Mr. Chairman, I very much appreciate this opportunity to appear before your committee and I sincerely hope that it will report favorably on S. 2802, with such perfecting amendments as these hearings may indicate to be desirable. Now, Mr. Chairman, just before I conclude I would state that this morning Mr. Edward Allen of Seattle, whom I think Senator Magnuson knows and who has always been interested in the fishing industry because I have corresponded and talked with him over the years, would like to have some amendment to make sure that biological research would not be restricted in its scope by the phrase "to promote the free flow of commerce". I told him that I felt the language of the bill, and certainly my statement were broad enough to include all types of biological research, but I would be glad to call it to your attention, sir. Senator MAGNUSON. He suggested an amendment that merely clarifies the language and gives it that broader scope. Senator SALTONSTALL. That is correct, and I would have no objection to that amendment. His suggestion is to add, after "origin" in line 14 of page 2 of the bill, the words "(3) to conduct any biological, technological or other research pertaining to American fisheries." Senator DUFF. Without objection, that may be made a part of the record. Senator MAGNUSON. May I also place in the record right after your conclusion a part of the fishing industry that was not mentioned by you. The salmon industry experienced the worst year in 40 years. From 812 million average cases it went to a low this year of 3 million cases. This is a $100 million a year industry. That is in Alaska alone, so the importance of this bill as it affects these other fish relates to the great Pacific coast salmon industry, too. I had a statement on it, and I would like to put it in the record at this point. Senator DUFF. The Senator's statement will be made a part of the record. STATEMENT OF HON. WARREN G. MAGNUSON, UNITED STATES SENATOR A fund of approximately $4 million a year to finance research to assist the salmon, tuna and other commercial fisheries will be provided in a bill sponsored today by Senator Warren G. Magnuson (Democrat, Washington). The $4 million would be provided by the foreign imports of fisheries products, through an allocation of 30 percent of all duties collected on such imports. This principle of subsidizing research to assist American industry was established in 1939 in the Agriculture Adjustment Act. "Our salmon industry has just experienced its worst season in 40 years,” Senator Magnuson said. "Only through an intensified research program can we discover why and determine the best treatment to prescribe for its revival.” Senator Magnuson declared that canned salmon production in the Territory of Alaska declined from a peak of approximately 81⁄2 million cases in 1946 to a low of 3 million cases in 1953. Other fisheries on both the Pacific and Atlantic coasts are experiencing similar decreases but, so far, not so sensational. "In salmon alone," the Senator said, "we are dealing with a $100 million a year industry and we have been spending less than $200,000 a year in research. The economy of both Alaska and the Pacific Northwest demands that we know facts that only research will reveal. The bill I am sponsoring will provide ample funds to get answers to the questions of where the fish run in the oceans, what happens to them in the spawning areas and what new markets may be develoned." Other Pacific and Atlantic coast Senators are joining with Senator Magnuson in support of the fisheries research bill. In the calendar year 1952 approximately $12 million was collected on imports of fish products. The Senator predicted that this will increase to $15 million in 1953, and under the bill 30 percent of this amount would be made available to the Secretary of the Interior for all phases of research vital to the domestic industry. A series of conferences with labor leaders and canners was held in Seattle last fall to diagnose the ills of the Alaska and Puget Sound fisheries. The sentiment was unanimous that additional funds for research is an absolute necessity if this great, vital section of Northwest economy is to be preserved in a prosperous condition. Senator SALTONSTALL. May I ask you to include a letter from Mr. John W. Black, Jr., an attorney from Gloucester, Mass., on this bill. Senator DUFF. Without objection it will be inserted in the record. (Letter from John W. Black, Jr., is as follows:) Hon. LEVERETT SALTONSTALL, Washington 25, D. C. GLOUCESTER, Mass., March 29, 1954. DEAR SIR: Please record my support of Senate bill 2802 when the same comes on for hearing on Thursday, April 1. This bill is otherwise known as the Saltonstall-Kennedy bill. The Nation needs the beneficial results which this measure should bring about. The content of the sea and its future value to America should be explored. The industry needs this help and any other it can have. There are areas in this country-and I have visited them-where folks don't yet know what good ocean fish tastes like. If this bill will bring new markets to these people it will benefit both consumer and producer. The research promised by this bill is, in my opinion, vital to the further progress of the industry. We can only speculate as to where it will lead. It is quite beyond the private capacity of the industry at the present time. Therefore I wholeheartedly urge favorable action by the committee and the Congress on this measure. It could be the economic salvation of this city. Sincerely yours, JOHN W. BLACK, Jr. Senator SALTONSTALL. I would also ask that you insert into your record a letter from Mr. Donald J. White from Boston College in Chestnut Hill, Mass., Mr. White being associate professor at Boston College. Senator DUFF. Without objection Professor White's letter will be inserted in the record at this point. (Letter of Donald J. White is as follows:) Hon. LEVERETT SALTONSTALL, BOSTON COLLEGE, DEPARTMENT OF ECONOMICS, Chestnut Hill, Mass., March 29, 1954. United States Senator, Senate Office Building, Washington, D. C. DEAR SENATOR SALTONSTALL: Now that hearings have been set definitely for the fisheries bill (S. 2802) which you introduced for yourself and for Mr. Kennedy, I would appreciate it very much if you would convey to the committee my wholehearted endorsement and support for the proposed legislation. Speaking as a private citizen and as a professional economist who has spent some years studying the New England fishing industry and its problems, I am convinced that the research and development activities contemplated by 8. 2802 would be beneficial to the industry and the Nation as a whole. The New England fishing industry in particular is in a period of transition from a stage in which research played a relatively minor role to a stage in which the industry either will operate from a strong research base or it will not survive on the level of recent years. The proposed measures of S. 2802 are precisely what is needed to strengthen the industry and safeguard the Nation's legitimate interest in the huge Northwest Atlantic fishery resource. Very sincerely yours, DONALD J. WHITE, Associate Professor. Senator SALTONSTALL. I would also ask to place in the record at this point a copy of the Monthly Review of the Federal Reserve Bank of Boston, entitled "America's Oldest Industry Faces Crisis." Senator DUFF. Without objection it will be made a part of the record. (Monthly Review, "America's Oldest Industry Faces Crisis" is as follows:) [From the Monthly Review, Federal Reserve Bank of Boston, vol. 32, No. 3] THE NEW ENGLAND FISHING INDUSTRY-AMERICA'S OLDEST INDUSTRY FACES CRISIS1 By Donald J. White' The outlook for New England's leading fishing ports is not promising unless the major interests in the industry-dealers, vessel owners, fishermen, and shoreworkers-work jointly to solve the problems which confront them. The threatened depletion of New England's fishing grounds requires immediate attention. Increasing foreign competition for American fresh- and frozen-fish markets accentuates the need for improved marketing practices and more vigorous market development by the New England fishing industry. The available evidence indicates that New England fishing interests have come to grips slowly with the difficulties which threaten their future existence. The principal groups in the industry have not begun to settle their internal differences and cooperate in overcoming their common problems. Only a sharp reversal of policy will enable the New England industry to maintain its position as the leading supplier of fresh and frozen packaged fish in the United States. The modest inauguration of a market-development program by fish dealers in Gloucester, and to a lesser extent in Boston, is the most hopeful recent development. New England's rambling fishing industry covers the entire coastline from Canada to New York State, but most of its activities are concentrated in Massachusetts and Maine. In 1948, the region's ports handled about 848 million pounds of fish and sea scallops worth $48.5 million to fishermen and vessel owners. That product represented more than 20 percent of the volume and value of the total United States and Alaskan catch. The area is the leading supplier of fresh and frozen packaged fishery products in the nation. In 1948, it accounted for 80 percent of the country's output of 193.5 million pounds. New England's four nationally known seafood ports of Boston, Gloucester, New Bedford, and Portland turned out nearly all the region's packaged-fish output. They landed about two-thirds of the weight and five-sixths of the value of all fish brought into New England ports. Unfortunately, the preemient position enjoyed by New England's fishing centers is far from secure. Four main problems threaten their continued prosperity. First, the scarcity of the key species of fish in New England and North Atlantic waters has increased production costs. Second, internal conflict, especially between the Fishermen's Union and the fish dealers, has hampered the smooth operation of the industry. Third, marketing difficulties have limited the sales income of the industry. Fourth, imports, particularly from Canada, jeopardize the sales of New England's packaged fish in the United States market. The value of fish landed at the main New England ports has reached unprecedented levels in the postwar period, but costs have also soared to record heights. Unless the fishing ports act soon and boldly to surmount their cost and marketing problems, their future may be bleak. What changes are needed to improve their competitive position? What are the prospects for the adoption of a forward-looking program? This article, after reviewing briefly the physical and economic characteristics of modern New England fishing operation, will suggest answers to these questions. 1 The longer study from which this was drawn is scheduled for publication in August 1954 as The New England Fishing Industry, by the Harvard University Press, Cambridge, Mass. The author, an assistant professor of economics at Boston College, prepared this article under a research grant from the Federal Reserve Bank of Boston. The material was drawn from a longer study by the author which is planned for publication in book form. The findings and conclusions are the author's. Ther are published by this bank because of their widespread interest to the New England community. THE FISHING GROUNDS, SPECIES, AND METHODS The New England fishing industry-America's oldest-is adjacent to more than 260,000 square miles of the world's finest fishing territory. New England's coastline parallels the southern end of a continental shelf which extends for 1,000 miles along the North Atlantic coast in the area from Newfoundland to Long Island. About 80 species of edible fish inhabit these waters. Eight have made up the bulk of the New England catch. Most important are haddock, redfish, flounder, cod, whiting, pollock, and hake. They are the principal groundfish, or bottomswimming species, available on the fishing banks in all seasons. As a group, they are the most outstanding marine resource of New England and the third most valuable marine resource of the United States. They live in food-rich, cool water on the continental shelf at depths of 100 to 150 fathoms. They are swept from the floor of the sea with huge conical nets dragged over the fishing banks by large steel trawlers, operating principally from Boston, and smaller wooden draggers, sailing mainly from Gloucester, New Bedford, and Portland. The eighth significant species is mackerel. It is a surface-swimming, migratory fish, characterized by great fluctuations in abundance. The mackerel catch commonly varies by several million pounds from year to year. From late spring to early fall seiners purse in the schools of mackerel with gigantic "purse-seine" nets. Gloucester is the home of the "mackerel fleet." THE PRINCIPAL FISHING PORTS OF NEW ENGLAND The fishing industries of Boston, Gloucester, New Bedford, and Portland are highly individualized. They have had different origins and developments. Their specialization, fishing methods, and organizations are also dissimilar. We should clarify their individualized characteristics before we discuss their common problems. Boston The foundation for the 20th century expansion of Boston's fresh- and frozenfish business was laid in 1914 when the Boston Fish Pier, then the world's largest, was opened for business. The pier was built by the State of Massachusetts at a cost of over a million dollars. It was leased to the Boston Fish Market Corp., a private company formed and owned by the fish dealers, which spent another million dollars for buildings. Its icing and cold-storage plant was the Nation's largest devoted exclusively to the fishing industry. The improved facilities enabled landings to soar from less than 100 million pounds in 1914 to more than 285 million pounds in 1930. Three technological developments stimulated the enormous expansion in Boston production. "Beam" trawling was introduced from England in 1906 and was reasonably perfected by 1916. A huge net dragged over the fishing banks replaced hand-line trawling from dories on the open sea. Beam trawlers became the ports' best all-season source of groundfish and tremendously increased the productivity of the fishermen. The second innovation was the invention of the filleting process in 1922. It facilitated the marketing of clear, boneless meat sections of fish and the disposal of inedible portions at the port. The filleting process was particularly stimulating to the marketing of groundfish and complemented the expansion of productive capacity induced by the beam trawler. In addition, filleting encouraged the greater use of branded products, the utilization of fish waste in a growing byproducts industry, and the entry of chain stores into the fresh- and frozen-fish business. The third development was the substantial improvement in the methods of freezing and storing fish. The introduction of quick-freezing processes around 1926 aided the industry to enlarge its market still further. This combination of favorable circumstances made Boston the undisputed haddock capital of the world, though even before World War I haddock ranked second to cod as Boston's most valuable fish. From 1914 to 1949 haddock and serod (baby haddock) constituted about half the total weight of fish landed at Boston. Their proportion of the value of total Boston landings rose from 40 percent to 60 percent over the period. Nearly all fish landed in Boston are sold through the New England Fish Exchange at the Boston Fish Pier. The exchange, an auction market, was set up by the dealers in 1908 under their own rules. In 1919 the dealers were found guilty of combining and conspiring to restrain trade in violation of the Sherman Antitrust Act. The exchange has been operated since 1919 under rules approved by a Federal Court. Commission men act as agents of the vessel owners during the fish auctions. Each species on each vessel is sold separately. Dealers who buy fish on the exchange, which is open to all legitimate fish merchants who pay the exchange fees and comply with its rules, must post a bond to cover their purchases. A singular feature of the rules is the "sellover," a provision that there may be a resale, as second or third quality, of any fish which do not qualify as first quality as they are removed from the vessel after the original sale. The sellover has been a source of constant controversy in the market, especially between the dealers and the fishermen. Boston fishermen, like all New England fishermen for generations, receive their wages as shares in the value of the catch under a system known as the lay. Certain expenses are deducted from the gross value of the catch as joint expenses of the crew and the vessel owner. The remainder is divided between the fishermen and the owner according to stipulated percentages. The expenses of the trip for which the fishermen are responsible are deducted from the fishermen's percentage, and the remainder is divided evenly among all members of the crew, including the captain. In addition, the captain is paid a specified percentage of the owner's share. Since 1939, the terms of the Boston lay have been determined through collective bargaining between the Atlantic Fishermen's Union and the Federated Fishing Boats of New England and New York, Inc. The present lay allocates 60 percent to the fishermen and 40 percent to the owners. The Boston market is unique in that most of the port's 38 large trawlers are owned or managed by fish dealers. The trawlers account for 80 to 85 percent of all fish landed. The integration of boat owning and dealing in the Boston market has intensified the interest of the dealers in low prices on the exchange. They have more to gain from the purchase of cheap fish than they could possibly realize, as vessel owners, from higher landing prices. Filleting yields the dealer only about 40 percent clear meat. He can save approximately 2.5 cents in fillet production costs for every cent the cost of raw fish can be reduced. Consequently, the dealer boatowners are as interested as the nonvessel-owning dealers in keeping prices to a minimum on the exchange. This situation has contributed to the continued strike between Boston's fishermen, whose earnings depend upon the price of fish, and the boat-owning dealers. The prosperity of the Boston fishing industry is difficult to assess, since income statements are not generally available. Even where they can be obtained for several of the larger concerns, they show only the combined operations of fish 45699-54 2 |