explanation of this sltviatlon lies in the fact that even If It is possible to increase the number of fishing outfits it is impos- sible to increase the size of the sponge population. As a matter of fact, as the number of fishing craft increases the entire level of the sponge population may go dovn, because competitive practices force fishermen to violate lavs of conservation. An inoreese In the Intensity of fishing effort, when api>lled to a fixed sponge x)opu- latlon, will increase the cost of fishing, which implies a rather steep supply function for the industry as a whole. Fishermen will try to pass on such cost increases to the next buyer In the distribu- tion chEumel. If each member In the channel succeeds in passing auLong his Increased costs the final user vlU be faced with a higher price, which win further damage the product's market position and hurt the Industry. 189 It Is possible that flshannen will have to absorb any cost in- creases resulting from their atteoqpts to increase sponge landings* If this happens fishermen's earnings and the returns on boat investiaent will have to go dovn. As fishermen's earnings and returns on boat Investment decline labor and capital will be forced out of sponge fishing. This situation in turn will precipitate a shortage of fish- ing craft and personnel in the industry. It is obvious that with a reduction of operating units it will be almost impossible to attain wide distribution as suggested by Mr. Hugh Parker. In September, 1963> the Sponge and Chamois Institute in cooperation with the Bureau of Commercial Fisheries laimched the Earrisbiirg experiment in order to test the possibility of increasing natural sponge sales through a more aggressive promotional effort. The city of Harrisburg, Pennsylvania, was selected as a sasiple, because the particli>atlng government per- sonnel had good contacts in the city, and the city is located rela- tively close to the offices of the Bureau of Commercial Fisheries and the Sponge and Chamois Institute. The city also had a good mixtxire of ethnic and racial groups and was considered to be fairly good from the standpoint of available advertising media. The test market operation lasted two weeks and consisted of the following specific steps. The two local newspapers, the Patriot Kews and the Evening News, with an estimated local newspaper coverage of 98 per cent spearheaded the promotion through editorial support. Spot announcements were developed and distributed to all ei^t radio stations in Harrisburg. Two local television stations, WHP and WTPA, gave the Sponge and Chamois Institute, "Test Market Report," p. 7. 190 campaign extensive coverage and showed slides and the fourteen minute Bxireau-produced film Sponge - Treasure from the Sea." The same film vas shown to all Junior and senior high school students in Dauphin County. Also, 5,500 pamphlets featuring natural sponges were distributed to the stiiidents and attendants at the Meat Institute cooking school. The latter promotion was sponsored by the Meat Institute and the Patriot Hews and was attended by approximately U,000 homemakers. In addition, a young lady from Tarpon Springs acted as an "Ambassadress of Good Will" during the last three days of the campaign. Her activities incliided a television appearance, a speech at the Lions Club, a tennis match, an appearance at the Exchange Club where she presented the Lieutenant Governor with a wreath of sponges, and visits to several retail outlets. Newspaper representatives were with the "Ambassadress of Good Will" during all her appearances and gave appropriate newspaper coverage. Table ^9 shows the participating stores togjether with the onount of sponges that they purchased. Sponges were packed in poly bags and retailed for 99 cents. The cost to the retailer was 65 cents with shipment prepaid. In order to give the product wide exposure it was agreed that a21 sponges not sold by the end of Nbvember could be returned for a full refund. Although the Harrisbijrg experiment was called a marketing test by its sponsors, it was merely a jworly organized promotional effort. The sole purpose of the Harrisburg experiment was to sell sponges rather than to atteo^t to determine cause and effect relationships ^Ibid., p. 6. 191 which could lead to the developeaent of a marketing plan. There vas no hypothesis to be tested, nor were provisions made to control condi- tions pertinent to the testing of such a hypothesis. To the extent that the above conditions vere not met the Heurrisburg event cannot be called a marketing test. Although larrlsburg is considered to be a 2 fairly popular city, authorities In marketing believe that there is no single market area which can be representative of the entire national market. According to Professor M. S. Heldingsfield there Is no such place as a "Middle Town, U, S. A.' To the extent that a local market area fails to be representative of the entire United States market any teat f iiidlngs cannot be projected as applicable to the national market. As can be seen f rcaa Table U9 the campaign to sell aponsse vas less than successful. Although no information on the cost of the campaign Is available, the amount of sponges sold would be a prima facie indication that the campaign failed to accomplish its objective. In Its Test Market Report to the members of the industry the Sponge and Chamois Institute reached the following conclusion : Lower priced synthetics sold much better than aggressively promoted natxiral sponges .... Regardless of the final results, this test market research and promotional canqpalgn did not lack for advertising, promotion or merchandising.^ ^Harper W. Boyd and Ralph Westfall, Marketing Research (Homewood, 111.: Richard D. Irwin, 1956), p. 80. 2'^st Marketing Ctoes Truly National," Sales Management, Novem- ber 10, 1958, p. Z&, ^Myron S. Heldingsfield and Frank H. Eby, Jr., Marketing and Business Research (New York: Holt, Rinehart & Winston, I963T* P« 138* Sponge and Chamois Institute, 'Test Market Report," p. 26* 192 TABLE 49 SUMMATION OF SPCWGE SALES IN HARRISBURG Qjiantity Delivered Number of Name of Store (Pieces ) Sponges Sold Acme Food Stores 288 0 A. 8e P. 501* 0 Pood Fair 1,080 0 Town and Country Distributors 2,800 0 Rea and Derick Drugs 664 0 Peoples Drug Store 720 96 Joe the Motorist 720 25 Stanley Distributing Company ^►32 0 S. S. Kresge Company k3St 27 F. W. Woolworth 288 21* 0. C. Muirphy Ccanpany 216 8 Joseidi Caplan Drug Company lUk 0 B. F. Goodrich Comiany 11^ 0 Restaurant Equipment Conipeuiy Ikk 0 H. L. Green Company iMk 52 Pooieroys Department Store iMk 0 Bownans Department Store ikk 0 Total 9,208 232 Source: Sponge and Chamois Institute, Bulletin, XXX (January 14, Even though the above paragraph does not shov any cause and effect relationships it indicates that in addition to being price elastic, the product is also highly advertising inelastic. That is, a per- centage increase in advertising exijenditures leads to a smaller percentage increase in sales. This vould suggest that attempts to differentiate the product within a general market may be a total waste of time, money, and effort. One may hazard a guess that the Harrisburg experiment might have produced dissimilar results under a different piromotional approach and 193 different timing. For example , had the promotion taken place in the spring rather than the fall season the results might have been more encoTiraging. It may be reasonably assumed that in northern climates more people would be willing to piirchase sponges for cleaning and washing piirposes in the spring rather than in the fall. Distribution Structxa-e At present, the established pattern for distributing Florida- produced natural sponges consists of the following levels: fisherman to packer, packer to distributor, distributor to wholesaler or viser, and wholesaler to user or retailer. This channel is rather long when compared to the distribution of syntl^tics and imports. It was pointed out that synthetics are sold directly frcaa manufacturer to retailer, manufacturer to wholesaler, and manufacturer to distributor. Imi)ort8 of natiiral sponges also move through a shorter channel, since their first contact in the daneatic market is at the distributor level. It was estimated diuring previous discussions that packers charge an average 25 per cent markup on cost. The markup added by distribu- tors is estimated to be in the vicinity of 85 per cent. Judging by the Harrisburg experiment where sjwnges bought for 65 cents were sold for 99 cents, one may venture to say that an average retail markup would be around 52 per cent. This is close to the "normal" 50 per cent markup recoraroended for synthetic sponges by the National Retail Hardware Association in its Turnover Handbook. Assuming these estimates to be fairly close to the actual practices of the businesses. ■^Letter frcxa Dwayne Laws, Executive Vice-President of National Retail Hardware Assn., Indianapolis, Ind., March 17, 1965* It is apparent that a sponge sold for $1.00 by fishermen In Tarpon Springs would cost the user $3»53« This is a rather high markup, but it is very hard to condemn. Becavise of the slow turnover rate of the ixroduct most middlemen would not carry it at all if the markup were low. As a matter of fact, the National Retail Hardware Associa- tion does not recommend the carrying of natxiral sponges because of their low tvimover rate, and natural sponges are not even included in its Turnover Handbook. The fact that distributors enjoy the highest markup in the channel is an indication that they are expected to do some aggressive selling and promoting of the product. The analysis of distributor operations in Chapter IV, however, indicates that a "pxish" strategy by the distributors could not be expected to succeed in view of the nature of the product lines carried by them. One may consider the possibility of packers selling sx)onges directly to users as a device to redvtce certain markups and trim prices at the user level; however, this suggestion would not be practical for two reasons. First, the discussion on packers in Chapter IV indicates that these businessmen have neither the financial resources nor the talent to undertake such an oi)eration. Direct selling by packers would require that they finance larger inventories, tie up sc^ae additional funds in accounts receivable, and be prepared to cope with collection problems. Most users are located in the North and are accustomed to placing small orders by telephone and obtaining immediate delivery. It would be difficult to satisfy these needs from Florida, and the adoption of such a policy might be the last straw in •^Ibid. 195 TABLE 50 SPONOE PURCHASES FOR 1963 BY ELEVEN PACKING PIR^E IN TARPON SPRINGS, H/SIDA Total Assets of Firm Purchases in Thousands of Dollars In Dollars 75-325 150,031.79 75-125 139,1*13.96 35-50 39,963.00 35-50 19^680.00 20-35 10-20 7,800,i*6 5-10 2,672.15 5-10 5-10 980.00 Source: Firm assets frcm Dun and Bradstreet. Firm purchases from svurvey of packers In Tarpon Springs, Fla., by the author, July, 196**. making all users shift to synthetics. Second, an attenqpt to sell directly to users vould most probably cause the packers to lose the entire market, since distributors are In a better position to retaliate by promoting both iiq>orted and artificial sponges. Finally, the preceding paragraphs have indicated that in viev of the limited supply fvinction in the short run and the fact that the level of supply is very unreliable in the long rim it would be economic folly to Invest money in the declining sponge Industry. The experiences of 1937 and 191^9 are too fresh to forget. Rroduct Trend One may deduce from the Harrlsburg experiment that the natural sponge has no distinct image in the minds of the xisers. It may be possible to create an image for the prodtict, but this is not very likely to succeed for two reasons. First, if the Harrlsburg test is 196 any indication, the amount of funds required to acconqplish such an undertaking would be prohibitively large* The second reason is the fact that the product does not possess any distinct advantages to differentiate it In the minds of the users to overcoiae the substan- tial price difference vis-a-vis the synthetics. In addition to facing direct coaqpetition from synthetics, natural sponges have been adversely affected by Improvements in other industries. For example, lithographers verc once one of the best DBarkets for selling natural sponges, but in recent years they have shifted to the use of zinc rather than stone plates* This Innovation has obviated the need to scrub stone plates vith sponges. Spray I)alnts have greatly reduced the consumption of sponges by painters. Before the introduction of sprays the average paint wholesaler bovight 1,500 pieces of natural sponges a year. Spray paints have reduced o this amount to 50 pieces annually. At present, window and car washers are among the best customers of natural sponge distributors, but one would not be too far afield to ventiure that innovations, such as automatic car washing, will make Inroads in these areas in the not so distant future. Figure 21 indicates the overall picture of the natural sponge in regard to its consumption. It depicts the trend of the product since 1951, a time which may be considered as a period of relative normalcy after the blights of 1937 and 19^+9. This estimate assumes that all imported and domestically produced natural sponges within any year ^Interview with Robert Sinenberg, November, 1964. Interview with Edward Riley, Itovember, 1964. 191 constitute the anniial consvonption of the prodvict for that year. The projected trend will deviate from specific annual figures In the future; however, it does indicate the general direction of natural sponge consumption. Of course, a projection based on historical experience will not be valid if lonpredictable factors, such as innova- tions or changes in user tastes and preferences, upset the assumptions inherent in the historical data. Historical precedent supplemented by logic would indicate that such trend disturbing forces are not likely to upset the trend of the natural sponge in its present market. As a matter of fact, if the present trend continues sponge consumption will cross the horizontal axis in a little over twenty years (again see Figure 21). It is obvious that the future of the Florida sponge indiistry is rather glocsny unless certain basic changes are effected in order to pull the Industry out of its secular decline. 198 Figure 21. Least Square Straight-Line Trend of Natural Sponge ConsiAmption in the United States 300 260 220 180 ll+O 100 60 20 1951 1955 Actual Consumption 1959 1963 Least Square Trend Source: Based on Table 51- 199 TABLE 51 C(»!PUrATION OF LEAST SQUARES STRAIOHT-LINE TREHD OF NATURAL SPOHGES Apparent Year Cksnsumption N Y X X^ XY Ye 1951 267,800 -6 36 -1,606,800 271,562 1952 203,000 -5 25 -1,015,000 261,932 1953 275,300 -i^ 16 -1,101,200 252,302 195»^ 206,207 -3 9 -618,621 2^2,672 1955 250,61+8 -2 k -501,296 233, Ote 1956 2if7,107 -1 1 -2^7,107 223,^12 1957 282,950 CO 0 213,782 1958 220,444 1 1 220, IM 204,152 1959 189,275 2 4 378,550 194,522 i960 223,811 3 9 67l,'+33 184,892 1961 134,305 4 16 537,220 175,262 1962 140,199 5 25 700,995 165,632 1963 138,126 6 36 828,756 156,002 Total 2,779,172 0 182 -1,752,626 a • Ijr a 213,782 b = IXY = -9630 N X=^ Source: Based on Table 39 CHAPTER Vin BECOMMENDATICa^ Tbe objective of the ccanbined descriptive and analytical work in the preceding chapters was to establish the basis and lay the ground- work for the following advisory paragraphs. This final chapter pxjur- ports to indicate possible future alternative courses of action for the sponge industry. Since the existence of clearly defined objectives is of paramount importance in reccmnending courses of action, it is appropriate to reiterate that from the outset the concern of this study has been limited to the sponge industry within the State of Florida. Therefore, the main objective of the suggested courses of action is to maximize those interests of the sponge industry that lie within the political Jurisdiction of Florida. Metrketing At present, the sponge interests in Florida see increased produc- tion as the sole remedy for their problem. No one within the industry is concerned about the marketing element. The only consciovisly applied marketing effort in the indtistry's history was the afore -mentioned abortive Hairrisburg experiment. Even then one can easily deduce that the Barrisbiirg test tried to sell rather than market natural sponges. ■'•Interview with Louis Smitzes, July, 1964. 200 201 Selling Involves prcnnoting the product through the use of salesmen and advertising; however, selling is only one of the many functions of marketing. Unlike selling, which is primarily volume oriented and seeks to promote the interests of the seller, marketing is concerned priittarily with the attainment of the firm's objectives through the 2 satisfaction of customer needs. It is almost impossible to gratify customer needs without making a conscious effort to find out why customers purchase a certain product and what contribution that partic- ular product can make towaz>d the solution of the customers' personal problems. It was pointed out in the previous chapter that the objective of the Harrisburg test was to incirease sponge sales* This, of course, is a rather limited viewpoint, since sales cannot be increased in a vacuum. The objective of a marketing experiment should be the discovery and measurement of factors and variables that, if properly manipulated, could lead to better profits and increased user satisfaction simultaneously. The preoccupation with production at the expense of marketing is typical of many unprofitable and declining industries and product categories. The previous analysis of the sponge industry indicates that increased piroduction is not the answer to the problems of the Florida natural sponge industry. t;, Jerome McCarthy, Basic Marketing (Homewood, 111. : Richard D. Irwin, 196^1), p. 17. ^Ibid., p. 15. ^Theodore Levitt, "Marketing Myopia," Harvard Business Review, XXXVIII (»miy-Augu8t, I960), 45-56. 202 The distribution pattern of natural sponges in the United States has not changed almost since the inception of the industry. Members of the distribution channel at all levels have not changed their selling methods and cust p. ^^' 205 The totirists visiting Florida seem to meet all the requirements mentioned above. The geographical dimensions of the tourist market are narrow compared to the national market, since by definition they are toxorists visiting Florida. Most tovurists visiting the state are in a mood to purchase many souvenirs and other curios, such as coconuts and various articles made of shells, without much regard for price. Ftor example, in I963 toiurists spent $182,369,21^ in buying souvenirs in Florida. This category has been rising constantly as can be seen in Table 52. Since tourist expenditures are closely related to the levels of general prosperity, constantly rising income levels should further increase the expenditures of this group in the future. It can be seen from Table 52 that tourism has been a growing industry in Florida. This is in sharp contrast with the declining trend of the sponge Industry. The examination and analysis of cLll pertinent factors in this study indicate that the dcsnestic sponge industry has been constantly losing ground to stibstitute products in its present market. One can assume that the product may not have sufficient economic value to Justify the continuation of industry efforts to serve its historical market. Abandoning the presently served market and concentrating on attracting the tourist market may be a more fruitful way to utilize the capital and mempower of the Florida sponge industry. Furthermore, this tourist market can be easily reached, since most visiting tcjrists have already been presold on Florida. It is obvious that the tourist market presents distinct opportunities for those who recognize its existence and are prepcured to serve it. •^The idea of exploiting the Florida tourist market originated dtiring a discussion with Dr. Carter C. Osterbind, Director of the Bureau of Economic and Business Research, University of Florida. 206 TABLE 52 NUMBER OF TOURISTS, TOURIST EXPEHDETURES , AMD TOURIST EXPENDITURES FOR GUTS AND SOUVEMIES, SELECTED YEARS, 1929-1963 Number of Tourist Expenditures Expenditures for Year Tourists (Dollars) Gifts and Souvenirs (Dollars) 1929 1,925,000 215,000,000 1939 2,600,000 291,000,000 19119 1^,700,000 825,000,000 1959 11,300,000 1,767, 562, 8»*3 1960 10,79^,81+2 l,B5^MlM3 1961 12,81+0,230 2,01+3,266,000 147,728,117 1962 13,010,389 2,2Ui+,776,500 160,851,31^2 1963 1I+, 208,279 2,522,396,000 182,369,211+ Source: Florida, Development Conaaission, Touris+ Service Division, Florida Totorist Study, I963 and Florida Handbook, 1963-1961+, comp. Allen Morris (Tallahassee, Fla.t Peninsular Publishing Co., 1963 )• Implementation Once the objective of catering to the Florida tourist market has been adopted two different approaches are suggested to accoioplish this purpose. First, the product can be sold to tourists throughout Florida as a souvenir unique to the State of Florida. Second, the uniqueness of the sponge fisheries can be used to advantage in devel- oping more tourist trade for the entire community of Tarpon Springs. In order to sell sponges as Florida souvenirs it is suggested that a sponge fishermen's cooperative be formed. It is an old maxim in marketing that one can eliminate a middleman but not his functions. The geographical dimensions of the market and the limited number of retail outlets selling curios and souvenirs may make it i>ossible to eliminate some of the middlemen. By availing itself of professional 207 advice sticli a cooperative could sell directly to the various curio shops in Florida throuc^ the use of traveling salesmen. In view of the number of such stores located in the state (see Table ^3), this activity could be performed at a reasonable cost by a single salesman. In addition, the cooperative should engage in some sort of product development through finding imaginative applications and forms for sponges. For example, sponges might be used in a similar fashion to coconuts and shells in constructing souvenir Indian beads, marine sceneries, et cetera. The use of marketing research or simple brain storming may prove to be of great value In discovering new ideas. Since fishermen have limited financial means, the most logical promotion should be based on a pushing policy. This woxild imply allowing selling outlets generous markups in order to provide them with an incentive to promote the product through proper displays, billboards, and other forms of advertising. In addition, attempts may be made to have Florida sponges listed In the catalogs of trading stas^ companies. Properly merchandised in trading stamp catalogs, natural si>onges may be made appealing to campers, automobile owners, and homemakers. Arranging to have Florida sponges given away by automobile dealers to their favored customers may be another potential with great promise. A sponge worth a few dollars is not a large cost item to a dealer who has Just sold a car worth several thousand dollars. All these approaches fall within the recommended market segmentation strategy and are msans for Isolating the x>z'oduct from direct price competition. It may be more realistic, although not ideal, to have the above suggestions implemented by the Tarpon Springs Sponge Exchange instead 208 TABLE 53 NUMBER OF SOUVENIR PJ!(D OUT SHOPS IN FLORIDA Coimty Number of Stores Broward ..... 3^ Dade 66 Duval 21 Manatee 11 Orange 1^ Falsi Beach 23 Pinellas ^+9 Polk 17 Sarasota 1^ Volvisia 17 Total 308^ Source; U. S., Department of Commerce, County Business Patterns, First Qiiarter, 1962. ^here was a total of 399 souvenir and gift shops reported for the State of Florida; however, adding the number of such shops given for each county results in a discrepancy of 91 shops. of fonnlng a fishermen's cooperative, because any approach to eliminate packers is bound to receive their resistance. In view of their influ- ence in the local community, packers acting as a group may negate the entire idea of creating a new market if they think their role in the selling of sponges is to be eliminated. In using the sponge industry to develop the area as a tourist attraction it may be possible to elicit the cooperation of the local community. The citizens of Tarpon Springs already recognize the importance of the sponge industry in attracting tourists to the area; however, little organized effort is made by local interests to increase tourist trade for the area by capitalizing on this unique TJarpon Springs (Fla.) Chamber of Commerce, The Tarpon Springs Sponge Industiyj Largest in the WorldfP. [V]. 209 industry of the state. At present, the totirist traveling in a north- south direction on highway U. S. 19 is the most likely prospect to stop and spend a few dollars in Tarpon Springs. The billboards adver- tising the Tarpon Springs sponge docks do not start until one has almost reached the city limits, and their size is much smaller than the size of other billboards competing for the motorists' attention. Beginning at a distance from Tarpon Springs, by placing large posters on main traffic arteries at frequent intervals it may be possible to get more tourists interested in visiting the city. Tourist interest can ftirther be stimulated by emphasizing the uniqueness of the sponge industry and the foreign-country atmosphere of the community. A sharply differentiated ccanmunity image will most likely attract more tourists to the area. Advertising and publicity efforts that use the sponge industry as a theme in order to attract tourists will also indirectly increase the sale of sponge souvenirs in Florida because of an increase in tourist awareness of the product. Although awareness is not synonymous with sale, one may assume that the higher the impact made by an advertisement the greater is the possibility of that advertisement producing sales. Production Chapter II described the concept of stable equilibrium in the sponge fisheries and pointed out that the present relatively high earnings of fishermen and craft owners are the result of restricted fishing effort. Under normal circumstances, fisheries do not offer much •^Heldingsfield, p. 130. 210 opportimity for profit. Profeasor Harden F. Taylor attributes the inability of fisheries to make profits to their coonnon property nature. This backwardnesB of the fisheries indxistry may well be explainable by its odd nature, in which it stands alone, as an incongruous mixture of communism and capitalism. It is communistic in the non-private or public ownership and political control €uid regulation of the source, but capital- istic in the ownership of the tools of production and freedan of enterijrise, and individualistic in the detached and iso- lated lives that rival fishermen live, much of the time at sea.^ Firms or individuals in the sponge fisheries have no legal title to the natural resource. Although from a social viewpoint such natviral re- sources are scarce, they are free goods for individual fishermen. The communistic nature of the sponge fisheries leads to wasteful competi- tion through an overexpansion of the fishing fleet, which in turn tends to put a squeeze on profits and results in needless wastage of the sponge beds as was explained in Chapter II. The fact that industries exploiting natural resources cannot remain profitable vmless properly regulated cGui best be demonstrated by drawing an analogy between the sx)onge fisheries and the petroleum industry. Althoxigh a person may own the piece of land on \rtiioh an oil well is built, he usually shares the subsurface natural resource, 3 petrolevmi, with his nei^bors. Since each surface owner has un- limited access to the subsurface natural resource, in the absence of garden F. Taylor, Survey of Marine Fisheries of North Carolina (Chapel Hill: University of North Carolina Press, 1951)* P« 304. ^Ibid., p. 311. ^Yernon A. Mund, Government and Business (2d ed.j New York: Harper & Bros., 1955 )» p. 638. 211 regulation he is impelled to drill as many wells as possible to retrieve the oil and gas before someone else can get it. In the past this coBBBon-property nature of petroleum has resulted in an over- expansion of productive facilities and unnecessary wastage of petrolevaa. The situation was not rectified until all the principal oil-producing states and the Federal Government decided to regulate and limit the 2 production of petroleum. This would suggest that a deliberate restriction of supply wovad be in the interest of fishermen, and it would tie in perfectly with the recomnended strategy of market segaaentation. It is not likely that packers will be receptive to this sugges- tion, since an inadequate level of landings appears to be their main problem. Dollar volume is a function of q:uantity and price. Under the recommended marketing strategy packers may be able to attain or go beyond their break-even volume at lower levels of sponge landings if hi^ier prices can be commanded from the newly aimed market. Sustained adequate earnings will also solve the industry's perennial problem of a labor shortage. By assessing operating units in return for granting a fishing perToit, a controlling body, such as the Tarpon Springs Sponge Exchange or a fisherman's cooperative, can build up a fund which may be used to train the needed number of divers and other operating personnel. Adjustments The suggested courses of action will require some adjustments at the various levels of the sponge industry, but under the above ^Ibid. ^Ibid., p. 639. 212 recommendations such changes will be relatively painless. The dis- cussion of distributors has demonstrated that those firms are adjusting to the idea that natural sponges are in a decline. This situation is reflected by their present policies. Since natural sponges have become a relatively unimportant element in their product mix, a restriction of sponge landings is not likely to hurt them a great deal. The same is tr\ie for six>nge producers at the present level of craft and personnel. The limited number of operating units makes the present a very opportune time to apply the above recommendations. The demands for importing more divers are based feeling rather than analysis. The importation of additional divers is not likely to solve any problems, and it will undoubtedly make any future adjustments more painful. lAider the proposed remedial policies certain packers may have to accept some changes. It is possible that their bxisiness may improve in spite of reduced landings, but this will depend largely on the price level that the product will command frcm its newly created markets. In all likelihood scoie packers may cease to be i>ackers in the literal sense of the word; however, this should not be a very painful adjustment since at present only three firms qualify as bona fide packers. The r«8t, whether they admit it or not, have been in the process of adjusting their businesses to the pressures of unalter- able economic forces for a long time. To be sure, the above suggestions are merely hypotheses which generated from the analysis of the secondary and primary data col- lected during the course of this study. Their Inplementstiou may not remedy the ills of the Florida sponge industry. The validity of 213 these hypotheses should be tested before making a total commitment to sell natvural sponges exclusively to Florida tourists and to develop the Tarpon Springs area as a tourist attraction by capital- izing on the sponge fleet. No reliable marketing plan can be devel- oped without empirically testing the iaqportance that should b« placed on the various elements in the marketing mix. These factors can only be explored through further experimental research involving the expenditure of substantial amounts of money which were not available to the author of this study* APPENDICES 215 APPENDIX A TRAHSLATION TROH CKEEK OF UCSEVIEW GUIDE USED IN HWEEIVIEWINO CRAFT CAPTAINS IN TARPON SIRINOS, FLORIDA CRAFT 1. Name 2. Length 3. Tonnage k. Age 5. Price at which owner would conBider selling craft 6. Market value of i aquipment PERSONNEL 7* Number of crew 8. Number of ov-ners or I)artners in crew 9. Age and nationality of divers OPERATIONS 10. Method of fishing Hooking diving^ 11. Approximate number of days spent in fishing 12. Approximate number of hours worked per day while fishing _______________«_____-_«__ 13* Distance of grounds fished from shore Ik, V lue of landings in 1963 OPERATING COSTS IN 1963 15. Fuel and oil 16. Food and supplies 17. Diving suits 18. Boat painting and repair 19* Engine repair 20. Annual depreciation 216 APPENDIX B TRAMSLATION FROti GREEK OF INTERVIEW GUIDE USED IN INTEHVIEWIHG SPOIKJE PACKERS IN TARPON SPRINGS, FLORIDA 6. 7. 8. 9. 10. 11. 12. Name of firm Legal form of business Number of years in business Member of Tarpon Springs Si>onge Exchange Engaged in business other than 8X)onee packing If yes, type of such business Sponge sales as a percentage of total sales Yes No Yes No Total number of en^loyees Fvill-time Nvmber of en^jloyed relatives Full-time Type of employment Clerical__ Average enqployee wages Hour Part-time_ Part-time_ Other Week Month 13. List five most important sponge buyers (distributors) Name of firm Location Average volume purchased a. b. c. a. e. Estimated material cost of packing a bale. 217 Ik. Is there any seasonality in selling sponges? Yes No 15. What are your annual sponge sales on the average Dollars^^ Pounds 16. Are sponge clippings a total waste? Please explain. 17. Importance of government in the sponge market. Federal State Other 18. What do you think of the sponge legislation recently enacted by the Florida Legislatxire? 19. Estimated investment in: Leuid Building Equipment 20. In your opinion how can the sponge industry be iniproved? BIBLIOGRAPHY BIBUOtaAPHY Public Documents Florida. Development Conmiasion, To\irl8t Service Division. Florida Tourist Study, 1963 » l9Sk, Florida. State Board of Conservation. The Conservation Lav. Revised and indexed by Greene S. Johnston, Jr., 1935. Florida. State Board of Conservation. Ninth Biennial Report, 19t»9- 1250. 1950. Florida. State Board of Conservation. Second Biennial Report, Biennixaa Ending June 30, 1936. 1936. Florida. Statutes (191'*). c. 253.692. Florida. Statutes (1963 ). c. 370.162. U. S. Bureau of ConHsercial Fisheries. Florida Landings. January, 196I- October, I96U. U. S. Bureau of Coimnercial Fisheries. United States Fisheries, 1962. C. F. S. No. 3'*71* Annual Stnmnary. U. S. Congress. The Fish and Fisheries of the Coastal Waters of Florida" Doounent No. 100. 5'^th Cong., 2d Sess., I897. U. S. Congress. Trade Expansion Act of I962. U. S. Code Congressional and Administrative Neva. dTth Cong., 2d Sess., 1962. U. S. Congress. House of Representatives. House Miscellaneous Reports IV. House Report 2120. Slst Cong., 2d Sess., 1950. U. S. Department of CcMaaerce, County Business Patterns. First Quarter, 1962. U. S. Department of CoomBrce. Foreign Commerce and Navigation of the United States. 1931^-1944. U. S. Fish and Wildlife Service. U. S. Fishery Statistics. 1937-1962. U. 8. Tariff Coaailsslon, Aimotated Tariff Schedules of the United States. 19U5-19^ti, 195'*-1963. 219 220 Books Benoett, Robert B. Background Information for Voliintary Grade Standarda on natural Sponges. (U. S. Fish and Wildlife Service Special Scientific Report, Fisheries No. 273.) Washington: U. S. Oovermnent Printixxg Office, 1958« Blodgett, Ralph H. Our Expanding Ecooomy. Rev York: Rlnehart & Co., 1955. Bouldlng, Kenneth E. Economic Analysis. 3rd ed. New York: Harper & Bros., 1953* Boyd, Harper W., and Westfall, Ralph. Marketing Research. Homewood, 111.: Richard D. Irwin, 1956T Cobb, John K. The Sponge Fishery of Florida in 1S)00. (U. S. CoaamlSBlon of Fish and Fisheries extract from U. S. Fish Comnisslon Report for 1902.) Washington: U. S. Government Printing Office, 1903. Dawson, Charles E., Jr. A Survey of the Tampa Bay .\rea. (Florida Board of Conservation Technical Series No. 3») Tallahassee, Fla.: Florida Board of Conservation, 1953* Dun and Bradstreet. Reference Book, 196U. New York: Dun & Bradstreet, I96U. Florida Handbook, 1963-196^. Compiled by Allen Morris. Tallahassee, Fla.: Psninsular Publishing Co., 1963» Frantzis, George. Strangers at Ithaca. St. Petersburg, Fla.: Great Outdoors Publishing Co., 1962. Galtsoff, Paul S. Sponges. (U. S. Fish and Wildlife Service Fishery Leaflet 1*^90.} Washington: U. S. Government Printing Office, I960. Oltlow, Abraham L. Labor Economics and Industrial Relations. Qomewood, 111.: Richard D. Irwin, 1957 • Heidlngsfield, Myron S., and Eby, Frank H., Jr. Marketing and Business Research. Hew York: Holt, Rlnehart & Winston, 1963. ' Idyll, Clarence P. Etow Can Statistics Increase ^he Catch? (Florida Board of Conservation Educational Series Nb. 3.) Coral Gables, Fla.: Marine Laboratory, University of Miami, 19'«-9. Kahn, Richard A., and Sandven, Lois B. Sponge Production and Interna- tional Sponge Trade of the United States. (U. S. Fish and Wildlife Service Fishery Leaflet I70.; Washington: U. S. Government Printing Office, 19^. 221 Lazer, William, and Kelleyi Eugene J. (ed*) Managerial Marketing t Perspectives and Vievpoints. Hcoevood, 111. : Richard D. Irwin, 1962. Leftwlch, Richard H. The Price System and Resovirce Allocation. Mev York: Holt, Rinehart & Winston, 1961. Marine Laboratory, University of Miami. Smrvey of the Sponge Grotmds Worth of Anclote Li^t. Tallahassee, Fla.: Florida Board of Conservation, 19^37 Mark 15:36 Marshall, Alfred, Principles of Economics. 8th ed. London: Macmillan Co., 1922. McCarthy, E. Jercaae* Basic Marketing. Bomevood, 111.: Richard D. Irvin, 196U. Mund, Vernon A. Government and Business. 2d ed. Nev York: Harper & Bros., 1955* Murray, A. T. The Iliad. Cambridge: Barvard University Press, 1935* Murray, A. T. The Odyssey. Cambridge: Barvard Uttiverslty Press, 1931* Osterbind, Carter C, and Pantier, Robert A. Econoaaic Study of the Shrimp Industry in the Gulf and South Atlantic States. Gainesville, Fla.: Bureau of Economic & Business Research, University of Florida, 1965 • Osterbind, Carter C. Florida's Comnercial Fisheries: tterkets. Operations, Outlook. (State Economic Studies No. 7.) Gainesville, Fla.: Bureau of Economic & Business Research, University of Florida, 1955. Ovenden, A. E. Costs of Earnings Investigations of Primary Fishing Enterprises . (FAO Fisheries Study No. 10. J Rone: Pood and Agriculture Organization, I96I. Samuelson, Paul A. Economics . 3rd ed. New York: McGraw-Hill Book Co., 1955. Sloan, Harold S., and Zurcher, Arnold J. A Dictionary of EconCTnica* New York: Barnes & Noble, 1958. Smith, Hu€^ M. Notes on the Florida Sponge Fishery in I899. (Houaa Documents, Bulletin of the U. S. Fish Commission, Vol. XIX for 1899.) Washington: U. S. Government Printing Office, 1901. Spencer, Milton H., and Siegelman, Louis. Managerial Economics. Hcmewood, 111.: Richard D. Irwin, 1959. Storr, John P. Ecology of the Gulf of Mexico ConBnerclal Sponges and Its Relation to the fishery. (U.^. Fish and Wildlife Service Special Scientific Report, Fisheries No. U66,) Washington: U. S. Oovemment Printing Office, 196*f. Storr, John P. The Sponge Industry of Florida. (Florida Board of Conservation Educational Series No. 9.) Coral Gables, Fla.: Marine Laboratory, University of MianiL, 1957 • Stuart, A. H. World Trade in Sponges. (U. S. Department of CoBBnerce Industrial Series No. tisTj Washington; U. S. Govenaaent Printing Ofl'lce, 19t*8. Taylor, Harden P. Survey of Marine Fisheries of North Carolina. Chapel HilTJ Uhiversity of North Carolina Press, 1951 • Thomas' Register of Manuf acttirers , 196^. Hev York: Thomas Publishing Co., 196iJ. Tiemey, J. Q. The Sponge Industry of Florida. (Florida Board of Conservation Educational Series No. 2.) Coral Gables, Fla.t Marine Laboratory, University of Miami, I9U9. Articles and Periodicals "Caisson Disease," National Encyclopedia, 19*^5 ed., II, 3^» "Florida Citrus Sets Three-Year Elding Campaign, " Advertising Age, XXXIV (May 20, I963), 101. Harris, J. E. "Sponge Fishermen of Tarpon Springs," National Geograjaiic Magazine , XCL (January, 19'*?), 119-136. Buttner, Matthev. "Deep Water Farmsrs," Argosy, CCGXXIII (December, 19"^), 28-30. Key, Alexander. 'Treasiire on the Ocean Floor," Saturday Evening Post, CCXIV (jUne 20, 19*^), 12-13. Levitt, Theodore. "Marketing Myopia," Harvard Business Review, XXXVIII (jUly-August, i960), W^, Moore, H. F. '*rhe Commercial Sponges and the Sponge Fisheries," Proceedings of the Fourth International Fishery Congress; Organization and Sessional Business, Papers, and Discussions (u7 S. Department of Commerce and Labor, Bulletin of the Bxureau of Fisheries, Vol. XXVIII, lart I of 1908 Washington: U. S. GovernmBnt Printing Office, 1910/), 399-585. Munroe,Klrk. "Sponges and Spongers," Scribner's Magazine, XXII (November, I892), 628-639 • 223 Peattie, D. C. "From Tarpon Springs to Tub," Nature Magazine^ 3Y (January, 1929), ^3-^3- Smith, Wendell R. "product Differentiation and Market Segmentation as Alternative Marketing Strategies," Journal of Marketing, July, 1956, pp. 3-B. Sponge end Chamois Institute. Bulletin. Vols. XXX-XXXI. New Yorkt Sponge & Chamois Institute, 1963>6'^« "Sponge Profits In a Squeeze," Chemical Week, IXC (October 27, 1962), i*3-51. "Sponge," National Encyclopedia, 19^*5 ed. IX, 352-353. "Sponges," Encyclopaedia Brltannlca, I963 ed., XXI, 21*8-255. "Sponges for War," Business Week, April 10, 19*^3, pp. 30-31. Stephens, Wllllaia M. "A Remarkable Animal - The Sponge," Sea Frontiers, X (February, I96U), 15-23. Stuart, A. H. "Synthetic Sponges, Sweden, United Kingdom, and the Netherlands," World Trade in Connnodities, VII, Part XVIII, Special Products, Ko. 15 (August, 19^9 )» 1-^. (U. S. Department of Comnerce, Office of International Trade Publication. ) '*Pest Marketing Goes Truly National, " Sales Management, November 10, 1958, pp. 28-36. Vokos, N. Greek Sponge Pishing," Trade vlth Greece, V (July, 196^), 29-34. (Quarterly Journal of Athens Chamber of Coonaerce and Industry.) PEunplilets aad Reprints Cellvilose Sponge Institute. An Absorbing Story. N.p.: Cellulose Sponge Institute, n.d. (Ifopaged. ) Kahn, Richard A. "Is the Natural Sponge Fishery Doomed by Synthetic Sponges?" Proceedings of the Gulf and Caribbean Fisheries Institute, Third Annual Session. N.p., November, 1950. (Unpaged reprint.) Kahn, Richard A. The Legislative Situation on Sponges. N.p.: U. S. Pish and Wildlife Service, Branch of Commercial Fisheries, n.d. (Unpaged.) Tarpon Springs (Fla.) Chamber of Commerce. The Tarpon Springs Sponge Industry, largest in the World. Tarpon Springs, Pla.t Tarpon Springs Chamber of Commerce, n.d. (Unpaged.) 22k UhpubllBhed Material Lewis, Cladln. "A History of the Sponge Industry of Florida," Ifapubllshed Master's thesis. Stetson University, 193^. Love Joy, Gordon Wllllains. '^e Greeks of Tarpon Springs." Unpublished Master's thesis, Utaiversity of Florida, 1938. Pinellas County, Florida. F. E. R. A. Project Ho. 52-F2-31. (Type- written.) ProtCB,, Georfje D. '*rhe Sponge Industry of Tarpon Springs." Unpub- lished paper in the files of P. K. Yonge Library of Florida History, University of Florida, n.d. (Typewritten. ) Sage, Fred K. "Sponge Industry Sunsnary Report." Pinellas County, Fla., C. W. A. Project 52-89. (Mimeographed.) Sponge and Chamois Institute. "Test Market Report." A report to the members prepared by the Sponge and Chamois Institute, Hew York, I963. (Mimeographed.) "A Survey of the Sponge Industry." F. E. R. A, Project HO. 52-7-31* (Typewritten. ) Writers' Program. "Sponge Industry in Florida." Itopublished paper in the files of the P. K. Yongp Library of Florida History, University of Florida, n. d. (Typewritten. ) Letters Abersfeller, H. S., General Services Administration CooBiiss loner, Washington, D. C. January 19, 1965* Cohen, Edward M.. Second Secretary of the American Embassy in Athens, Greece. Hovember I7, 196**. Badraba, Theodore J., Coxmselor of Embassy for Comnercial Affairs of the American Bsibassy in Rome, Italy. November 20, 196^. liter, Canlp, Director of the Foxurth Department of the Txirkish Ministry of COTBaerce in Ankara, Ttirkey. January 5, 1965» Rerby, Peter 0., Production Vice-President of Ilylonge Corp., Bew York. December 28, 1961*. Lane, George H., American-Vice Consul in Aleppo, Syrian Arab Republic. December 29# I96U. Laws, Dwayne, Executive Vice-President of National Retail fflurdware Assn., Indiemapolis, Ind. March I7, 1963* 225 Lilllg, Arthiir C, Connercial Attache of the Ajaerican Embassy In AsHsara, Turkey. Noveinber 20, I96U, Lynam, T. G., Ec^sehold Specialties of E. I. du Pont de Nemours & Ck)., Wilmington, Del. January k, 1965* Parker, Hugh, Vice-President of J. Walter Thompson Co., to Theodore Cantouris, a sponge distributor. August 27, 1963* Robinson, Leslie, Conaaodity-lndiistry Analyst for U. S. Tariff Commission, Washington, D. C« February 23, 1965* Schneider, T. A., Sales Mcmager of Chemical Division of General Mills, Inc., Kankakee, 111. January 8, 1965* Smith, William E., Cellulose Sponge Institute, Chicago. December 10, 196i^. Wieisert, John C, Conerclal Attache of the Aoerican Etabassy in Beiirut, Lebanon. January k, 1965« Interviews Albee, E. R., District Sales Representative, Ger^ral Mills, Inc., Atlanta, Ga. January 28, 1965* Arfaras, Georgs, ovner of George Arfaras Packing Firm, Tarpon Springs, Fla. May-July, 196**. Cohn, Milton, President of Gulf and West Indies Co., Inc., Nev York. NoveniLber 18-20, 196^^. Frantzis, George, President of Sponge Industry Inproveraant Conmdttee, Tarpon Sjarings, Fla. JUly, 196'f. Gialoxu-akis, Nick, ovner of Nick Gialourakis Packing Firm, Tarpon Springs, Fla. May, I96U. Rouremetis, John, owner of John Kouremetis Backing Firm, Tarpon Springs, Fla. May, 196U. Leonard, Arthur P., International Trade Specialist, U. S. Department of Coonaerce, Atlanta, Ga. February 8, 1965* Riley, Edward, President of American Sponge and Chamois Co., Long Island City, H. Y. November I9, 196'f. Samarkos, John, Captain of the diving cralTt "Eleni," Tarpon Springs, Fla. May- June, 1964. Samarkos, Mike, ovner of Samarkos Brothers, Inc., Tarpon Springs, Fla. May, 196l»-. 226 Slnenberg, Robert, peurtner in Florida Sponge and Chamois Co«, New York. November l8, I96U. Smitzes, Louis, President of Tarpon Springs Sponge Exchange, Tarpon Springs, Fla. April-July, 1964. Wallace, Mrs. Elizabeth, Executive Secretary, Sponge and Chanoie Institute, Ifev York. November 16-20, 196*^. Other Sources Sponge and Chamois Institute records (in the files of the Institute). Survey of distributors conducted by the Sponge oM Chamois Institute, 196if. Survey of nine diving craft captains in Tarpon Springs, Fla., conducted by the author. May, I96'*. Siirvey of packers in Tarpon Springs, Fla., conducted by the author, July, 196k, BIOCatAPHICAL SKETCH John Vasll Petrof vbs bom January 6, 1933» In Istanbul, Turkey* In September, 1953 ^ be Joined the Turkish ansy from which he was dis- charged In 1955 &s a First Lieutenant. He came to the United States In 1956 to attend Soory University from which he received the degree of Bachelor of Arts In June, 19^8 • In June, 1959> be was awarded the degree of Master of Business Adolnlstratlon by the saae Institution. From 1959 to 1962 he was employed as an Instructor by the Atlanta Ublverslty School of Business Administration. In I962, he enrolled In the Graduate School of the University of Florida in order to ptirsue his work toward the degree of Doctor of I^ilosophy In Economies and Business Administration. He worked as an interim-instructor in the Department of Economics until May, I963, and was awarded a Department of Interior fellowship the following academic year. In September, 196^* he returned to Atlanta lAilversity to work as a Resource Development Specialist for the newly established Regional Eoononlc Development and Business Service Center. John Vasll Pstrof is married to the former Barbara Jean Galney and is the father of two children. He is a member of the American Association of lAiiiversity Professors, American Economic Association, American Marketing Association, and tl» Society for the Advancement of Management. 227 This dissertation was prepared under the direction of the chairman of the candidate's supervisory committee and has been approved by all members of that committee. It vra.s submitted to the Dean of the College of Business Administration and to the Graduate Coxmcil, and was approved as partial fulfillment of the requirements for the degree of Doctor of Philosophy. June 20, I967 Dean, College of Business Administration Dean, Graduate School Supervisory Committee: t 5 03 0