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The share system and its effects on innovation, employment and income in the British Columbia salmon… Midgley, Ian Harold 1963

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THE SHARE SYSTEM AND ITS EFFECTS ON INNOVATION, EMPLOYMENT AND INCOME IN THE BRITISH COLUMBIA SALMON FISHING INDUSTRY 1951 - 1961 by Ian Harold Midgley B.A., The University of British Columbia, 1961 A Thesis Submitted in Partial Fulfilment of The Requirements for the Degree of Master of Arts in the Department of Economics and Political Science We accept this thesis as conforming to the required standard  The University of British Columbia September, 1963  - ii -  Abstract  This thesis has been designed to examine the share system and to study its effects on innovation, employment and income in the British Columbia salmon fishing industry,, The approach taken has been that of examining the theoretical basis of the share system and then noting how the system has worked in practice,, The share system has demonstrated some notable advantages over a wage system in its approach in providing an incentive for hard work and in the economizing of materials used, Against these advantages must be weighed the heavy burden of risk which is shifted from the capitalist to labour. Share fishermen are not assured that they will earn any income from a particular fishing trip and may, in fact, be forced to bear part of the losses of those ventures which fail. The share system creates a rigidity in the free movement of resources within the fishing industry by requiring that the net proceeds from fishing be divided between the crew and the vessel owner in fixed proportions.  The allocation to  labour of a fixed percentage of all net income results in the entrepreneur requiring a higher rate of return on his investment than would be the case if he were operating in a freely competitive market, thus in theory the share system would inhibit innovation,,  The entrepreneur requires that his investment pro-  - iii -  jects have a sufficient return to repay both his capital and interest after paying a share to labourQ The number of licensed fishermen and fishing boats has increased annually since 19510  The opportunity of obtaining a  high income which is a feature of the share system is a particular incentive which attracts new recruits into the industry. However, many fishermen fail to remain in the industry due to the low and unstable earnings they experience® The incomes of British Columbia salmon seine fishermen appear, on the average, to be below those offered in alternative occupations, though there are certainly some very high incomes earned by a few fishermen0  The increased employ-  ment both of labour and capital can, in the main part, be blamed on the common property feature of sea fisheries0  The share sys-  tem, though playing a part in the total industry, is not the most important variable,  A solution to the difficulties that  the industry faces can best be sought by changes and adjustments elsewhere.  In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia,, I, agree that the Library shall make it freely available for reference and study.  I further agree that per-  mission for extensive copying of this, thesis for scholarly purposes may be granted by the Head of my Department or by his representatives.  It is understood that copying, or publi-  cation of this thesis for financial gain shall not be allowed without my written permission.  Department of  Economics  and Political  The University of British Columbia,, Vancouver 8, Canada., : ^  Date  September 15, 1963  Science  -  iv  -  Table of Contents Page  Chapter I. II.  v  III. IV". V. VI.  Introduction.  1  History of Share System . . . . . . . . . . .  3  The Share System and Organization of the. . . Fishing Industry in British Columbia. . . .  20  Innovation in Theory. . . . . . . . . . . . .  40  Innovation in Practice.  54  The Common Property Resource and Conservation  $3  A Review of Capital Utilization and  .....  Remuneration. . . . . VII. VIII. IX.  91  A Review of Employment. . . . . . . . . . , .  m  ^ishermenfs Income. . . . . . . . . . . . . . 123 Summary and Conclusion. .  . . .  153  List of Tables Table 1. Minimum Contractual Prices to Fishermen For Gillnet and Seine Caught Salmon at Opening of Season, 1951-1961  34  Table 2.  Seine Boat Production, 1953-1962, Index of Dollar Value of Catch. . . . . . . . following  69  Table 3.  Number and Value of Boats in the British Columbia Fishing Fleet, 1952-1962  92  Table 4.  Inventory of Fishing Boats in British Columbia, 10 tons and over, by Type of Engine, 1952-1962 .  94  Table 5.  Inventory By Type of Fishing Vessels, 10 tons and over, Engaged in British Columbia Fisheries, 1952-1962. . . . :  96  -mmdcccxciv-  Table  6.  Table  Inventory of Fishing Boats Under 10 tons in British Columbia, By Size and Type of Boats, 1952-196 2  9$  Value of Fishing Boats Under 10 tons in British Columbia, By Size and Weight, 1952-1962.  99  Table  3.  The Number and Type of New Boats Built in British Columbia By Types, 1951-1961  103  Table  9.  Inventory ,of Gear in the British Columbia salmon and Halibut Fisheries, 1952-1962 ...  104  Table 10.  Number of Licensees in Each District by Years, 1953-1960. .  119  Table 11.  Type.and Percentage Failing to Renew Their Licenses in Selected Years, 1957, 1959, I960 and 1961 . . . . . . . . . . . . . . . . . . . . . .  120  Gillnet Caught Salmon By Weight and Value in Relation to the Effort and Number of Fishermen Licensed, 1951-1961. . . . . . . . .  123  Troll Caught Salmon By Weight and Value in Relation to the Effort and Number of Fishermen Licensed, 1951-1961  130  Seine Caught Salmon By Weight and Value in Relation to the Effort and Number of Fishermen Licensed, 1951-1961  132  Table 15.  Annual Dollar Value of Salmon Seine Catch of 31 Sample Vessels, 1952-1961  136  Table 16.  Estimated Number of Days Fishing for 31 Sample Vessels .  140  Table 17.  Annual Average Salmon Seine Expenses  141  Table IS.  Estimated Daily Earnings Per Salmon Seine Licenses, 1951-1961  142  Table 19.  Estimated Seine Crew Size, 1951-1961  144  Table 20.  Estimated Daily Earnings Per Salmon Seine Licensee 1951-1961. . . . . . . 146  Table 21.  Comparison of Number and Distribution of Salmon Seiners by Gross Return Groups, 1956, 1957 and 1961 • • • 150  Table 12.  Table 13.  Table 14.  - vi -  Appendix Supplementary Agreement for Salmon Seine Vessels Share Basis and Fishing Conditions  Bibliography  1  15 g  165  Introduction  The British Columbia fishing industry has a diverse and complex character.  This diversity can be seen in the  heterogeneous background of the various fishermen and in the wide variety of fish that are sought.  The composition of the  labour force actually engaged in fishing is divided on a racial and ethnic basis with representatives from China, Denmark, England, Finland, Greece, Ireland, Italy, Japan, Norway, Scotland, Sweden, Yugoslavia and, of course, the native These racial and ethnic groups may also be  Indians.  differentiated  according to the wealth and income that their members possess. Some ethnic groups are, however, concentrated in a particular sector of the industry, for example, the native Indian is heavily involved in fishing for salmon.  Though there is this  diversity within the fishing industry, all fishermen appear to be highly competitive, especially within particular Fishermen as a group appear to have some  fisheries. characteris-  tics which differentiate them, at least to some degree, from other workers in the province.  Many fishermen live in relative-  ly isolated settlements along the coast, while others  congregate  in specific areas on the edge of large industrial centres.  At  work and at rest, fishermen tend to be in contact solely with one another.  This factor has led to a comradeship of almost  clannish proportions.  It is the feeling of comradeship which  is so important for the successful use of the share system. Fishing also has a high degree of instability due to the risk  and uncertainty which are inherent to the industry. ' The major species of commercially important fish on the British Columbia coast are the salmon, the halibut and the herring.  The salmon is by far the most important in value and,  in 1962, represented 66 percent of the total landed value of all fish caught.  Halibut and herring accounted for approximate1 ly 17 and 10 percent respectively. The actual percentages vary from year to year but their position has been relatively stable within the last five years. Salmon landings are particularly vulnerable to yearly fluctuations. salmon.  This is due to the life history or cycle of the  There are five species caught in British Columbia,  namely, sockeye, pink, coho, chum and spring.  The commercial  importance of each species varies and is based on such factors as size, quality and life cycle.  The life cycle of the salmon  varies depending on the species.  It ranges from two and three  years respectively for pink and coho to four to six years for spring.  Chum and sockeye average three to five year cycles.  The most distinctive factor of the salmon, however, is that all salmon species return inland to spawn in the stream where they were born.  After spawning, they die and the cycle is complete.  Most salmon are captured as they return in their cycle year to spawn.  1 Canada, Department of Fisheries, British Columbia Catch Statistics. 1962, Ottawa, Queenfs Printer, 1963, p.2.  - 3 -  The herring is an important fish in Canada and although its landings fluctuate from year to year, it may account for as much as one-third or one-quarter of total fish tonnage landings.  The Pacific herring is particularly important in  that it accounts for approximately two-thirds of the herring catch and may, as in 1962, be as much as 3-4 times the weight of the salmon landings.  The majority of the landings are from  the east and west coast of Vancouver Island.  Herring, however,  has little value as compared to its weight and though in 1962 halibut landed weighed only one-ninth that of herring, it was much more valuable.  Halibut is caught all the way from the  Straits of Juan de Fuca to the Aleutian Islands with 90 percent  2 of the catch being north of Vancouver Island. There are many varieties and species of fish and the techniques used in their capture differ widely.  Some techniques  are specific to a particular genus of fish, while others are applicable to a wide variety.  The major techniques used in  British Columbia are the purse seine, gillnet, longline and troll.  Salmon are caught commercially by all the above methods  except the longline which is used for fishing halibut. on the other hand, are caught mainly in purse seines.  Herring, The  salmon which is the most valuable specie was caught in 1962 by seiners, gillnetters and trollers; each accounting for 45 percent  2  British Columbia Catch Statistics. 1962. p. 2.  40.1 percent and 14.9 percent respectively of the total weight of the catch.-* In the midst, of all this diversity, there appears to be at least one thing that all the above fisheries have in common - the share or lay system.  It is applicable to fishing  operations involving all the above species of fish and to almost all methods of capture, either implicitly or explicitly. The share system makes the remuneration to labour upon the total catch.  dependent  The purpose of this thesis is to examine  the development of the share system and its consequences on innovation, employment and income in the fishing  industry.  Chapter I traces the historic; development of the share system in theory and in .practice from its beginning in early Greek agriculture until the present.  The effect of the various share  systems utilized in British Columbia and the  institutionalized  arrangements under which they operate is the subject matter of Chapter II.  Chapter III is concerned with-.the theoretical  effects and ramifications of the share system on innovation in the primary fishing industry, while Chapter IV examines the. effect of the share system on a number of innovations which have been implemented in recent years.  The. common property feature  of fisheries resources is reviewed in Chapter V .  Chapter V I  deals; with the capital investment which has been allocated to  3  British Columbia Catch Statistics. 1962, p. 3.  the fishing industry between 1951 and 1961 and with its effectiveness and remuneration.  A general examination of the  number of fishermen employed in the industry and a study of which branches utilize their services is undertaken in Chapter VII.  The following chapter, Chapter VIII, is concerned with  the income of fishermen and the impact that the share system has had on their earnings.  Chapter IX is the concluding  chapter  which summarizes the effects of the share system and also gives other possible causes as to the low income that salmon fishermen obtain. Before proceeding further in this study, it would be worthwhile to note a set of criteria upon which the whole try might be judged.  indus-  Such criteria, however, frequently differ  from place to place and from person to person. must be achieved which can be acceptable to all.  Some standard Economists  in striving for such a set of criteria usually accept a group based on "economic efficiency".  "Economic efficiency" in terms  of the fishing industry is based on the cost per unit of output. Cost.can be examined in a variety of ways but let it suffice at the moment to say that the real cost of utilizing a factor in its present use, i.e. the fishing industry, is equal to its opportunity cost or the amount this factor could earn ift its best alternative occupation or use.  Usually at this point, a  normative assumption is made which claims that the value to society of a particular product is equal to the opportunity cost. This, in. turn, raises the problem of how to determine the best  method of allocating resources to achieve economic welfare. There is a need for a value judgement as to what constitutes the next best alternative.  The answer to such an enquiry may  differ within society as a whole, both between groups and between individuals, but it is important that some standard be established.  This point of reference or standard of judgment  is to be the measuring rod of the whole system and Is to be such that it will allow a factual accounting to be taken.  Economists  have by convention made use of the existing political and social framework and have accepted the present distribution of income as given data when dealing with such general problems.  The  measure which they have usually chosen as their standard of value has been money. If the present distribution of income is accepted as a given fact and assumed to be acceptable, then it is left solely to the price system to allocate the various factors of production into those fields which display the greatest demand for them.  The assumption is made that people both individually  and collectively attempt to maximize their income and that this income can be measured by some monetary counterpart.  This  assumption of income maximization depends on the acceptance of a society in which individual decisions are assumed to be rational and to represent current valuations of present and future alternatives.  The price mechanism acting through the rate of  interest is supposed to achieve this latter end. The price system with profit maximization tends to  I'  _ 7 _  bring about an allocation of resources in an economically efficient manner when factors are allocated so that their marginal social benefit equals their marginal social costo The marginal social cost is equal to the opportunity foregone if the factor is allocated to this use, whereas the marginal social benefit is a measure of the value of the total resultant product from such an allocation,,  Economic efficiency has been  discussed in a static setting; no account has been given for the occurrence of change 0 terms of innovation*  This will be discussed later in  Economic efficiency is not a goal in i t —  self but is rather dependent upon the value judgment that society places upon its achievement 0 The price system is expected to allocate factors of production to their most efficient use to achieve an optimum degree of economic efficiency,,  Thus the pricing system by which  factors are allocated is of paramount importance to the fishing industry as well as to all other industries 0  The pricing system  affects the organization of the fishing industry and the level of remuneration which fishermen receive.  The share system is  one of the means through which the pricing system works in the British Columbia fishing industry.  It will require further  study to understand how the pricing system functions under the arrangements of the share system.  _ 8 _  Chapter  I  The History of the Share System  Throughout-the wor;j.d, fishermen most frequently receive their remuneration in the form of a share of the total catch.  This share may be influenced by a variety of factors,  such as, the species, number, weight and value of the fish in the total catch.  The actual share arrangements differ from  country to country and may be modified according to particular customs and institutionalized factors,but unless a particular fishing industry is highly industrialized, the share system, or its variant, is most likely to be present. The share or lay system is not unique to the fishing industry.  Other industries have somewhat similar  arrangements.  The metayage or share cropping which is to be found in various segments of the agricultural industry presents some basic similarities to the share or lay system of the fisheries.  It was  in connection with the share cropping or metayage system that economists first began to examine the causes and of share agreements.  consequences  It is the writer*s opinion that an exami-  nation of the views held by various economists as they studied the metayage system will be a useful means of providing a proper tinder standing of the relationship of the share system found in the fisheries. Land is leased by the various metayer or sharecroppers under assorted arrangements all of which contain the basic  feature that the landlord or his agent receive a specific proportion of the total yield.  This fixed proportion or share is  obtained by the landlord in lieu of a fixed money rent.  A  share arrangement such as this results in a variation of the total receipts that the landlord obtains due to fluctuations in price, quantity and quality of the crop.  The metayage sys-  tem is not new and though Sismondi in his book Nouveaux Princites dfEconomie Politique [1819]1 placed its conception in the middle ages, other writers ascribed its birth to a much earlier date.2 In Eastern countries this mode of occupying land has existed from the earliest period, and it also prevailed in ancient Italy..... Early Roman farmers were, in fact, metayers.^ In early times, the Roman metayer received only a small percentage of the crop yielded by the land.  Cato^ sugested, however,  that this small percentage would be increased as the quality of the soil to be farmed declined.  Cato also related that though  the share received by the metayers was small, it was equitable  1 J.C.L. Simonde de Sismondi, Nouveaux Principes dtEconomie Politique, 2 vols. Paris, 1327, Vol. 1, pp. 192-94, cited in J.R. McCulloch, Treatises and Essays. 2nd rev. ed., Edinburgh 1859, p« 182. 2 McCulloch, Treatises and Essays, pp. 136-88. See also, Richard Jones, An Essay on the Distribution of Wealth. [1831], New York, Kelly and Millman, 1956, pp. 73-98. " 3  McCulloch, o£. cit., p. 186.  4 Cato the Elder, 234-149 B.C. His only surviving literary work is Derre rustica (On Farming). It is a valuable source of knowledge on the Roman domestic and rural life of this period. "Cato the Elder", The Columbia Encyclopedia. 1942, Vol. 1, p. 315  as the metayers were not required to supply either their own seed or implements; these were furnished to them by the landlord when he provided the land and livestock. As time passed, the share system continued to increase in importance, so much so that in later years of the Roman Republic, it became the most prevalent form of land tenure.  Not  all people, however, greeted this situation with enthusiasm. The farms expanded both in their size and their utilization of capital and yet they failed to experience increased yields.  In  fact, the decreasing productivity of farms operated under share chopping arrangements led to critical comments by at least one 5 author during this period.  Columella  asserted that the de-  crease in farm yields was not due to a decline in the fertility of the soil but was rather a consequence of the inherent weakness of the,' share system.  The weakness of the share system, he con-  tended, was in its failure to provide sufficient incentive to pursuade the share croppers or "coloni partiarii" to exert themselves. It is interesting to note that later economists continued to remark upon this same phenomenon.  Francois Quesnay's  description of French agriculture written in 1756 bore, in some places, a striking resemblance to the report by Columella on  5 Lucius Junius Mo der at us Columella was the author, of one of the principle ancient Latin works on agriculture. He lived during the first century A.D. and he wrote De re rustica. "Columella", The Columbia. Encyclopedia, p. 398.  Roman methods of cultivation written almost 1700 years before. Quesnay, a leader of the Physiocrats, gave a vivid account in which he stressed the share system's inefficiency and failure to stimulate the m&tayers to hard work.  It was Quesnay*s view  that any system which provided land and equipment to the metayers under a share arrangement would lead to abuses.  Quesnay  charged that the metayer often exploited the landlord's oxen by utilizing them in the carrying or cartage trade for the metayer *s own personal gain rather than utilizing them in the plough-Ing of the landlord's fields as he had intended.^  The share  system provided a definite incentive for such practices as the metayer received only a percentage of the crop when he farmed, while if he were engaged in the carrying trade, he obtained the total reward and was not required to compensate the landlord. Quesnay also strongly criticized the continual use by the metayer of oxen rather than horses.  It was his view that horses  were more suitable and more efficient beasts for the production of agricultural crops than were oxen, and yet farms operating under the share system failed to utilize horses.  This failure  was due to the poverty of the metayer, a fact which Quesnay blamed on the share system. Other authors later dealt with the same problem and reached similar conclusions.  Adam Smith remarked that it was  never in the tenant's interest to employ his own capital unless  6 Francois Quesnay et la Physiocratie. 2 vols., Paris, -Institut National d'Etudes Demographiques, 195$, Vol. 2, p. 431.  - 12  —  the tenant would be able to recover it with a profit before the expiration of his lease.7  Smiths further contribution  was, however, relatively small.  Arthur Young, on the other  hand, discussed the metayage system in detail and remarked on the varying conditions under which the system was operated in 3  different provinces of France.  Some large land owners let  their land to men of substance for money rents and the latter hired them out to metayers.  These owners of large estates  thus escaped from the inherent risks of farming which were then borne in turn by the renter..-.  Young noted that the metayage  system was a great disadvantage to the landlords who rented directly to the metayer as they were forced to undertake risks which they could have avoided or shifted to others under other tenure systems.  The landlords, Young claimed as did Quesnay,  were frequently abused as the metayers had little incentive to care for the landlords1 land and animals with diligence. The landlords under the metayage system received low rents as the land was miserably cultivated.  Young did not sympathized  solely with the land holding class but also saw the "lowest state of poverty and ... misery" to which tenants were reduced. He commented that in some regions the metayers had become almost  7 Adam Smith, The Wealth of Nations. [1776], ed. Edwin Cannan, New York, The Modern Library, 1937, pp. 367-363. See also p. 733. 3 Arthur Young, Travels in France During the Years 1737, 1733 and 1739. ed. Constantia Maxwell, Cambridge University Press, 1929.  - 13 -  menial servants due to the high debts under which they had fallen.  Young condemned metayage as tt... a miserable system that  perpetuates poverty and excludes instruction." 9  He attributed  many of-the ills of French agriculture directly to the systemTs failure to provide incentive.  As a remedy for metayage Young  suggested that a long lease .of twenty-one years should be provided both for farm stock and for lands with the payments being made in money and not in kind."1"0 YoungTs solution was to be a forerunner of many that were to be recommended in later discussions of agricultural problems, and his writings were to form the basic source of evidence for many of later English authors who dealt with the metayage system. Strange as it may seem, these earlier authors did not appear to have significantly influenced either David Ricardo or Thomas Malthus who, though dealing with agricultural rent, failed to examine the metayage or share-cropping system.  This omission  from the literature was readily rectified by the work of Richard Jones in An Essay on the Distribution of Wealth published in 1831.  Richard Jones criticized the metayage system as having  "... some very serious inconveniences peculiar to itself."  11  9 Arthur Young, Travels in France, ed. M. Bentham-Edwards, 2nd ed., London, 1889, p. 18. 10 Arthur Young, Travels in France During the Years 1787. 17&8 and 1789. ed. Constantia Maxwell, p. xxx. 11  Jones, Essays on the Distribution of Wealth, p. 102.  - 14 -  One disadvantage that he attributed to it was that "... the divided interest which exists in the produce of cultivation, mars 12 almost every attempt at improvement." A second disadvantage was that "... when a stock is to be advanced by one party, and used by another for their common benefit, some waste and carelessness in the receiving party, great jealousy and reluctance 13 in the contributing party follow naturally." While a third disadvantage is seen in the fact that the metayage system re14 quired the proprietor^ constant attention and management. J.R. McCulloch in his Principles of Political Economy [182$] contributed little new to the discuasion but instead echoed the sentiments of Adam Smith. Throughout this and other works, he stressed the abject poverty to which the cultivators were reduced by the metayage system and also suggested that a metayer would "... scrupulously abstain from laying out anything on improvements, unless they happen to be such as promise an 15  almost immediate return."  ^ McCulloch, in his Treatises and  Essays, however, dealt more specifically with the letting and occupancy of land as he reviewed the contributions of earlier authors. 12  Loc. cit.  13  Ibid.. p. 103.  14  Ibid.. p. 104.  15 J.R. McCulloch, Principles of Political Economy. 2nd ed., London, William Pickering, 1936, p. 511*  - 15 -  All economists, however, did not think that the share system was bad.  A French landowner and economist, Simonde de  Sismondi, favoured the system.  His description and comments  were diametrically opposite to those of Arthur Young.  Sismondi  believed that ... cultivation by metayers, or occupiers paying half the produce, is one of the happiest inventions of the middle ages; that it contributes powerfully to diffuse happiness amongst the lower classes, to carry the soil to the highest pitch of cultivation, and to accumulate the greatest amount of capital upon it. 1° Sismondi also ascribed a security to the tenure of the metayer and though admitting that legally the metayer might be removed at the end of each year, he asserted that there was a customary security.-, John Stuart Mill wassanother economist to see merits 17 in the metayage system,  though he was well aware of the pre-  viously mentioned literature opposing it. Mill recognized the importance of the point made by Adam Smith but was of the opinion that the defects pointed out particularly by Arthur Young were due to imperfection in the system and would not be applicable to a system that was operating perfectly.  Mill disputed the  claims of Young, Jones and McCulloch and suggested that the criticisms they levied were based on the insecurity of tenure and  16 Simonde de Sismondi, Nouveaux Principes d'Economie Politique. Vol. 1, dited by McCulloch."Treatises and Essays, p. 182. 17 J.S. Mill, Principles of Political Economy. [1&J.3], New ed., ed. W.J. Ashley, London, 1909, pp. 302-323.  - 16 -  that their criticism would no longer be valid if tenure were secure.  Mill based his argument on two sources of evidence 18  from two countries.  He claimed that Sismondi's comments  on  varying regions in Italy supported him and that evidence could also be found in Ireland in the role of the Irish cottier.  Mill  asserted that the faults to be found at the root of the metayage system were its competitive rent's- and its failure to provide security; if security 19 of tenure were assured, almost all problems would be removed.  Mill made an important contribution to  the understanding of the effects of the metayage system when he commented that it was the "... multiplication of people beyond the number that can be properly supported" 20 which was the cause of misery and poverty. J.S. Mill's contribution, though worthwhile, fades in significance when contrasted.' with the clear and concise expos i21  tion of Alfred Marshall.  Marshall presented a tidy analytical  model that gave great insight into the actual institutional framework of the share system.  He explained in his usual dia-  grammatic form the relationship of the share system to the intensity of cultivation that is practised by the sharecropper.  18 J.G.L. Simonde de Sismondi, Etudes sur I'Economie Politique. 2 vols., Paris, 1837, Vol. 1, pp. 286-293. " 19 Mill, Principles of Political Economy, p. 320, See also, pp. 302-23. 20  Ibid.. p. 304.  21 Alfred Marshal!, Principles of Economics, London, Macmillan, 1920.  [1890],  8th  ed.,  17 -  Marshall dealt with a specific area of land and applied an increasing number of equal doses or Increments of capital and labourj this, he suggested would result in a diminishing rate of return from the land.  He assumed that diminishing returns  were present on the intensive margin, for without diminishing returns, all products could be obtained from a single piece of land and no incentive would be given to utilize other land.  This  proposition does appear to be reasonable in the light of actual physical facts, for it is diminishing returns which explains the limit of cultivation on the intensive margin and the need to exploit the extensive margin.  Marshall, with diminishing  returns explaining the degree of cultivation, asserted that whatever the cultivator obtains from all his doses of capital and labour minus the cost of the marginal dose times the total number of doses applied can be viewed as a surplus of the land or as a producer's surplus. matically as follows i MfrFCQiNfiL fcoDucT  Marshall explained this diagram-  22  Labour represents a composite dose of labour and capital as they are applied to a fixed quantity of land.  0  D  LABou^  22 Marshall, Principles of Economics, pp. 15 5n - 156n.  - 18 -  The gross product can be represented as ACDO„  CD  re-  presents the amount required to remunerate the cultivator for his last unit of labour and is equal to OH as HC is constructed parallel to 0D„  The amount OHDC is that actually required to remu-  nerate the cultivator in order that he produces this quantity of product,  AHC is the amount over and above the required share  and is the surplus product which, under specific conditions, constitutes rent„  No matter what tenure system is used, the rent  will be the same if all factors are receiving their full marginal producto  The share system has a particular effect which  makes its results different from that which would be found under a system that utilizes a fixed payment for the lando  If the share  system is in effect it is not the total product ie, the area under the marginal product curve which is relevant, instead it is the tenants' share curve which must be considered,,  The tenants' share  curve is based on a percentage share of the total product and is identical to the marginal product curve but set at a lower level„ Marshall demonstrated this as  follows.^  MftR^fMful PRAbOc-T  Q  23  Marshall, Principles, p„ 644  L R S O u {?  - 19 -  The marginal product curve remains the same as before, i«e0 AC, but the tenants' share curve is a fixed percentage of the total product curve both rising and falling with the latterQ The curve LK represents the tenants' share curve0  .The area  below the curve LIC represents the tenants' share, that above and between AC represents the landlord's share0  If the tenant  is left alone and without supervision, he will only apply himself until the point IC is reached, that is, until the marginal return is equal to the marginal cost to him of his labour0  The land-  lord wi11 enjoy a smaller proportion than if he had insisted on a fixed rent, and furthermore, he will have a smaller proportion of a smaller total product than would have occurred under a fixed rent system*  Here, then, from the landlord's point of  view, is the diagrammatic proof of the weakness of the share system as it is applied to the distribution of Ricardian renta  -  20  -  Chapter II The Share System and Organization of the Fishing Industry in British Columbia The share system as operated in the fisheries is basically similar to that used in agriculture and as described in the previous chapter.  However, it will be necessary to give a  brief summary of how in general the system works at preaent.  In  most fisheries, the arrangement is based on the sharing of the total catch with the actual division depending either on the weight or the value of the landings.  Historically the net stock  is divided between the crew and the vessel.  The boat's share is  understood to pay for depreciation, interest, taxes and profit, whereas the crew's share constitutes the remuneration to labour. The most significant fact of most share arrangements is the deductions which are made from the gross proceeds or grosscstock before the final share division takes place.  The arrangement of  these deductions which covers such things as the running  cost,  that is, fuel, ice, water and food, and also such costs as those incurred due to a loss of gear and selling of the catch.  These  actual deductions are not always applicable to all fisheries and depend upon the institutionalized arrangements.  If the boat is  small and is operated by a small crew, the formal share system may not be operative.  It is.mainly on the larger boats, both  individually and company owned, that the share system is found. The share system is readily applicable to the fishing industry and contains many attributes of a similar nature to those previously discussed in relation to agriculture.  The fishing  - 21 -  industry possesses major reasons for having a share system similar to that of agriculture, namely in relation to risk and incentive. The share system can be examined in terms of its relationships to (a) the vessel owner, and (b) the crew member. To the vessel owner, the share system reduces the burden of a high overhead which he would be forced to carry if the crew were paid by wages.  This reduction of overhead is particularly  important to a single vessel or to a small group of vessels. Fishing is by nature a risky enterprise and variations in catch readily occur from trip to trip.  A heavy overhead or a high  fixed wage bill might force the smaller owners into bankruptcy if they were unfortunate enough to partake in a number of unlucky trips.  This worthwhile effect of the share system in reducing  risks is not so important if the vessels are larger and therefore the labour costs are a smaller proportion of the total cost. Such vessels also have the added advantage of being able to undertake longer and more varied trips.  In certain cases, the  share settlements are not made immediately upon the  completion  of a single trip but, in fact, encompass a number of voyages. This delayed settlement has a double advantage to the vessel owner as he will have a lower rate of turnover among his cfew if they are forced to wait for their pay and the vessel owner will also have reduced "the risk he would have had to bear by averaging his labour costs over a number of trips.  Delayed settlement is  not usual. . The total value of the catch may fluctuate due to  - 22 -  price instability in the short run and this risk may also be combatted by share contracts« The share system also benefits the ship owner by creating an incentive for the crew to work harder.  The belief  that the share system creates an incentive for hard work was also found as a basis for the share system in agriculture; however, in the case of fishing, the high risk factor which the crew men bear appear to be lai-ger than that borne by the average farmer.  The high inherent risk found in fishing is  sufficient to require remuneration in the form of shares„  The  effect of the share system on incentive only further emphasizes this needo  Incentive is given to a fisherman to ensure careful  handling and the maintenance of high quality of product for if they fail to do so they will suffer a loss.  The fishermen will  also economize on their use of supplies, fuel, water and ice, if they are forced to bear part of the costs 0 The crew also obtains some real advantages from the share system.  Trade unions favour it since it guarantees that  labour shares in increased vessel productivity and permits access to figures of cost and profit of fishing ventures which enables unions to bargain more favourably.  The crew must also certainly  be affected by the incentive of possibly obtaining higher earnings than they could make under a wage rate system,,  In the short-run,  the crew is forced to bear risks which would, under another system, be b o m e by the vessel owner«,  It is usually assumed that in the  long-run, fishermen's earnings would be higher due to their  - 23 -  assumption of this risk.  This assumption, however, is "based on  the view that fishermen are averse to risk bearing and that they require a monetary reward to persuade them to assume risk.  If,  however, fishermen possess by nature gambling instincts, they may not be averse to the assumption of risks.  I. Bowen  feels  that fishermen possess a gambling preference which can be characterized as being based on the psychology of a .'big•pay packet 1 . The major value of the share system to the crew is that it allows for the reduction of supervisory personnel.  Under  the share system, each crew man bears some responsibility for the total costs of the trip and therefore each person supervises the other.  A n efficient operation with a reduced crew leads to  higher rewards for those fishing.  There is a definite incentive  created for the share system This view of incentive appears at first glance to be somewhat inconsistent with that described by earlier authors as applicable to farming.  These earlier authors, especially  Quesnay, had asserted that the sharecropper would find it to his advantage to utilize the landlord's equipments in uses from which he is not required to return a share.  This divergence of views  1 I. Bowen, discussion of "Fishermen's Remuneration", paper presented by H. Zoeteweij to a Round Table organized by the International Economic Associationm Rome, September 1956, in R. Turvey and J. Wiseman, eds., The Economics of Fisheries. Rome, Food and Agriculture Organization of the United Nations, 1957, p. 35-  may possibly be explained by the fact that in fishing ventures the opportunities for such misuse are not as readily available. There are a number of individuals concerned and as each crew man shares in the total gain, he has an incentive to check the waste of his fellow workers.  The sharecropper in agriculture, on the  other hand, tends to work as an individual and therefore does not have to share the labour remuneration with other workers. The fact that the vessel owner or one of his representatives frequently works alongside the crew as an equal partner also limits the possible abuses.  The individual crewman still has  the incentive to'utilize equipment where possible for his ownt ,.individual'benefit and it is only the supervision of feilow workers and the highly specialized nature of the equipment which keeps this in check.  At least one author, Bowen, has suggested  that the closeknit nature of fishing as an occupation presents particular sociological factors which encourage the use of shares and that the share system through its incentive provides ready means of disciplining fishermen who, in other  circumstances,  2 would require great  supervision.  There are at least six possible variables which mine the net share that the individual crewman receives? quantity of the catch;  (2) thessize of the operating  (3) the price received per unit of catch;  2  Loc. cit.  deter(l) the  expenses;  (4) the proportion of  - 25 -  these expenses "above the line" and "below the line";  (5) the  ratio of the fisherman's share to t h e "net stock"; and (6) the r, 3 number of fishermen on the crew. For individual boats but not for the total fleet, variables  (l) and (2) are on t h e average directly related to the  degree of effort exerted in fishing.  Variable  (3), on the other  hand, from the view of the entire fleet anl not the boats, is inversely related to the quantity landed.  individual In British  Columbia, for salmon and herring at least, the last four variables are known in advance due to prior agreement before the vessel sets out to fish.  Under the present British Columbia  salmon agreements the only variables which are allowed to operate are the quantity of fish caught and t h e operating costs of catching them.  This agreement differs from other fisheries,  notably halibut, which is price-determined by an auction. iable (4) may need some further explanation.  Var-  In fishing ventures  the "gross stock" consists of the value of the catch, and from this value the expenses for operating the vessel must be deducted. Some of these operating expenses fall into the category of those "above the line", that is, they are deducted from the "gross stock" before the share division is applied.  Other operating  expenses are changed directly to either the crew's share or to the boat's.  "Above the line" expenses for salmon seine vessels  3 Donald White, Hew England Fisheries. Cambridge, Harvard University Press, 1954, p. 59.  - 26 -  are expenses due to such things as such as fuel and lubricating oil while a "below the line" expense consists of the cost of all provisions which is deducted solely from the crew's share. Variable  (5) is determined by union bargaining and variable  (6)  is set by the captain of the -vessel. The share system gives some security to an industry that is beset by uncertainty.  The fisherman becomes a partner  in a co-operative venture with the vessel owner as both assume part of the risks.  Fishing voyages constitute a joint venture  and the share per crewman is determined after every period at sea.  When a crew member quits before the end of a season, he  is entitled to his proportionate share of the catch.  This short  period for settlement has a tendency to encourage a turnover among crew members and may, in part, account for the increase during the last ten years in the number of licensees who earn so little income from fishing.  Though fishing appears to be a  co-operative venture, since April 1, 1957 fishermen have been classified as employees as far as the Unemployment Insurance Act is concerned, thereby allowing them to obtain Unemployment ance Benefits. ^ The application of the Unemployment  Insur—  Insurance  Act to the fishing industry was in direct opposition to the advice of the Unemployment Insurance Commission which had recommended as early as 1951 that the fishing industry should not be  4 Canada, Report of the Committee of Inquiry into the Unemployment Insurance Act, Ottawa. Queen's Printer. 1962.' p. 75. Note also, pp. 174-180.  - 27 -  covered.  Unemployment insurance has been treated by some  fishermen as a further source of income and may have acted as an incentive in encouraging them to go fishing.  The Income. Tax  Act also presents some incentive, in that commercial fishermen, like farmers, are allowed to average their incomes over a five year period for income tax purposes.  This averaging provision  enables them to shift part of the risk and uncertainty that is inherent, to. their occupations; onto the country as a whole. Having examined the theoretical bases of share agreements for fishing in general, it is necessary to examine t h e developments that have taken place on the Pacific coast of North America.  Share agreements are applicable to all major  fisheries. To catch fish successfully as a commercial venture there is a need for labour, boat and gear.  If a single person  owns his own boat and gear, then there is no need for a share system as long as he fishes alone.  A fisherman in such cir-  cumstances pays all his necessary costs including  depreciation  and the- return on his investment and keeps the remainder as remuneration for his labour.  Many fishermen do not have their  own boat or gear and, therefore, they must either (a) borrow money to purchase a boat and gear, or (b) they must rent a boat and gear from someone else, or (c) they may combine the above by buying the boat and renting the net or vece versa.  5 Canada, Survey of the Fishing Industry in Canada. Ottawa, Coverage Division of the Insurance Branch, Unemployment Insurance Commission, 1951, p. 82. .  -2923-  If money is borrowed, it bears interest which must be paid as must be the rental on gear.  The high risk involved in  fishing suggested the advantages of the share system for meeting such payments.  This system is not frequent with one-man fishing  ventures but when larger vessels are concerned the share system is customary. Various arrangements are common in the different fisheries of British Columbia.  In herring seining the fishing  companies to whom the fish are ultimately sold usually provides both the net and boat.  The crew receives a fixed price for each  ton of herring and the total earnings from this is then, divided among the crew, members.  Fishing companies through the reduced  price which they pay per ton of herring retain sufficient money to meet the boat's and the gear's share.  The herring  fishermen  under conditions such as these are on a basis similar to piecework rates in other industries.  The major difference being that  under piece-work arrangements individual earnings are based on individual production rather than being based on a share of the total catch of a group of fishermen, as is the case in herring fishing.  A system such as the above is possible as most of the  nets and many of the vessels are owned by the few companies processing herring, though there are a few individual operators that own both.  The vessels that they do noto^wn they charter from  their owners at fixed rates per day or by the season. The halibut fishery provides for a slightly different system of payment with the boat share being 20 percent of the  - 29 -  gross stock before any other costs are deducted.  Gear is paid  for by replacement out of the crew's share as are all other operating expenses.  The fishermen share the remaining proceeds  from the gross stock after all deductions. The most important share agreement, however, is that employed on salmon purse seine vessels.  This is the share  agreement which will be dealt with almost exclusively for the remainder of the thesis.  It serves as a good example of the  operations of all share systems.  The earliest salmon agreements  recorded indicated that the share basis was one-third to the boat and gear and two-thirds to the crew.  This system which  was common to all salmon seining on the Pacific coast was altered in 1931 from 4 shares to the owner and S shares to the crew to the new bases of 5 and 7 shares respectively.  Thus from 1931  on until the present agreement was signed in July 1941, the vessel owner received 41*66 percent of the proceeds.  The present  agreement which was signed as the result of a month-long strike now consists of 4/llths the crew.  for the boat and gear, and 7/11 ths  for  This arrangement has been stable though attempts  were made in 1952, upon the introduction of the drum seine, to increase the owner's share of the proceeds.  The drum seine  method of fishing is competitive with the table seine, though the latter is still in use.  The introduction of the power block  also brought forward requests by owners for a change in the agreements.  The owners requested special rental fees to cover  the cost of this new equipment but they were unsuccessful in  - 30 -  overcoming union objections.  6  The salmon seine sharing agreement as it is presently 7 constituted is operative in the following manner.  The gross  stock, i.e., the value of the total catch is divided among the boat and gear, and the crew, in the 4/llths and 7/llths shares respectively, after the cost of fuel and lubricating oil has been deducted from the gross stock.  Both owners and crew are  also responsible for meeting specific expenses from their respective shares.  The owner is responsible for providing all  gear and the crew is responsible for its own provisions and necessary  (food  clothing).  The organizations that have existed in British Columbia among the fishermen until 1945 were best described as being rather unstable.  Gladstone and Jamieson discussed the wide  variety of organizations which came into being during a period covering the last seventy years.  The desire of fishermen for  higher' income and greater security in prices had stimulated the growth of British Columbia fishing unionism, but until 1945, no union appears to have been sufficiently strong to survive as  6 For a historical account of the various shareaagreements noted above, see W. Rigby, Statement to Conciliation Board on Drum-Seine Share Dispute. United Fishermen and Allied Workers T Union, 19547 See Supplementary Agreement for Salmon Seine Vessels Share Basis and Fishing Conditions. June 26,~l96l. Reproduced in Appendix 1. g P. Gladstone and S. Jamieson, "Unionism in the Fishing Industry of British Columbia", Canadian Journal of Economics and Political Science, XVI, February 1950, pp. 1-11, and XVI, May 1950 pp. 146-71•  - 31 -  a large and efficient organization.  These earlier union nego-  tiations and agreements had dealt with the minimum price for fish and with the working conditions of workers afloat and ashore. The most important such union is the UUhited Fishermen Fishermen and Allied Workers Union created in 1945 as the result of the merging of three former organizations. strongest union in the industry.  Today it is the  The union membership is open  to all persons engaged in the fishing industry except those employing two or more other persons. fluctuated, but in 1 9 5 t h e  The total membership has  total was 6,821 members of whom  5,302 were paid up, i.e. 1519 or 22 percent were in arrears with their dues in 1958.^  During this same year, there were  14,266 licensees engaged in fishing in British Columbia.  The  United Fishermen and Allied Workers Union, in conjunction with the Native Brotherhood of British Columbia, conducts negotiations on behalf of the fishermen for minimum salmon prices, the share arrangements and working conditions on vessels.  The strike  weapon is very potent since the union encompasses workers in all segments of the industry, fishing, fish processing.  tendering and fish  The Native Brotherhood, which is composed almost  . 10  entirely of native Indians, had a membership of 3,300 in 1958, and of which half were engaged as salmon fishermen, mainly in  9 Sol. Sinclair, License Limitation - British Columbia. Ottawa, Department of Fisheries of Canada, I960, p. 115. 10  Ibid.. p. 117.  - 32 -  northern British Columbia.  There are other fishermen's organi-  zations in Existence along the coast, but their importance is limited and they do not partake in price negotiations. The above two organizations bargain with the fish buyers and processors and also with the vessel owners.  The  major processing companies are represented by the Fisheries Association of British Columbia which conducts their negotiations for salmon prices and the wages and working conditions of shoreworkers.  The vessel owners are organized into two groups,  the large and more important being the Fishing Vessel Owners * Association of British Columbia.  The rules of this organization  limit membership to vessel owners or part-owners with boats having crews of three men or more plus the skipper.  This results  in the Fishing Vessel Owners' Association being confined mainly to seine and combination vessels. are excluded from the Association.  Fish processing  companies  The Union bargains with the  Fishing Vessel Owners Association over t h e share agreements but the latter works in conjunction with the Union in attempting to settle salmon prices with the processors.  The Vessel Owners'  Association also negotiates charter rates under which vessels are chartered to the processing companies.  In summary, the  bargaining arrangements are rather complicated due to the interrelationships of bargaining procedure among the three major parties.  No other industry with similar circumstances  comes  readily to mind. The bargaining procedure under such conditions as the  - 33 -  above has mixed consequences, it leads to a common objective of catching as many salmon as are allowed by the regulatory authorities, but it also leads to conflict as to how the remuneration is to be divided.  The Union negotiates minimum  prices for salmon and has a strong bargaining position.  The  number of strikes that have occurred in the British Columbia  11 fishing industry is extremely high.  Since 1952, there has  been a strike or a work curtailment due to contract disputes in every year except 1955 and 1956 in at least one segment of the fishing industry.  The 1959 strike of salmon fishermen lasted  from July 25 to August 9.  This was at the height of the season  and cost both the industry and fishermen dearly.  In 1956 and  1957, this two week period produced the following percentages 12 of the annual catch.  1956  Sockeye 21%  Pink 23%  1957  3k%  29%  Chum 9% 12%  Coho 11%  17%  Steelhead 9%  .  9%  The 1959 contract agreements reached at the conclusion of the strike substantially increased salmon prices, at least at the level of the minimum contract price.  The trend of salmon  prices has been upward since 1951 though there was some setback  11 Gladstone and Jamieson, "Unionism in Fishing pp. 150-151. 12  Industry",  British Columbia Catch Statistics. 1959, p. 5.  - 34 -  in 1953 and 1954*  1962 prices are the highest on record for  all salmon species.  The following table gives the minimum  prices paid for the various kinds of salmon since 1951.  The  two minimum prices for chum are due to a price differential depending on the area where the fish are caught. Table 1 .,Minimum Contractual Prices to Fishermen for Gillnet and Seine Caught Salmon at Opening of Season. -12il.rl.961 (in cents per pound; Year 1951 1952 1953 1954 1955 1956 1957 1958 1959  1960 1961 1962  Chum  5 5 5 6 6  1/2 1/2 3/4 1/2 1/2 , 7 1/2 ~ 9 - 1  9  9 11  Co ho and Red Spring 7 1/2 8 8 8 9 9 7 1/2 12 2  - 12 - 12 - 14  18 13 11 13 15 15 1/2 15 1/2 16 21  22  22 24  Pink 9 7 7 7 8 9 9 9 10  1/2 1/2 l/,4 3/4 3/4 , 1/4 1/4 3/4  111  11 11 1/2  So ckeye 25 25 22 22 24 24 28 28 31  32 32 33  Sourcess Data from 1951 to 1958 from Sinclair, License Limitation - British Columbia. p;u:;12oi.0Table 10; since 1958 from British Columbia Catch Statistics. The Union negotiates minimum prices for salmon but does not regulate the maximum price.  There are always some buyers who  are willing to pay a little higher than the minimum price; a fact which accounts for the average price received being higher than the minimum. Vessel ownership and operations are directly related  - 35 -  to the bargaining pressure that the United Fishermen and Allied Workers Union exerts. used in fishing.  There are many different types of boats  As indicated earlier, fishermen can either  buy or rent their craft.  This does not answer how, in fact,  they actually obtain their boats.  Boats are owned in three  different ways - (a) by the fishing companies (i.e., processing companies); (b) by individuals but under some financing arrangement such as a mortgage from the fishing companies; and (c) by individual fishermen.  As is to be expected, the type of boat  to some degree determines the method of ownership.  The gillnet  and troll vessels are most frequently owned by individuals either in full or under mortgage, although on the Skeena River, many of the Indians operate vessels chartered from the companies. Gillnetters and trollers are usually less expensive than the seiners. The largest vessel, the seiner, is usually owned either by Individuals who charter them to the companies or is owned directly by the companies themselves.  On occasion, however,  individuals operate their own seiners without chartering them to the fish processing companies.  A n examination of the Registry  of Shipping indicates that the companies have ceased to build vessels themselves since the early 1950 T s; instead, they appear to prefer to finance the construction of vessels for others. This change in company policy may be due to the rate of return vessels have been able to earn.  The actual extent of company  financing of vessel construction appears to be fairly high though  - 36 -  no direct estimates are available as to its extent and as to the rate of interest charges, although 5 percent is a figure sometimes mentioned.  It has often been suggested by outside obser-  vers that this rate is too low, especially when considering the risks and uncertainty to be found in fishing.  Much of the .  capital engaged at present in fishing does not appear to earn a 5 percent rate of return on investment. discussed later.  This point will be  If the rate of return on investment is so low,  it hardly seems sensible for companies to continue to Invest indirectly in boats and yet, they continue to do this and to provide other forms of financial assistance to fishermenl The fishing companies are in competition with each other in an attempt to obtain as large a number of fish as possible.  This competition is fierce as the companies all have fish  packing plants which they hope to keep operating at full capacity. To obtain the fish they need to keep their plants operating they have been forced by competition into offering individual inducements to fishermen to fish solely for a particular  company.  The fishermen do not possess equal skill and it is this desire by fishing companies to get "good skippers and crews" which drives them on.  The inducements offered have taken a variety of forms,  the most prevalent of which has been the sale by the companies of a variety of items.  The sale and/or financing of fishing boats  was mentioned earlier but companies also sell nets, gear and other related fishing equipment as well as all necessary provisions such as fuel and food.  In some circumstances they even offer  cash advances to fishermen.  The sale of articles to fishermen  is not an incentive in itself, but it is the terms at which these sales are made which make them attractive. men often receive discounts and "cheap" credit.  Company f i s h e r — Even vessel  repairs are done at reduced cost for the "company man".  All  these facilities are to induce the fishermen to sell their fish to the fishing company that does the financing.  The agreements  for such fish sales may be formal or solely verbal.  This sort  of financing and special services acts as an inducement to fishermen to go fishing and is partially responsible for the overcrowded conditions of the industry.  Company officials claim  that such financing is due to the competitive nature of the industry and that even though some fishermen do not repay their advances, no individual company could cease to offer the inducements and expect to maintain its share of the total catch. Seine vessels can be operated under a number of varied arrangements.  If the seine vessel is owned by a fishing company!-,  the company engages a skipper to operate it.  The skipper chooses  his own crew and receives a share of the crew's catch equal to that of any other crew member.  The skipper also receives some  remuneration from the company's share of the proceeds.  The  skipper's share or bonus is often equivalent to l/Sth of the boat's four shares.  The net and the boat must be paid for out  of the boat's four shares.  Two and one half^shares of the net  stock go to the boat and 1 l/2 to the net.  The captain's bonus  is paid by l/$th of a share from the boat's 2 1/2 shares and also  - 38 -  by l/8th of a share from the net's shares.  Another l/4th of a  share is often given to the captain if he demonstrates special skill and knowledge.  This l/4th of a share comes equally from  13 boat and net.  If, however, a vessel is individually owned  by a vessel owner, he may operate it under a variety of arrangements.  First, the vessel owner may operate the vessel himself  and receive a share equal to any other member of the crew.  In  such a circumstance, he would keep 4/llths of the net stock to pay for the boat and net.  The fishing companies would pay him  a commission on the fish he sells to them.  This commission  would be in lieu of the money the vessel owner would have received if he had chartered his vessel to an individual company. The rate of commission rises rapidly after a certain minimum value of deliveries has been achieved.  Secondly, the vessel  owner may charter his vessel to the fishing company from anywhere between a few days or for the entire season.  Under such  an arrangement the vessel owner will receive a specified rental per day whether or not the boat fishes.  The boat and the net's  share under such circumstances will go to the fishing company that chartered the boat and the vessel owner will have no control or share in its operation.  A third possibility is that owner  may charter his boat to a fishing company for a smaller fixed sum of money than under the preceeding arrangement and also obtain some percentage of the catch.  This percentage varies depending  on whether in fact the vessel owner is also the owner of the net 13 Information supplied to writer by Mr. R.S. Nicholson of British Columbia Packers Ltd., Vancouver, British Columbia.  - 39 -  but it is usually about 10 percent of the gross stock. Before a vessel will be chartered by a company, the latter may insist that it contain specific equipment.  This  equipment may be considered as standard equipment to the vessel itself or it may be auxiliary.  If the equipment is auxiliary,  it usually is paid for by the fishing companies giving a fixed rental to the owner.  The power block falls into this second  category with the companies paying $400 per annum rental to the vessel owner to compensate him for putting it on the vessel. Some other innovations were introduced first by the companies only to become standard equipment to be provided for by the vessel owner on later charters. example.  The radio telephone is such an  It was introduced in 1941 on the vessels Limited and  Algea and was paid for by British Columbia Packers Ltd.  Event-  ually other vessels adopted it and it became standard equipment. The echo-sounder which is used in herring fishing falls into the same category and so does radar.  Representative examples  of innovations will be dealt with later.  It appears that it  is, to some degree, the competitive nature of the fishing that leads to the spread of innovations.  companies  - 40 -  Chapter III Innovation in Theory  In a dynamic society change is continually occurring and affecting all relationships.  The rates of change of all  variables are never constant and the problem of dealing with variables in a time dimension requires the assumption that a determinate solution is possible.  The means to the solution  of any dynamic problem may in fact influence the point at which a solution finally occurs.  With the introduction of human  nature in the form of expectation, risk and uncertainty, the solution becomes even more clouded. Change is particularly applicable to any discussion of fisheries, if for nov, other reason than that of its organic component.  There are, however, many other dynamic or changing  factors in terms of employment, income, investment and catch. This chapter is an attempt to examine how successfully the fisheries adapt to change.  In any analysis it would be necessary  to limit the discussion between exogenous and endogenous variables.  The division line may limit the usefulness of the  modCL but it is a necessary price for this analysis.  This paper  will discuss the consequences of an exogenous change in the variables of the model.  Such a change could be in the form of  a natural phenomenon such as;:..a landslide, pollution or disease, etc., which in some way, affected the fish population.  A change,  on the other hand, could take the form of the introduction of a  - 41 -  new technique or innovation which altered the efficiency of the fishing fleet or individual units in the fleet.  It is this  second type of change that is related to innovation which will be discussed in the remainder of this chapter.  The discussion  is intended to explain what an innovation is and what theoretically are its consequences in the setting of the British Columbia fishing industry. An.:innovation can be simply defined as the introduction of something new or different.  This definition fails to  give any detail but it will suffice for this discussion.  Al-  though an innovation is something new or different, it does not have to involve the introduction of a new piece of physical equipment; it may be only the introduction of a new system or shheme of utilizing the existing factor inputs in a manner which yields either an increased output at the same cost or a constant output at a decreased cost, or the same output in less time. make this analogy complete, an example may be in order.  To  Suppose  that all factor quantities remain the same but by re-organizing the floorspace ox" t h e procedure that is followed, it were possible to reduce the time required to make the same number of units of output, this would be an innovation since the time required would be reduced, thus permitting at least one factor to be used elsewhere for part of the time, i.e., either labour and/or liquid working capital would not be required for as long a period of time and could now be utilized elsewhere.  If the  Innovation resulted in all resources being freed they could now  "be used either to increase the total output at the same total cost or he utilized in lowering the cost of the fixed number of articles sold.  Depending on the demand conditions for the final  production, the appropriate combination of the two will likely be chosen. An innovation may also consist of the introduction of a new type of gear or equipment or the modification of an existing piece of machinery.  :  The consequences of an innovation are  not affected to any degree whichever approach is taken, that is, whether the innovation Involves an organizational or a physical change.  For the sake of convenience it has been decided to  examine only.a portion of the British Columbia fishing  Industry  and to note the changes and modifications which it has undergone in response to exogenous changes or innovations.  The salmon  share System appears to be the most important and therefore the best system to study, though in fact, in this branch of fishing the formula is only applicable to purse seine boats. The best way to examine innovation and its relationship to the share system is by classifying the new techniques in terms of their effects on labour and capital.  It is assumed that  there are only two factors of production, i.e., labour and capital.  Some innovations are labour saving, others are labour  using and still others continue to use a constant amount of labour.  Similarly, innovations may also be either capital saving,  capital using, or cgpital constant. varying combinations of the two.  It is also possible to have  All innovations must necessarily  - 43 -  fall into one or more of.the above classifications.  The signi-  ficance of the classication is that an innovation probably will affect the relative share of the total return going to a particular factor.  It is well to remember that the share of the  .total which is altered by an innovation may be due to a marginal change and not,to ,a complete and full change of the whole process, thus the change in the final or total reward to each factor may not be large. To aid in understanding the whole procedure of the share system and its' relationship to innovation, It is worthwhile to start with a basic model which will be modified according to changing situations.  A model of a single vessel occupied in  capturing fish on a year-round basis is constructed.  It Is  assumed that there is only one, species of fish and that the supply of fish facing the vessel is unlimited, therefore it is in the interest of the fisherman to e-capture as many fish as he possibly can, assuming, of course, that demand for his product is perfectly elastic.  Under such sircumstances, the fisherman  will attempt to catch fish until his marginal return is equal to his marginal cost.  The marginal return is based on the price he  receives for the last unit of fish caught and sold.  The marginal  cost in the short run is based on the variable costs which must necessarily be covered if the boat is to operate.  These costs  include,all current expenses for fuel, food and gear.  In the  long-run, however, the long-run marginal cost must be covered by the long-run marginal revenue, that is to say, sufficient revenue  - 44 -  must be forthcoming to cover depreciation and wages, or an income equivalent to wages in alternative employment, as well as the previously mentioned variable costs.  The introduction of an  innovation will lead the vessel to increase its catch of fish until a new equilibrium is established when marginal cost and marginal revenue are equal. The above illustration explains the situation for a single vessel, but what is the situation if there are a number of such vessels fishing?  To demonstrate this, it is further assumed  /  that all vessels in the fishing fleet are identical in their capacity and skill of operation.  Then, under such  circumstances,  all vessels will continue to equate their identical marginal revenues with their marginal costs.  This is the situation which  would be found in stationary equilibrium.  If the above situation  exists prior to the introduction of an innovation, it is possible to study the consequences of the same.  W h e n a new techni-  que is first introduced, the vessel which is fortunate enough to possess it will obtain an advantage in that it will have a lower average cost per unit of output.  The vessel will probably expand  its output and it will enjoy higher profits.  It does not matter  whether the total quantity of fish in the ocean is limited or not because if the number of fish available for capture is limited, then the new and more efficient vessel will reduce the catch that would have been available to other vessels.  The whole fleet can-  not gain by an innovation if the quantity of fish is limited unless the new innovation is such that it lowers the total cost  - 45 -  of capture, or presents some external economies to other vessels, or unless it changes the demand curve for the final product. This section presents a group of numerical models which are to explain in a simplified form the theoretical basis of the share system.  The first models describe the  introduction  of a new innovation into a fishery which is not working under the share system.  The innovation in these models is assumed to  have a capital cost of $500 and to have a life expectancy of a single year.-  Time A is assumed to be a one-year period in  which the innovation is not present. in which it is present.  Time B is a one-year period  The price of the catch is assumed  constant in both periods and there is assumed to be only one species of fish of a homogenous quality.  The total supply of  fish is assumed to be equal and fixed in both periods.  All boats  are assumed to be of equal size and quality and the skill of the skippers is assumed to be constant.  Variations due to fluctua-  tions in catch or due to various risks and uncertainty are assumed away.  The net stock is assumed to be the total value  of the fish caught, all allowances and deductions having been made for running expenses.  Payments to capital consist of the  depreciation and interest that go to the boat owner.  Payments  to labour are the total of fishermen's remuneration.  Net profit  is the profit remaining after meeting all expenses.  This is  assumed to be zero in period A as all boats are in equilibrium. Boat X represents a particular boat from whose point of view all the following problems are examined.  Boat I represents the  - 46  -  rest of the fishing fleet. The first three cases, A, B and C, are purely capitalistic in that they demonstrate the effects of innovation outside of the share system.  The boats are not operating on the share  system although the 4/llths and 7/llths basic shares are used as the expense ratio.  Under such a system, any profits or  losses are charged solely to capital. Case A - This represents the situation when no vessel has the innovation, and is, under ceteris paribus assumptions, the longrun equilibrium positions Shares Gross Bene- Additional Payment Payment Net Profit Net fit from cost to to to to Stock Innovation Capital Capital Labour Capital Labour B  TimeXA  $6000  $  "  I  -  I 2132.  $  -  |  Boat X, Time B  6000  -  Time A  6000  Boat Y, Time B  6000  .  -  2182  3&L8  -  -  2132  3&L8  -  -  .21-82  3&L8  Boat X,  Case B - Boat X has the innovation in Time B, whereas Boat £'ihas not.  The net profit of $500 is the incentive which makes the .  vessel owner utilize a new innovation.  Boat Y in time suffers  a net loss of $1000 which must be borne solely by the capitalist in the absence of the share system. followsi  Case B is illustrated as  -  - 47 -  Shares  Gross Bene- Additional Payment Payment Net Profit Net fit from Cost to to to to Stock Innovation Capital Capital Labour Capital Labour Boat I, Time A $6000 Boat X, Time B  7000  Boat Y. Time A  6000  Boat Y, Time B  5000  $  -  $  1000  -  $2182  $3813  500  2682  3818  2182  3818  1182  3813  -1000  "  500  -1000  Case C - Case C represents the case where Boat I has the innovation in Time B and ,Boat Y has not.  In this case, however,  labour has managed to increase its wages and thereby to remove all the net profit of $500 which went to the entrepreneur in Case B.  This is illustrated as follows J  Shares  Gross Bene- Additional Payment Payment Net Profit Net fit from Cost to to to to Stock Innovation Capital Capital Labour Capital Labour Boat X, Time A $6000 Boat X, Time B  7000  Boat Y, Time A  6000  Boat Y, Time B  5000  $  -  1000  A1000  # 500  $2182  $3818  2132  4318  2182  3818  1182  3818  500  -1000  Labour could only manage to raise its wages if it possessed' a'-  - 48 -  monopoly of the labour for Boat X.  Under the above  circumstances,  the vessel owner would be indifferent to applying the new technique as it only just pays for itself without allowing a surplus for himself.  The vessel owner is in the zone of in-  difference. : If the cost of the innovation had been less, then the labourers could have pressed for an even higher share for labour.  ' The share system that is applicable at present to  the British Columbia salmon industry is based on a 4/llths and 7/llths division of the net stock.  How then does this appear  to influence the rate of innovation in the light of what has been discussed?  The net stock in the previous examples was  divided under the salmon share formula but this formula was not applied to the division of the return from the new innovation.  The effect of the salmon share division appears to be  quite striking. Case D - In Case D the net stock increases by a total of $1000 and yet the additional benefit to the capitalist was only $364 of this total, as is shown in the table on the following page. This small return to the capitalist was due to the share system. The immediate effect of such a return will be to reduce the desire of the vessel owner to innovate.  This example demon-  strates that an innovation which will yield an increase in the net stock of #1000 will not be undertaken if it costs the capitalist more than $364 to implement it.. Thus any innovation that does not have a marginal return which is at least 2.75 times  - 49 -  its cost is not worthwhile introducing from the boat owner's point of view.  The following table illustrates Case D:  Shares Gross Bene- Additional Payment Payment Net Profit Net fit from Cost to to to to Stock Innovation Capital Capital Labour Capital Labour Boat X, Time A $6000 Boat X, Time B  7000  #  -  1000  $  -  §2182  $3818  ^ #  * #  500  2046  4454  -  2182  3818  .  -  l&Lg  31^2  -364  636  364  Boat Y, Time A  6000  Boat Y, Time B  5000  -1000  -636  The figure of 2.75 times cost is derived from one divided by the vessel's;; share or 4/llths.  Case D also demonstrates the effect  of the share system in covering a loss.  Boat Y in time B has  suffered a loss which under a capitalistic arrangement, such as Case C, would have been borne solely by the vessel owner, instead, due to the share system, the major burden is shifted to the fishermen and the vessel owner's burden is reduced. Case E - The above innovation was capital using.  If, instead,  the innovation wereccapital saving and reduced the need for capital by $500, the results would be as those which are shown by the table on the following page. If the innovation is capital saving, it need not affect the total catch or the net stock.  The catch will remain  the same unless the money which was saved were re-invested in  new equipment to capture more fish.  The vessel owner has  every incentive to implement this technique as it will give him a windfall profit.  This windfall may attract attempts by  "the fishermen or those paid by labour's share to seek to change the share arrangement so as to partake in the windfall. Shares Gross Bene- Additional Payment Payment Net Profit Net , fit from .. Cost to to . to to Stock Innovation Capital Capital Labour Capital Labour Boat X, , $2182 $3^18 $ Time A $6000 $ $ _ Boat I ; Time B Boat" I. Time A Boat Y, Time B  6000  -  - 500  2182  3818  6000  2182  3818  6000  2182  3818  500  -QaseJ? - Case F involves a labour saving innovation xfhich does not require any increase in the quantity of capital.  It would  appear to be similar to that of Case E except the payment for labour would now be reduced by $500.  However, it may not be as  simple to reduce the payment to labour and, in fact, what may happen is that the labour force will be reduced but the total payment to labour will remain the same.  The workers who remain  on the job will have received a windfall gain.  The capitalist  might attempt to change the share arrangement so that he can obtain at least some of the reward. "Any change in the share allocation will.be strongly resisted by labour.  If the capitalist is  unsuccessful, in obtaining a new share arrangement or a modification of the old, he may continue to operate under the old technique utilizing the same amounts of labour and capital as before.  The  - 51 -  capitalists neglect to implement the new innovation will thus keep the potentially increased wages from the fishermen.  Such  behaviour may be due to jealousy or laziness on the part of the capitalist.  If, however, some vessels do reduce the size of their  crew, the ambitious and energetic crewmen will leave the vessel with the larger crew and attempt to get on to the vessel that pays a higher return for their effort.  Thus in the end the capitalist  may be forced to innovate to keep the good crewmen that he already has on his vessel.  Case F is illustrated belows  Shares Gross Bene- Additional Payment Payment Met Profit Net fit from Cost to to to ' to Stock Innovation Capital Capital Labour Capital Labour Boat X . ...• . Time A $6000 Boat X, Time B  f  -  $  -  .  #2182  #3818  6000  -  -  2182  3318  Time A  6000  -  -  2182  38l8  Boat Time I, B  6000  -  -  2182  3818  f  -  I  -  500  Boat I .  If the labour saving technique requires a little  capital  it might still be employed under the present share arrangement as long as the return on the investment, i.e., the additional benefit to capital, is increased by at least 2.75 times the initial required new investment.  A return of 2.75 times the  initial investment is required to compensate the capitalist if any innovation is to take place under the share system.  This is  due to the fact that all returns from a new innovation are shared with labour before the cost of the new investment has been met.  - 52 -  If an investment was implemented under the above 4/llths and 7/llths share system and it failed to yield a return of at least 2.75 times its cost, then the capitalist would be unable to even recoup his original investment.  Under a purely capitalistic  system as long as an investment yields at least its costs the capitalist does not suffer a capital loss. Innovations may be summarized to show the various possible combinations of capital and labour.  The following list  is such a summary? Capitalist ? s Att itude • T D — Capital Capital Capital Capital Capital Capital Capital Capital Capital  Saving Saving Saving Using • Using Using Constant Constant Constant  Labour Labour Labour Labour Labour Labour Labour Labour Labour  Using Saving Constant Using Saving Constant Using Saving Constant  Favourable Favourable Favourable * ?•  Favourable Favourable Favourable  Labour T s Attitude  "125  favourable Favourable « Favourable Favourable ? Favourable Favourable  This list shows all possible combinations of innovations as to their utilization of labour and capital.  Column 1 gives the  attitude of the capitalist to an innovation which will  increase  the net stock and which will require additional demands on the respective factors.  Column 2 gives the attitude of labour to  the propasetl change.  These innovations which the respective  group approves are noted as favourable, while those which are uncertain are questioned. The presence of 'a question mark in columns 1 and 2 indicates those types of innovations which possess a degree of  - 53 -  uncertainty and where additional difficulties are present due to the share system0  The innovations or changes which are question-  ed in column 1 will not be implemented unless the return on the capital invested is at least 2®75 times the invested capital0 Those innovations questioned in column 2 will be opposed by labour who would not wish their implementation unless the net increase in the net stock is at least 1 0 57 times the increased burden on labour„  This increased burden is equal to the increas-  ed number of men times their respective share.  The figure 1,57  times the increased burden or cost is derived from one divided by labour's share or 7/llths.  It is similar to the figure 2,75  which was derived for capital.  If the share system were not in  force, and the system in use was solely based upon the long-run marginal productivities of the factors, then it would be expected that any innovation would be utilized as long as it had at least, or better than, a one-to-one relationship between increased cost and increased product.  Only four out of the possible nine types  of innovations fall into the category where the one-to-one relationship would hold under the share system,, The other five face a variety of hindrances.  The actual percentages by which the  marginal product must exceed the marginal cost depends on the actual circumstances of the share system,, However, under any share system, when both factors are considered, the lowest figure by which the marginal return must exceed the marginal investment is 1.57 times and this occurs only when there are half shares.  - 54 -  Chapter I\T Innovation in Practice After completing a study of the theoretical hackground, it is Imperative to turn to the facts, and to the institutional framework to examine how the fishing industry works in practice.  In British Columbia the type and degree of  innovation is strongly influenced by the elaborate system of regulations imposed on salmon fishing by the Fisheries Department of Canada and the International Pacific Salmon Fisheries Commission.  The main objectives of these two bodies seem to  be (a) the conservation of the salmon species, and (b) the maintenance of employment opportunities for fishermen.  To  obtain these objectives they have implemented regulations governing such matters as the size of nets, the colour and size of mesh allowed and the areas in which purse seining may take place.  Wo limits have been placed on the number of boats and  men allowed in each branch of the fishery, but strict limitations have been placed on the periods during which fishing is allowed and on the total amount of fish that can be caught. If the regulations had other objectives, e.g. maximum efficiency regardless of employment, then the type and direction of innovation would probably have been quite different.  Seiners  would probably have replaced trollers and gillnetters, while if fishermen were to be dispensed with almost entirely, fish traps might have dominated.  The regulations that govern the industry  - 55 -  have a significant effect on innovation and also on the employment and incomes of fishermen. It is not really possible to estimate the number of the innovations which have been rejected, or not applied, due to the share system.  It may be questioned whether, in fact, an  innovation actually takes place if it is not introduced, but even leaving this point aside, it is difficult to find examples where an innovation has been specifically rejected on the grounds that it failed to give a yield of 275 percent of its cost.  This  chapter instead will attempt the next best thing and will discuss some examples of innovations which might fall into the five categories of innovations which were mentioned as likely points of conflict. Before proceeding further it is worthwhile to note that the fishing industry displays a high degree of variability in its catches from year to year.  This variability, however, is  mild in comparison to that sometimes found among boats, even those which are fishing in the same areas at the same time.  This  variability naturally malces any sampling procedure open to criticism unless the sample is both large enough and unbiased. The examples which will be presented on the following pages have not been drawn from a random sample and therefore are open to criticism on this ground.  The main feature of these examples,  however, is that they are an attempt to organize all available data.  The paucity of relevant data which are freely available  has been a serious problem.  The information, however, is believed  - 56 -  to be both reliable and realistic; attempts at verification through conversations with those engaged in industry appear to support the conclusions the figures imply. NYLON BETS The first innovation to be examined is one that is capital using and which has almost no increased labour requirements.  It is the introduction of nylon fishing nets, the history  of which is briefly as follows.  Prior to 1950 all nets had been  made of material other than nylon, with linen being the predominant material.  In 1950 and 1951 the new nylon nets were  used experimentally, and in 1952 approximately 500 nets were released to fishermen.  The nets were bought directly from the  supply house and the demand was so large that by August 1952 the two major and one minor suppliers in the field were unable to meet the demand.  In 1953 five other companies entered the supply  field and a factory to manufacture nylon nets was opened in British Columbia. It is rather difficult to talk about fishing nets in general terms as they differ in design and in the variety of the material used.  The cost of a net varies depending on such things  as the weight and size of the twine and whether a double or single knot construction is used, etc. twice as expensive as linen nets.  Nylon nets are almost  The "tangle net" which had  widespread popularity at this time was woven out of No. 23 nylon twine.  It was very fine and less expensive than the regular  - 57 -  sockeye net.  Tangle nets did not gill the fish but only, as  the name implied, entangled them.  Such nets had a very short  serviceable life and frequently lasted only six weeks or less. The very fine twine also made repairs very difficult.  The  Department of Fisheries finally declared tangle nets illegal as of January 1, 1954.  The stronger nets used for sockeye were  usually made out of the No. 53 twine.  They were frequently  woven in a double knot pattern and had a serviceable life of two seasons.  The lead line and the corks were not changed but  nylon was used for the hanging and the selvage which attached the web to the lines. Nylon nets presented some specific problems to the manufacturers both;in construction, dyeing and general care. Double knots had to be used in the construction of the meshes and to counteract slipping and shrinkage problems. nylon twine was also a difficult process.  Dyeing  Nylon also was easily  affected by sunny and warm weather which shortened its life expectancy.  These problems were all finally surmounted.  nets have the following particular characteristics:  Nylon  (l) they  resist bacteria and mildew, thereby suffering no deterioration from being stored;  (2) they absorb little water:.and therefore  are not as heavy;  (3) they are 10 percent to 20 percent weaker  than linem nets when wet which means that they must be larger to give the same strength.1  1 "Trends in the Usage of Nylon Twine and Web", Western Fisheries. March 1952, pp. 18-19, 62. See also S.L. Young, "Nylon  - 53-  When nylon nets were first introduced various tech2  niques were used.  Some fishermen attempted to interspace both  linen and nylon sections in their nets, but they failed to notice any appreciable difference in the number of fish caught ' • i' by each segment of the net.  The general concensus on the part  of fishermen is that completely nylon nets are better.  They  suggested that the chief reason is the ability of nylon nets to be fished successfully during the daytime in relatively clear water.  Linen nets have more noticeable meshes and the fish are  able to avoid these nets.  In 1952 the main part of the sockeye  run passed into the Fraser River while the water was still relatively cloudy due to silt and debris carried by the river during the spring run-off.  Linen nets did not appear to be at  •Tested on West Coast", Trade News. February 1952, Canada, Department of Fisheries, pp. 8—9. This paper deals with a comparison of the physical properties of nylon, linen and cotton salmon twine. The strength of wet linen salmon twine is set arbitrarily at 100.  Twine Strength, dry Twine Strength, wet Mesh Strength, dry Mesh Strength, wet Stretch under •'•.breaking tension, dry Stretch under breaking tension, wet Toughness, dry Toughness, wet  Nylon  Linen  Cottesin  91 77 108 85 . 385 395 350 300  74 100 69 110 60 100 45 100  23 25 28 33 2900 360 65 90  Also noted is nylon's wear resistance and ability to stretch. Nylon is more expensive and broken meshes fray in water making repairs difficult. 2 Report on Nylon Nets. Canada, Department of Fisheries, Unpublished, 1952.  - 59 -  too much of a disadvantage during July of this year, but when the water cleared, nylon nets proved to be superior. Wo data are available on the utilization of nylon seine gear, and though the first net was made up in 1952, it was not utilized in that year.  Most vessels have no?/ converted  to nylon, though some linen gear does remain in use.  Nylon was  first utilized by gillnet boats on the Fraser in 1952.  In  that year, a survey on the catching efficiency of nylon and linen gear was undertaken by Mr. T.F. Rothery, a Fisheries 3 Officer at Steveston, B.C. The survey is based on an examination of the' catches at the mouth of the Fraser River in the Steveston-Sandheads area during and after the sockeye run of that year.  It indicated the greater efficiency of nylon nets.  Mr. RotheryTs method was to examine two groups of fishermen, one group of which was using nylon nets, the other using linen.  The  fishermen in the sample were not chosen at random but were selected on the basis of their fishing experience and the equipment, other than the nets that they utilized.  Mr. Rothery was  well aware of the abilitiesoof various fishermen and was therefore capable of making such sound judgments. The survey was actually based on the catches of two groups of boats during two periods of time.  In all, the survey  included information based on 94 boat periods.  The first period  extended from July 1 to August 4 and the second from August 5 to  - 60 -  September 5.  The following table explains the catches which  were made by the 32 boats during the first period and 62 boats during the second period? Group 1 July 1  August 4, 1952  16 Linen nets 16 Nylon nets  No. of Fish Caught  Total Weight in lbs.  16,786 23,866  123,575 181,059  11,936 24,409  96,859 207,065  28,722  220,434  Group 2 August 5 - September 5, 1952 31 Linen nets 31 Nylon nets Groups 1 and 2 47 Linen nets 47 Nylon - nets  48,355  388,124  During both periods one half of the boats used linen nets and the other half nylon nets.  The number of separate pieces of  each species and their respective weights are not identified in this example.  This detail, in fact, showed nylon nets during  the first period July 1 to August 4 to be more efficient in capturing all species except chum and steelhead, but even in these categories the difference did not appear to be important.  The  results from the second period August 5 to September 5 appear to be more significant since during this period boats using nylon nets outfished their competitors both in the number of fish landed and in the size of the fish they caught. An examination of the detailed figures shows nylon nets to have been more efficient.  The following table shows the catch by weight and  -el-  and species for vessels in the sample  Sockeye Linen Nylon  No o of Fish  Pounds  23,939 39,200  171,860 287,106  Pv.ed Spring Linen Nylon  Linen Nylon  Pounds  3,193 5,109  22,247 33,103  109 447  1,597 6,592  40 48  504 640  Chum 662 2,049  10,431 33,746  Ehite Spring Linen Nylon  Coho  No„ of Fish  Linen Nylon Steelhead  779 1,502  23,795 26,937  Linen Nylon  There are 94 boat periods but only a total of 62 boats in the sample, since the vessels examined during the first period are also in the sample of boats in the second periodo  In the com-  bined period, July 1 to September 5, nylon nets captured 19,633 more salmon, which were equivalent to 167,690 pounds more weight Thus during this period, vessels fishing with nylon nets were 68o3 percent more efficient than those fishing with linen netsQ For example, if it is assumed that there are no fixed costs, then a linen net which cost $1,000 and just paid for itself in the season would be equivalent to a nylon net which cost $1,683 and yielded in return a 6803 percent increase in the catcho  If the cost of the new nylon net is less than 6803  percent, then it would be utilized if there were no share system In the gillnet fishery, a share system based on 4/llths and 7/llths is not applicable, and if the vessel operation requires only one man, the above is the only consideration that need be  examined.  However, if the fishing operation utilizes two men,  and the catch is divided on the customary basis of 2/3rds to the captain and boat owner and 1/3rd to his assistant, problems © arise, for under this system, only 2/3rds of the increased catch would go to the vessel owner and be available to meet the cost of the net.  Thus it would appear that if the linen net  cost $1,000 and yielded $1,000, it would only be worth utilizing a nylon net if it cost less than $1,455 and yielded $1,683.  If  it were possible to utilize these catch figures in reference to the salmon seine share agreement, then under this agreement only 4/llths of the increased catch would go towards the boat and gear and thus the relevant information would be that the nylon net would have to cost less than $1,247 and y&eld $1,683 to be worthwhile adopting. Nylon nets have continued to grow in popularity and now supply almost the tcital market for netting. phenomenon occurred?  Why has this  The samples, based on the catches of two  groups of fishermen, are not really justifiable as the two groups are highly dependent on each other.  This is true particularly  in the case of the salmon runs since the supply is regulated for conservation purposes.  As fishermen turn to nylon nets and  capture more fish in a shorter period of time, there are fewer fish available to be caught in linen nets.  Thus as the catches  per nylon net at first increase, the total number of fish caught per unit of linen net will decrease.  The fewer fishermen that  use nylon instead of linen, the greater will appear the superiority  - 63 -  of nylon.  The individual fisherman who first utilize the nylon  net enjoy an advantage at the expense of those who retained linen nets.  This advantage will be eaten away as more boats  commence to use the new nets.  The results logically appear to  point to a need for fewer fishing boats with each boat obtaining a larger share of the total catch than it did with linen nets.  In fact, this does not appear to be what is happening.  This problem  will be examined again later.  PURSE SEINERS  The origin of purse seining on the Pacific coast is uncertain.  John Cobb credited its origin to Chinese fishermen  in 1836,^" while Rounsefell and Kelez ^ quoted Hittel and suggested that it was an important gear as early as 1832.  The  original purse seine vessels were sail boats; but in 1903, the first gasoline engine was' used on salmon purse seiners.  The  power-equipped boat "... easily demonstrated her vast superiority over other purse seiners in the quickness with which she could reach a school of fish after it was sighted and in surrounding it with her seine." 6  These first power seine boats  4 John Cobb, Pacific Salmon Fisheries, 3rd ed. (Document No. 902), May 1921, Report of the Commissioner of Fisheries, Washington, D.C., U.S. Government Printing Office, 1922, p. 73. 5 George A. Rounsefell and George B. Kelez, "The Salmon and Salmon Fisheries of Swiftshore Bank, Puget Sound and the Fraser River", Bulletin No. 27 (October 17, 1933), Bulletin of the United States Department of Fisheries, vol. XLVIII, Washington, D.C. U.S. Government Printing Office, 1940, p. 726. 6  John Cobb, 0£>. cit., p. 73.  - 64 -  were small in size, at approximately 30 feet.  Boats soon began  to increase in size once the technique had proved itself to be successful.  High power and speed which had once been unnecessary  now became of great importance and the newer boats soon cast their predecessors in the shadow.  The new vessels began to  range in size from, 45 to 55 feet and to be powered by 45 to 75 horsepower engines and later reached as much as 80 to 90 feet. In conjunction with increased size, motor power was soon attached to winches for hauling.  The gasoline-power seine boat was 7 universal in Puget Sound by 1907.' In the years following, many other improvements and innovations took place; such things as turntable and roller mechanization, hydraulic engine throttle and clutch control, and the diesel engine, to name a few.  The  history of purse seine salmon fishing provides many innovations which can be examined profitably.  However, it will suffice to  deal with some of the more modern ones which can act as representative examples. In seine fishing., the type of gear used is the purse seine.  The purse seine net is made either from nylon or cotton  twine and is supported on the surface by Spanish cork or Spongex (plastic) floats.  The purse line runs along the bottom of the  net through metal rings which are attached to the bridles which are in turn fastened to the lead line. When scouting for fish, the seine vessel proceeds until the crew observe some indication that a school of fish 7  Rounsefell and Kelez, op. cit., p. 728.  - 65 -  might be present,  ton  the school has been located a small  seine skiff is launched with one end of the net.  The seine  boat then proceeds to release the remainder of the seine from the stern of the vessel as it encircles the school.  Ghee having  satisfactorily accomplished this and having retrieved the other end of the net from the skiff, the seine is pursed by drawing in the purse line which seals off the bottom of the net entrapping the fish.  Various devices, such as air hoses, lights  and wooden paddles, are used during this operation to scare the fish away from the opening at the bottom and side of the net beside the boat.  The next operation consists of hauling  the net onto the vessel until only a small portion remains enclosing the fish alongside the vessel.  The fish are then  removed from the net and into the hold with the help of a powerdriven dip net or brailer. Historically, all purse seine vessels were table seiners.  The table is a large movable platform on the stern of  the vessel from and onto which the seine is launched and collected.  The usual operation was to haul the seine on board  by hand; an operation which took approximately 45 minutes.  The  introduction of the power drum and the Puretic power block revolutionized the speed of this operation and modified the vessels.  Both these innovations are of relatively recent origin  and it is worth noting how they were treated in the light of the share system. The conversion of purse seine boats from table to drum  - 66 -  seine operations was an innovation of notable importance.  Such  a conversion is,from the capitalist point of view, an innovation which is capital using and labour saving, at least, in the short-run.  Capital using and labour saving innovations are  among that group of questionable innovations over which disputes are likely to occur.  The conversion of a vessel from table  seining to drum seining requires an expenditure by the capitalist and less hard physical work for labour, but a more constant and arduous work by a smaller number of fishermen.  The need for fewer  fishermen makes this innovation labour saving, and yet for those fishermen who remain on the vessel, the work load has increased. To these remaining fishermen the innovation appears to be labour using as it require more effort on their part.  They  will be opposed to the innovation unless they obtain sufficiently large increased earnings to pay for their increased effort.  The  fixed share system automatically insures thern of at least some increase in earnings due to the smaller-sized crew. Salmon purse seine fishing based on the principle of the drum was of little importance in British Columbia before 1952.  The first drum purse seiner was introduced in 1947-  In  1951 approximately six drum seine vessels were engaged in seeking salmon.  Their operations appear to have enjoyed a  noticeable success and as a consequence, a number of vessels wer>e converted from table seine to drum seine operations.  During  the year 1951-1952, seven new drum seine vessels were built 8  Sinclair, License Limitation, p. 154•  - 6? -  and a total of about 30 drum type vessels were engaged in salmon fishing in 1952.  This vessel total had increased to 75 vessels  by 1955 and has continued to grow ever since. When a seine vessel is equipped with a power drum, the actual setting operation remains relatively the same as mentioned previously. operation which differ.  However, there are a few parts of the Unlike table seining, the net in drum  seining is only half pursed before the hauling in begins.  This  half-pursing enables the set to be completed in a shorter time period but also presents an opportunity for the fish to sound and to escape.  However, the basic difference in drum and table  seining is in the hauling of the net mechanically.  In drum  seining the seine net passes over a roller and around a drum which is located in the stern of the vessel.  The power drum  which is mechanically operated removes the heavy pulling work which the crew had to undertake formerly when retrieving the seine.  This reduction of work eliminates the need for a seven  man crew.  Five men are now sufficient to handle a drum seiner  in comparison to a table seiner which requires the seven men. The salmon seine share arrangement which was in effect on all purse seiners in 1952 stipulated that the fisherman f s share of the catch was to be 7/llths.  The advent of the drum seine re-  duced the vessel crew to five workers who were able to obtain that which had previously been divided among seven.  The remain-  ing crew was also to gain further from the' increased efficiency of drum seine vessels.  - 68 -  BRUM SEINE The invention of the drum seine has been credited to Nicholas Kelly of Nanaimo, B.C. in 1951.9  He introduced a  drum with a level winding mechanism for handling the entire purse seine.  After a set had been made, the net was retrieved  by winding it around a large drum located at the stern of the boat.  This innovation removed the need for either hand-pulling  the seine over a live roller at the edge of the seine table or, in the case of the large seines, the strapping in of portions of the seine. ful.  The drum seiners have appear to be quite success-  The crediting of this innovation to Nicholas Kelly may  be correct but it is certain that the seine tables had been replaced by seine drums on at least two vessels, the Tarzen 10 and Greyfish, as early as 1947-  The innovation of the power  drum for seine vessels represented merely an extension of a principle which had been used for a number of years previously by gillnetters.  The Implementation of the power drum on these  boats had made one-man operation of gillnetters possible. Drum seiners, at least in some areas of the British Columbia coast, are more efficient than table seiners; this is  9 Peter J. Schmidt, Jr., "The Puretic Power Block and its Effects on Modern Purse Seining", in Modern Fishing Gear of the World, ed. Hilmar Kristjonsson,^London, Fishing News, Food and Agricultural Organization of the United Nations, 1959, p. 400. 10 W. Rigby, Statement to Conciliation Board on Drum Seine Dispute. United Fishermen and Allied Workers Union, 1954, P« 8.  - 69 -  particularly true of the Northern Area especially where the water is not too clear.  Experiments by drum seiners in the  clear water of Juan de Fuca Straits have proved disastrous for all those who attempted it.  The reason for their failure  in this area was the clear water which permitted large fish escapement from the net.  Northern drum seiners, however, have  continued to experience larger catches than their table seining competitors.  Drum seiners usually catch fewer fish per set of  equivalent gear than do table seiners, but the former make up for this loss by more frequent sets per diem. In the early years, the conversion of table to drum seiners cost, on the average, between $3,000 and $10,000. This has now fallen to approximately $6,000 and the equipment has improved from the original chain drive to piston drive operations. The drum seiner also incurs other extra expenses, and relatively expensive Spongex floats must be used in place of Spanish cork which fails to stand uplunder the extra pressure imposed by winding the net around the drum.  The maintenance cost of  the drum purse seine tends to be higher and since it is set more frequently it wears out faster.  The crew on the vessel,  though not working as hard physically, do work more continuously and steadily.  This latter factor makes drum seine work more  arduous. All the above then are to be compensated for by the increased profits which should accrue from the operation of the drum seine.  Table 2 which shows, in index form, the value of  221  Seine Boats  1953  i  t  Crew  iif  I  24  6  20  6  239  6  34  6  191  6  i 19  li 27 25 i 38 29  i i  i  | 6  6  | 6  317  1  !  126  U 365  478 543  I 6  I 6  I  IS  6  152  6  ¥  6  1  439  6  —  —  m t  Ii  Grew  1958  Crew  6  m 452  4  517  700  6  «M  *»  452  6  200  461  t  i  K  6  357  556  J  361  6  1209  5  Ife  *  $  L  739  4  I  3  I  2?  I  6  230  6  I  i  i  is  I  i  6  200  6  537  6  230  8  £  I  & 1  504  23  1  ©  20  i i  6  i  5  574  4  270  4  3  120  4 124  123  4 t  \  i  404  4  % \  & & i 4  1078  4  453 SgZ  _ $ 4  1 1  504 1SI  578  3  452  3  700  3  913  3  1283  313  839  4  426  4  422  4  621  4  904  *  % %  i t  *  456  <  41 i  $  4  % *  13  a  S SS  20.7  ifc8  1  1  $  I t  U &^  1  ®  5  556  5  904  287  4  226  4  869  4  1221  I  j  I  !  I  j  I t  22  8!  120  \  •s  335  1  20:8  1174  560  8 13  & 322  ti  4  5  86  Ik8  ig  i  961  409  &  300  i  5  1256  561  j  233  856  6  74  |  1082  435  4  28  6  6  IS?  1962  1961  mrnHmmrTW  417  i  60  Crew  mafeniUMW  $ £  ii?  6  I I  1960  1959 JL  178  6  m  1957  m t  1  191  20  & r  1955  1954  8  13  &  SS.  1I3II  12  13  lit  1179  il9  III  1  1  8  1?:! I  1  1  ;!  - 70 -  seine boat catches for the period 1953-1962, demonstrates the almost continual success of drum seiners in the northern area of the Province.  A comparison can be made between the catches  that are landed by various table and drum seiners over a number of years.  This provides a method of checking the boats against  themselves and competitors.  Almost consistently drum seiners  have proved more efficient. The table is based on a sample of seining fishing vessels .in the norther area of the Province.  The sample has  been constructed from the records of a fishing company which employed these and other vessels.  The sample is based on the  operation of vessels owned both by the fishing company and by independent but associated fishermen.  The sample includes no  new boats constructed during this period nor the records of vessels which failed to fish continually.  Certain of the figures,  representing the index of the dollar value of catch, are unusually low for some vessels in specific years.  Enquiry has  shown this to be due to a variety of reasons such as incompetent skippers, breakdowns and failure to fish the entire season. Human failure on the part of the skipper appears to be the most frequent cause of low yields. The time period examined is ten years.  These years  are significant as they cover the period during which the c o n v e r sion of table seiners to drum seiners and the introduction of the power block took place.  An examination of the table reveals  that the vessels of lower tonnage were the first to be converted  - 71 -  to the drum seine.  The length of the vessels is omitted to  hinder identification but it suffices to indicate that the trend is similar. man crews.  In 1953, all vessels in the sample had six-  This included drum seiners as well as table seiners.  The first power block was introduced on the latter in 1957 and it was a notable factor in reducing the size of the crews.  By  1962, of the 21 vessels in the sample, all of whom originally had six-man crews, only two vessels were still in this category, both being table seiners.  One vessel, originally a table seiner,  was converted to a drum seiner only to change back after two years. Table 2 demonstrates the greater efficiency of the drum over the table seine method of fishing.  In most years the drum  seiners outfished their counterparts by a healthy margin.  The  total value of the catch for each category of seiner was calculated annually, as was the average catch per vessel for each category.  This latter average was calculated by dividing the  total value of the catch by the number of vessels fishing.  It  is deceiving as it weights each boat equally regardless of size. To counteract this, it was decided to examine the dollar value of catch per gross vessel ton.  This measurement bears some  relationship to the cost involved in constructing each specific vessel and is a legitimate standard for measurement.  An examina-  tion of the two indices of dollar value of catch per gEoss vessel ton demonstrates that in all years the rate of return per gross ton was higher for the drum seine rather than the  - 72 -  table seine category.  This divergence is one of no small  degree for, in some instances, the rate of return for a gross vessel ton of a drum seiner is twice that for table seiners. This difference is more noticeable in the early years when smaller vessels were in the drum seine category, and it declines in later years when larger and less easily convertible vessels are introduced.  Another partial explanation for the  reduction in this divergence is the introduction of the power block,a factor which came later into this area than in some others. The owner of a table seine vessel has an incentive to convert due to the increased productivity that can be obtained by drum seiners.  However, it is difficult to know whether the  increased profit will cover the owner's cost of conversion,•or whether it will generate sufficient revenue so as to make the alteration worthwhile from the vessel owners' point of view at least in the short-run.  The answer to this fact is hidden by  the index formulation of the table; a formulation which was considered necessary to hide the identity of the vessels.  However,  if the actual direct monetary return is not sufficient, there is still another major fact which exerts pressure on the owner to convert, i.e., the quality of the fishermen who operate the vessel.  The good fishermen all prefer to work on drum seiners  as their total individual remuneration is greater.  In the long-  run this fact alone may be a sufficient incentive to the vessel owner, for if he fails to convert, he will only be able to  - 73 -  atti-act the poorer fishermen. The number of fishermen engaged on these 21 vessels has declined continually throughout the period from a high of 126 in 1953 to a low of 94 in 1962c  The consequences of this  decline are readily noticeable, both in the employment opportunities and in the rate of remuneration they provide per active workero  Fewer men are now employed on these vessels, but the  total value of the landings by their effort shows a marked increase.  Thus those fishermen who remain employed are now  able to enjoy higher remuneration, as the 7/llths of the net stock is divided amont fewer people.  These fishermen have gained  both fr om the increased productivity of the vessels and from the smaller sized crews.  Those who are no longer required to  operate these vessels have been forced to seek employment elsewhere, either in fishing or other occupations. When new seine vessels are built, the drum seiner is, in fact, both a capital saving and labour saving innovation.  The  drum seiner, on the average, is a smaller and therefore a less costly counterpart to the table seiner,, The drum seiners do not have to be as large or as powerful boats, as they only have to accommodate a five-man crew.  This factor alone would appear  to imply that the newer purse seire vessels would all be drum seiners, but this is not the case because of the inefficiency of drum seiners in some fishing areas.  The implementation of the  power block has reduced the need for the large sized table seiners, and these also will be reduced in size in future vessels0  -  Ik  -  Innovations have reduced the amount of capital required for salmon seine boats by reducing the necessary size of the vessel. However, the smaller sized vessel is at a disadvantage when it is engaged in other uses, such as halibut fishing or herring packing, since it lacks storage capacity.  As more and more  seine boats are utilized in other fisheries, convertability between fisheries becomes important and there is an increased tendency to retain the larger sized boat. The construction of new drum seine vessels would not be opposed by either capital or labour, since all those directly involved would benefit.  This construction, however, has  to await profitable investment opportunities since the conversion of the existing fleet may postpone the day of need. However, if the conversion had a cost of $10,000 and a depreciation life of ten years, the total payments that would have to be made to capital per year would be $1,000 plus the interest charges on the debt outstanding.  To meet tbhese new expenses  the value of the increased catch would have to increase, due to the share system, by approximately $3,000 per year.  The  average value per yearly catch for the typical table seine vessel is better than $10,000 a year.  Thus the $3,000 figure  appears to have been met, since the catches of drum seiners have increased to almost twice that of their table sfeine counterparts.  This is a slightly illegitimate comparison since  the two sets of figures are partially dependent on one another.  - 75 -  TABLE SE1MB. POWER BLOCK The year 1955 witnessed the introduction of a new innovation to aid the table seiner.  The power block was the  idea of Mario Puretic and was first successfully tested on a tuna seine boat in 1954-  The power block was first used  commercially in British Columbia on July 12, 1955 in the Straits of Juan de Fuca, and by August 10, 1955*»all 104 table seiners fishing the Straits were equipped.  Power blocks come in varying  sizes depending on the gear to be hauled.11  The power block  consisted of a sheave which was suspended from the boom.  The  net was drawn over a sheave which was power driven by means of a rope belt attached from it to a cathead.  The weight of the  net on the sheave was sufficient to provide the necessary traction.  The original power blocks were very heavy and weigh-  ed as much as 500 pounds.  The later models were made of  aluminum and weighed approximately 200 pounds.  These newer  blocks were hydraulically driven and contain a gear reduction within the heads themselves.  The utilization of a power block  allowed the speed of the individual settings to be doubled. This allowed the vessels to increase their production and to reduce the amount of heavy labour required. The power block can therefore be classified as a capital-using and labour saving innovation.  The block was  11 Schmidt, "Puretic Power Block and its Effects on Modern Purse Seining", pp. 400-413.  - 76 -  particularly effective in increasing the catches in the Straits area.  The Sockeye Commission administrators have sug-  gested that the power block increased the effectiveness of the 12  vessels by 15 percent.  Other individual fishermen have  given higher estimates of around 26 percent, at least for the salmon .seiners in the Straits of Juan de Fuca and along the West Coast.  The International Pacific Salmon Commission, following  tests covering an equal number of fishing days in 1955 and 1959, concluded that the seine gear fishing in the Straits during this period had increased in efficiency by 31 percent. The only major change in gear during this period was the intro13 duction of the power block.  The cost of a power block varies,  depending on whether it is to be solely for salmon or for herring as well.  As block that is used for the former may cost  #2,300 to $2,400 while power blocks for the latter may cost $4,000.  On the average, most appear to cost $3,200 to $3.}300  and.have a usable life expectancy of from six to seven years. For example, if a power block cost $3,200 and lasted seven years, the annual depreciation would be $457-  For the capital  ist operating under the share system to obtain $457 per year would require that the net stock increase by $1,256 per annum.  12 The Pacific Fisherman Year Book, Seattle, Washington, Miller-Freeman Publi cat ions, 1956, p. 11$. 13  Sinclair, Licence Limitation, p. 213•  - 77  Most vessel owners appear to feel that the power block has increased their catches by a sufficient amount to have made it worthwhile for them to have installed the power block.  Due to  tlie share system, this would require an increase in the value of net stock of between $1,000 and $1,500 per year. TRAPS The salmon trap is probably one of the mcs t effective and efficient methods of capturing fish.  Fish traps can be  constructed both as permanent or temporary structures.  A fish  trap usually consists of a long leader connected to a heart or core in the middle of the stream.  The leader usually extends  from the shore at the narrow entrance to an inlet or a channel. The leader is so constructed that the fish are prevented from passing through it, over it or under it.  Instead, the fish will  be forced to seek a way around the obstacle and, by instinct, they will swim alongside the net towards the centre of the channel.  The centre or heart of the trap leads the fish into  a small area from which they are brailed into packers and taken to the cannery.  A trap which extended across a river mouth would  be able to capture almost all the fish returning to spawn. Salmon traps would also be a more efficient method of capturing salmon in that they vrould require a smaller quantity c of labour and capital to capture a given quantity of fish. An innovation such as this would, at first glance, appear to be the only logical method of utilizing and economizing on scarce  - 78 -  factor inputs, but this has not been the case, and traps have not been used successfully or without heavy criticism. It is quite important to know why fish traps have failed and why they have been opposed by fishermen and other groups.  Fishing traps were first operated in British Columbia 15 in 190,4. There.were not very many traps, and those which did  exist were not on the rivers themselves but were mainly on the inlets and channels leading to the spawning grounds.  They were  not constructed in such a manner as to block off the entire channel but were frequently limited to closing half the?,pas sage. As a consequence of this, it was often felt necessary to construct a number of traps in a row.  Fisheries regulations  imposed by federal regulatory bodies limited both the length of the traps and the distance between them.  These regulations  were imposed on the grounds that they were necessary to ensure a sufficient escapement of salmon for spawning to perpetuate the species.  A major problem with the traps was the non-  selectivity of their operations which resulted in their frequently catching unwanted species of fish. Traps were operative in British Columbia until 1956,  14 The Use of fish traps by American companies on the United States side of Juan de Fuca Straits was a sore point in CanadianAmerican relations for many years and contributed pressure towards international control of the fisheries. 15 W.A. Carrothers, The British Columbia Fisheries. Toronto, Toronto University Press, 1941, p. 17*  when the last one, owned and operated under a royal charter by the J.H. Todd Company, ceased operations at Sooke, B.C. structures at Sooke were of the fixed type.  The  The major reason  for ceasing operations given at the time for their closure was the high cost of maintenance and repairing the structures as compared to their yield.  This seems to contradict the  statement made as to the efficiency of traps, and therefore will need to be explained.  The dominant factors in determining £  the catch of these Sooke traps were (a) the climatic conditions and (b) the prevalence of other gear.  The increase in the  number of fishing vessels operating in the vicinity of the traps grew remarkably during the 1950»s.  In the early 1950fs  there were approximately 70 purse seiners; by 1953, this number had increased to 80, and by 1956 there were about 110 seiners in the Straits of Juan de Fuca.  Gillnet vessels also invaded  the area, and they increased from 5 to 150 between the 1953 and the 1954 seasons.  This latter total had risen to approxi-  mately 500 by 1962."^  The implementation of the so-called  Tatooch-Bonilla line between Tatooch Island and Bonilla Point, Vancouver Island, in 1956 also increased the concentration of vessels in the Straits of Juan de Fuca.  Fishermen were not  permitted to fish to the west of this line.  Crowding has in-  creased to such proportions in this area that vessels have to 16 Estimates supplied by Mr. J. MacEacheren, a long-time British Columbia fisherman and associate of the United Fishermen and Allied Workers Union.  - 30 -  /  line up and take turns in setting their nets. A distinctive feature about the operations of fishing traps is the lack of the share system.  The traps operated in  British Columbia Illustrate a fishing technique in which no incentive or risk is involved on the part of the labour employed.  The workers on the fishing traps were, in fact, paid  straight wages without any share arrangements.  The lack of a  share system, and the decreased employment opportunities with the utilization of traps, helps to explain the opposition of fishermen to their operation. The complaints of purse seiners over the operation of traps led to the appointment of a Royal Commission, which submitted its report in 1940.  The Commission noted that traps  had various advantages and disadvantages.  From the point of  view of conserving fish runs, they "... are subject to a more quickly effective regulation then other types of gear. This finding does not appear to have found official recognition, as fish traps are still held to be illegal by regulatory 18  authorities. On the otherhhand, fish traps in the past have been based on a property right or a privileged right to operate a 17 Royal Commission Report relating to the use of (1) Trapnets atSooke Area and (2) Purse seines in a Portion of the Gulf of Georgia (Area MoT 17) iiTSalmon Fishing in British Columbia, Ottawa, H.M.P.O., 1940, P. 913 Norman Hacking, "Costly Strikes have Often Paid Off", The Province, Vancouver, August 12, 1963, p. 21.  - 31 -  trap. The location of the trap, and the right to sole utilization of a particular area is of prime importance.  Too many-  traps in operation along a river would lead to a problem similar to that presently seen with too many boats.  The  successful operation of a fish trap depends upon private property rights on the location of the trap but also private property rights to the fish which utilize the river upon which the trap is located.  For, unless there are private property  rights to the fish as well as to the land, other fishermen could continue to exploit and deplete the stock of fish before they reached a particular trap.  For fish traps to operate  efficiently there must be strict control over other types of fishing gear.  The operation of a fish trap therefore implies  to some degree a monopoly right to exploit a particular group of fish.  This monopoly right would have to be conferred either  in perpetuity or on a long lease, else the monopolist would find it profitable to exhaust the fishery before it reverted back to its former owner, and there would be little incentive for him to invest in the growth of the fish stocks.  This point  was noted earlier in relation to agriculture while dealing with the history of the share system. Fish traps are a possible solution to the overcrowded conditions of the British Columbia salmon fishery, and yet they offer no remuneration to those who would be displaced by their implementation.  Thus it is the group of individuals who would  suffer the economic loss that are most vocal in their opposition  - 82 -  to fish traps.  If the implementation of fish traps were able  to generate sufficient revenue to meet all necessary expenses and to give sufficient compensation to satisfy all those individuals who were displaced, then the change to fish traps should be implemented.  It is not necessary that the payments  be actually made to the displaced fishermen in order to increase the total welfare.  If this were the case, economic efficiency  and increased economic welfare suggest that fish traps would be the most effective way of reaping the sea's harvest.  The  actual decision on this controversial question ultimately will be settled in the political sphere by the government who is the landlord. The innovations which have been examined in this chapter appear to show that the share system has not been of particular importance in hindering innovation0  Innovations  appear to have taken place at a rapid pace and to be, in general, both capital and labour saving0  The reason for this high rate  of innovation seems to lie outside the share system®  A possible  explanation for this is to be found in the following chapter which deals with the theory of a common property resource.  - 83 -  Chapter V The Common Property Resource and Conservation The salmon fishery of British Columbia is based upon a genus of fish that migrates from fresh to salt water.  It  is difficult to distinguish the salmon of each river system while they are at sea since all are relatively intermingled. This factor excludes the possibility of dealing with each river separately and, as a consequence, the whole British Columbia salmon area must be considered as a single geographic region.1  The only time it would be possible to deal with a  single river would be if fishing were permitted solely at the mouth of rivers or upstream. Ih H e consider at ing the British Columbia coast region as an economic unit, it is imperative to decide as to the optimum degree to which it should be utilized; this may readily be stated so as to maximize the net economic yield, i.e. the difference between total cost and total value of production. In an agricultural example, the production function would be assumed to display diminishing returns as units of the variable factor were expanded upon a particular area of land.  So like-  wise is the case of the British Columbia fishing industry which,  1 In fact, not only British Columbia waters but also the waters off the Washington coast must be considered as a unit, .a factor which led to the formation of the International Pacific Salmon Fisheries Commission.  - 84 -  at least in the short-run, experiences increasing costs on the part of individual fishermen as they attempt to increase their landings.  The increased effort required for larger landings  comes in the form of higher variable costs„  Money labour costs  rise only as a fixed proportion to output due to the rigid effect of the share system, and therefore are not a factor leading to diminishing returns in the short-run unless higher product prices are necessarily paid for increased production This may not appear to be as apparent if we examine the whole fleet as it now operates, but if there was a single owner directing the whole fleet it would become noticeable if he attempted to increase production with the existing capacity,, Each boat under a situation such as this would equate marginal cost with marginal revenue and maximize its quasi-rent, i.e., ABCD.  i.e..,. Fis-tusK EFFORT.^  2 Fishing Effort - Doses of Labour and Capital applied to fishingo Area ABCD = Quasi-rent,,  Figure 1 (bft poLL-ftKS OF OUTPUT  /  t  SH-ORT RUN  MC  SHORT RON z _ /  hC  d « M R  \  OUTPUT  PER  U N I T OF  TIME  The marginal and average revenue curves are based on the marginal and average productivity curves of units of fishing effort, where fishing effort is defined as the variable factor composed of combined doses of labour and capital applied to the fishery.  These revenue curves assume there are no fixed  costs and that the opportunity costs of the variable factor have been included.  The fishery has yielded an economic rent  which is equivalent to that found on intramarginal land at the intensive margin of cultivation.  The rent in the case of the  fishery is due to the productivity of the fishing ground and/or its location and is based on short-run considerations.  This  represents the optimum economic yield for this use. So far the model of the fishing industry is similar to that of most agriculture farmed under the English system of tenure, but if resources are held under common ownership, such as in the case of a sea fishery, then there are certain  - 86 -  • 3  necessary modifications.  If the fishermen do not have property  rights to specific salmon areas they will fish wherever they please and in so doing they will dissipate the rent of intramarginal grounds among all fishermen through competition.  If  the fishery has fishing grounds of varying qualities then the total possible rent from each ground will differ.  There will  be some grounds which are intramarginal and which will yield, under a secure tenure, a specific rent to the owner; likewise, there will be some fishing grounds which are marginal operations.  The product from these latter grounds will only suffice  to pay the opportunity costs of the variable factors.  The  optimum allocation of factors of production between these two fishing areas would be achieved when the marginal product from both grounds were equal, i.e., under the equimarginal principle. The marginal physical products of each fishing ground will he equated.  This can be seen in the diagrammatic example  which follows on the next page.  It is assumed that there is  only one species of fish caught and that the fishing grounds  3 For further information on this topic sees J. A. Crutch field, "Common Property Resources and Factor Allocation", Canadian Journal of Economics and Political Science. Vol. XXII No. 3, (August 1956), pp. 292-300; Scott H. Gordon," "The Economic Theory of a Common-Property Resource; The Fishery" Journal of Political Economy. Vol. LXII, No. 2, (April 195k), pp. 124-142, and "An Economic Approach to the Optimum Utilization of Fishery.Resources", Journal of the Fisheries Research Board of Canada. Vol. X, 1953, pp. 442-457; also, Anthony Scott, "The Fishery: The Objectives of Sole Ownership", Journal.of Political Economy. Vol. LXIII, No. 2, (April 1955), pp.  II6-I24.  - 87 -  are of equal size,, The rent that is present is partially due to the differing qualities of the grounds and partially to their scarcity,. AVeffAfig MAEGlfJtVL. PRODUCT of  Figure 2 y  NAP  CATMTM-  AMB  LFIBOU'K  Coses  If tenure were fixed, the optimum situation would be to allocate OA., OB and OC units of the variable factor to fishing grounds X, Y and Z respectively,,  If, as is the case, the  fishery is a common property resource, the variable factor would be dealt with differently,,  Fishermen are concerned with  marginal product when deciding to maximize total profit but in making a decision regarding individual trips they allocate time according to the average product of individual fishing grounds. The average product on fishing ground X is GO, on ground Y is NO, and on ground Z, R0„  These average products are not  equal, therefore from the individual fisherman's point of view, it is more realistic to increase the time on ground X rather than fishing ground Z 0  This behaviour will continue  -  -  until the average products and not the marginal products are equal among fishing grounds, and only then will the situation "be stable.  To achieve an equality of average productivities  among grounds would result in the exploitation of some fishing areas even when the marginal productivity of doing so is negative.  This negative marginal productivity will lead to an  increase in cost, so that the average cost will be equal on all grounds and the rent of the intra-marginal grounds will all be removed to meet the increased expenses.  Total cost and total  revenue will be equated as shown in Figure 3. Figure 3  v:  British Columbia salmon industry falls into the  category of a common property resource, and it had undergone conditions similar to those to be expected from the above theory.  It is difficult to be too specific as the salmon  fishery is not based on a small and limited fishing ground as are some demersal fish such as halibut, but rather encompasses the whole British Columbia coast.  Salmon fishing does have  - 89 -  some characteristics similar to those to be expected from theory and though there is no specific ground there are specific areas which will normally have high returns at various times of the year.  This is particularly true of  certain passages, straits, inlets and river mouths where the fleet is densely located due to the large runs which must pass through these areas.  The high density of vessels may be such  as to prohibit the proper usage of gear and men effectively. The Straits of Juan de Fuca are a prime example, and have in approximate terms experienced a rapid growth in fishing effort both by seine vessels and by gillnetters, the latter having grown from approximately five vessels in 1953 to 500 by 196l.  The increase in the number of seine vessels was no-  where near as large but they also did increase.  The congestion  due to the multitude of gear is so intense in this area that boats have to line up and wait their turn before they can set their nets. The Federal Department of Fisheries has the responsibility of ensuring the continuation of the various kinds of fish along the British Golumbia coast.  The Department attempts  to implement this policy by regulating the methods by which, and the times at which, fish may be caught commercially. Regulations have been introduced to limit or prohibit the effectiveness of various types of gear.  Some regulations have limited  the depth, length and place of nets, while others have prohibited the use of tangle nets and traps.  The use of power driven skiffs  - 90 -  on purse seine vessels was also prohibited at one time.  The  Department has divided the British Columbia coast into various fisheries areas, each of which is then controlled so as to allow a sufficient escapement to perpetuate the species in the rivers and streams of the area.  The escapement is assured by  the implementation of a system of closed areas.  Areas are  closed to fishing for a number of days per week during the season.  If the fishing fleet is particularly large or effect-  ive within an area, it soon manages to catch the permitted total of fish.  The Fisheries Department is then forced to in-  crease the length of the closed period.  Thus an increased  fleet results in fishermen and vessels being idle for longer periods of time.  The factor that has attracted these vessels  has been the economic rent which the fisheries could yield, but which the increased numbers have dissipated among themselves.  - 91 -  Chapter VI A Review of Capital Utilization and Remuneration  Chap ter V explained some reasons for the increased amount of capital used in the British Columbia fisheries. This chapter examines the growth that has taken place in this capital.  The pramary fishing industry employs many factors  to produce the total product of the industry.  I n the examina-  tion of the share system these were broken down into two distinct groups, capital and labour.  This and the next chapter  will examine these two groups in the context of the total primary fishing industry of British Columbia.  ..Before so doing,  it is necessary to have some ideas about the magnitude and variations in the factors of production during the period under study. CAPITAL INVESTMENT Capital investment in primary fishing is mainly in vessels and gear.  Fishing vessels have increased both in number  and in value since 1952, but the most significant factors are to be found in the changing size and composition of the fishing fleet. pattern.  Table 3 on the following page illustrates this changing During the eleven year period of 1952-1962, the number  of boats in the category "over-10-tons" increased from 913 to 1210 or by 32 percent and their value increased from $24,279,000 to #31,879,000 or by 30 percent.  Likewise, those in the category  Table 3  Number and Value of Boats in the British Columbia Fishing Fleet ' 1952 - 1962 Over 10 tons Year  Number  1952  913  1953  Value ($000)  Under 10 tons  Total  Number  Value (§000)  Number  Value (1000)  24,279  7,381  17,695  8,294  41,974  887  24,488  7,584  18,888  8,471  43,376  1954  915  24,740  7,535  18,116  8,450  42,856  1955  950  25,424  7,244  18,142  8,192  43,566  1956  959  25,590  7,034  17,553  7,993  43,143  1957  985  26,766  6,881  17,923  7,866  44,689  1958  1,002  27,025  7,175  18,306  8,177  45,331  1959  1,015  27,253  7,463  19,600  8,468  46,853  I960  1,048  27,935  7,575  21,666  8,623  48,601  1961  1,184  30,144  7,672  23,659  8,856  53,803  1962  1,210  31,879  7,933  26,032  9,143  57,911  Source I  Canada, Department of Fisheries, Fisheries Statistics of British Columbia. 1952-1962.  MD JO  - 93 -  "under-10-tons" showed some significant changes.  The number of  vessels fluctuated from year to year but over the entire period their numbers increased from 7 , 3 8 1 to 7,933 or by 7 . 4 percent. The total value of vessels in this category also increased from 117,695,000 to #26,032,000 or a gain of 47 percent during this period, thus representing a significant change in the relationship of small vessels as part of the total capital investment in fishing.  This change is all the more significant since the  1957 value is lower than that of 1952 and most ofpthe growth has occurred since this latter date.  Thus, in summary, the aggre-  gate fishing fleet has increased in numbers by 10 percent and by value by 37 percent. The fishing vessels in the "over-10-tons" group are either powered by diesel or by gasoline engines.  The number,  tonnage and value of these boats are given in Table 4 which follows on the next page.  An examination of vessels in the  "over-10-tons" grouping shows t the ffdull owing %  (a) that the major-  ity of these boats are diesel-operated (77 percent are in 1962 but the group of gasoline-powered vessels is growing at a faster rate than that of the diesel-powered vessels); and (b) that the average tonnage of vessels in the "over-10-tons" category has decreased both for diesel-powered vessels, which in 1962 averaged 27.1 tons, and for gasoline-powered vessels which averaged 11.2 tons.  In 1952, the corresponding tonnage figures were 28v.2 tons  and 14 tons respectively.  The average tonnage per vessel was  highest for gasoline-powered boats in 1956 when it was 14.1 tons.  Table  9  Inventory of Fishing Boats in British Columbia, 10 tons and over, by type of engine, 1952 - 1962 Diesel  Gasoline Number  Year  Number of Boats  1952  733  20,866  21,784  175  2,466  2,495  913  23,332  24,279  1953  713  20,729  22,006  169  2,466  2,432  887  23,192  24,433  1954  734  21,350  22,112  181  2,681  2,628  915  24,031  24,740  1955  766  22,534  22,918  184  2,503  2,506  950'  25,087  25,424  1956  774  22,931  23,006  185  2,652  2,584  959  25,533  25,590  1957  790  23,532  24,056  195  2,750  2,688  985  26,282  26,744  1953  804  23,726  24,333  198  2,759  2,642  1,002:':: 26,435  27,025  1959  805  23,605  24,491  210  2,395  2,762  1,015  26,500  27,253  I960  343  24,075  25,593  205  2,415  2,342  1,048  26,490  27,935  1961  901  25,029  26,976  283  3,290  3,168  1,184  28,319  30,144  1962  936  26,419  28,829  274  3,193  3,050  1,210  29,612  31,379  Tons  Value ($000)  Boats  Sourcej  Tons  Value ($000)  Total Boats  Canada, Department of Fisheries, Fisheries Statistics of British Columbia.- 1952-1962.  Total Tons  Total Value  ($000)  - 95 -  The highest average tonnage per diesel vessel was in 1957 when it averaged 29.8 tons.  This change in the average tonnage of  the vessels is reflected in the average investment per vessel. The average value of diesel-powered vessels has increased from $29,517 in 1952 to $30,790 in 1962, but for gasoline-powered vessels it has fallen from $14,275 to $11,135.  These figures  are in terms of current dollars and if they vrere deflated, the average value per vessel in real terms would have decreased for both diesel and gasoline vessels.  The decreased vessel  size can be partially attributed to the introduction of labour and capital saving techniques such as the power drum and power block.  ; It is interesting to note the growth in the number of  these larger vessels and to examine the categories Into which it has been concentrated.  This is illustrated by Table 5.  Over the eleven year period, 1952-1962, the number of seiners increased by only 3 percent, packers by only 6 percent, long1  liners  by 68 percent and collectors by 54 percent.  The major  growth has taken place in the number of multipurpose boats. The number of seiner packers increased by 64 percent, while the number of seiner longliners and longliner packers increased by 406 and 230 percent respectively.  The category "other"  increased by 42 percent. 'The annual rates of growth have not  1  Longliners are used for halibut fishing.  Table  12  Inventory By Type of Fishing Vessels, 10 tons and over. Engaged in British Columbia Fisheries. i952~^1952  Type of Boat  1 ^ 2  1212.  19Ik  m i  121A  1311  12SA  1212.  12£Q  l£6l  1962  Seiner  307  289  294  313  288  257  257  258  258  310  316  Packer  144  146  145  146  148  134  136  135  128  152  154  Longliner  41  V 67  57  50  56  36  34  33  31  71  69  Collector  50  39  41  45  44  35  37  43  47  72  77  Seiner-Packdr  37  46  65  61  62  57  57  57  54  60  61  Se iner-Longliner  15  19  26  28  48  39  40  40  42  63  61  Longliner-Packer  20  21  27  42  44  40  40  39  40  46  46  299  260  260  265  269  387  401  410  448  410  427  913  887  915  950  959  985  1002  1015  1048  1184  1210  Other Total  Sources  Canada, Department of Fisheries, Fisheries Statistics of British Columbia. 1952-1962.""  - 97 -  been constant in the various vessel categories throughout this period. M o r e th  an ever before the larger salmon seining  vessels are now also engaged in the halibut fishery at least part of the year.  It is not difficult to assess the reason  for this as the salmon fishery is only feasible for a limited period of time and if vessels are not utilized in other occupations they must lie idle. The. combination vessel is designed so as to be adaptable to a number of uses and therefore utilized for a longer period of time annually.  It has been suggested  that combination vessels, due to the adaptability of their design, are less efficient than they might be if they were specialized.  The smaller salmon purse seiners,for example, may  have a higher value of catch per unit of operating cost than do the larger purse seiners.  This high value of catch per unit  of operating cost is only obtained during a short salmon fishing season while during the remainder of the year the boat is forced to remain idle.  The overhead or fixed costs of the small seiner  can only be charged to salmon fishing while the larger seiners can charge their overhead costs partially to other fisheries. The category "under-lO-tons" can be further classified into boats of over and under 20 feet.  The type, number and  value of such vessels are examined in Tables 6 and 7-  The most  numerous category is that containing vessels under 10 tons but over 20 feet.  The number of gillnetters in this category during  the period under observation fluctuated from a high of 3,714 in  Table  9  Inventory of Fishing; Boats Under 10 tons in British Columbia. By Size and Type of Boats. 1952 - 1962" ! Over 20 feet  Under  20feet  Tear  Gillnet  Troll  Combination  Collector  Gillnet  Troll  Other  1952  3,714  1,582  292  178  114  1,116  384  1953  3,654  1,608  279  131  112  1,378  422  1954  3,607  1,441  289  158  76  1,483  481  1955  3,413  1,414  289  160  94  1,223  651  1956  3,359  1,390  270  151  101  1,166  588  1957  3,324  1,386  261  117  169  1,055  452  1958  3,169  1,444  317  120  259  1,382  484  1959  3,307  1,420  344  128  251  1,353  660  I960  3,174  1,598  403  127  271  1,363  639  1961  3,240  1,571  407  128  265  1,348  713  1962  3,425  1,570  55 0  145  376  1,252  715  Sourcej  Canada, Department of Fisheries, Fisheries Statistics of British Columbia.- 1952-1962.  Table  9  Value of Fishing Boats Under 10 tons in British Columbia. By Size and Type of Boats. 1952 - 1952"  ($000)  Over 20 feet  Under 20 feet  Year  Gillnet  Troll  Combination  Collector  1952  9,447  5,768  986  897  1953  12,145  6,120  1,049  1954  11,019  5,134  1955  9,417  1956  Gillnet  Troll  Other  41  359  187  746  14  349  107  974  855  34  38 7  176  8,084  1,111  838  30  361  134  10,038  5,095  1,021  797  36  334  132  1957  10,486  5,274  1,982  621  63  325  204  1953  10,254 •  5,473  1,077  653  121  398  231  1959  10,758  5,736  1,381  734  11:6:  495  380  I960  11,005  7,298  1,518  823  134  516  372  1961  12,872  . 7,141  1,802  857  137  506  344  1962  13,828  7,749  2,263  1;080  222  479  411  Sourcej  Canada, Department of Fisheries, Fisheries Statistics of British Columbia.- 1952-1962.  - 100 -  1952 to a low of 3,169 in 1958 or by 17 percent.  The total  number of gillnetter vessels declined during the eleven-year period by only 8 percent to a total of 3,429 in 1962.  The number  of trollers fluctuated similarly by 16 percent but they suffered a net decline of only one percent.  The high and low years for  trollers were 1953 and 1956 respectively.  As was noted earlier  in regards to vessels in the "over-10-tons" category, the real change was in the number of combination boats.  In the "under-  10-tons"and over 20 feet category, combination boats increased by 88 percent between 1952 and 1962.  The years 1958, I960 and  1962 were high growth years for such vessels; for example, the growth rate in this category was 35 percent between 1961 and 1962.  In summary, it can be said that the fishing fleet in the  "under-10-tons over 20 feet" category is diversifying operations into more branches of fishing.  its  The larger trollers  and gillnetters are being adapted to enable them to salmon seine part time and to be used for halibut fishing. The category of vessels under 10 tons and less than 20 feet has had the fastest rate of growth of any type of vessels solely engaged in salmon fishing.  These boats are mainly  gasoline or row boats operating in sheltered bays and, in particular, the mouth of the Fraser River.  The number of small  gillnetters has had the fastest rate of increase since 1952. These vessels increased in number from 114 in 1952 to 376 in 1962 or by 330 percent.  Trollers, likewise, have experienced a  increase though they only increased from 1,116 in 1952 to 1,252  - 101 -  in 1962.  Trollers are still the most numerous of the small-  type fishing vessels. The average value per fishing boat in the "under-lG tons" category operated in British Columbia during the eleven year period has increased fairly substantially.  The 1952 and  1962 average values were as follows! Over 20 feet Under 10 tons  Gillnetters Combination  1222  1962  $2,544 3,646 3,377  $4,037 4 936  5,039  7,421  Collector  4  115  Under 20 feet Under 10 tons Gillnetter Troiler  $  360 322  $ '  590 383  These values are indicative of the increased investment required for multi-purpose boats. In summary of the entire fishing fleet, it can be said that more and more frequently the larger fishing vessels are being built to engage in fishing for other species of fish as well as salmon.  The vessels that are engaged more specifi-  cally in salmon fishing are becoming smaller in size due, at least partially, to the progressive shortening of the fishing season.  There is an increasing emphasis on vessels which are  very small and operated by a crew of one or two men.  These are  the vessels which utilized the share system the least and which are operated by men whose regular full-time occupation is other  - 102 -  than fishing.  Another notable fact is the increase in the  number of fishing vessels falling into the category "other". It appears that fisheries other than salmon and halibut are being exploited to a greater degree than ever before.  The  actual number of vessels fishing each year varies depending on the expectations of the particular year's fishing opportunities.  Old vessels may be reconditioned and new ones may  be built when there are expectations of good catches.  The  construction of new vessels, however, appears rather to be related either to long-run expectations or to the ready availability of cash following a successful fishing season. The number and type of fishing vessels constructed in British Columbia between the years 1951-1952 and 1960-1961 are given in Table 8. GEAR The quantity of gear used in the British Columbia fishing industry has increased since 1952 in the salmon gillnet and salmon purse seine categories, though there has been a decrease in number of salmon troll lines and salmon drag seines. The number of skates of halibut gear has also declined.  These  facts are illustrated in Table 9. The number of gillnets used has increased by 29 percent while their total value increased by 40 percent during this period.  The average value of gillnets was #344 in 1952,  and this had risen to $371 in 1962.  This represents an £ percent  increase in the average value per net but also a ddcline in real  Table 8 The number and Type of Mew Boats Built in British Columbia By Types. 1.25.1...- ,1?61  Year  Gillnet  Troll  Table Seineri and Combination  Drum Seiner  Longliner and Combination  Other  Total  1951-52  242  17  12  7  1  7  286  1952-53  82  17  12  3  1  5  120  1953-54  25  11  1  -  -  2  39  1954-55  50  12  8  ' 1  2  4  77  1955-56  49  4  5  6  2  6  72  1956-57  42  11  6  1  2  1  65  1957-58  53  7  11  4  -  1  66  1958-59  80  25  1  2  1  2  111 a  1959-60  102  28  4  3  2  21  1960-61  94  33  b  -  c  24d  ...  160 155  a - 9 are gillnet combination and 3 troller combination, . b + c = 4 in total. d - 18 are gillnet combination and 6 troller combination. Source!  Information supplied by the Department of Fisheries of Canada, Vancouver, B.C.  Table 9 Inventory of Gear in the British Columbia Salmon and Halibut Fisheries, : . 1952 - 1952" : (Value in $ Million) Gillnet  Seine  Purse  Value  Number  483  1.6  2.6  463  6,535  2.4  1955  6,647  1956  Year  Number  Value  1952  7,437  2.6  1953  7,211  1954  Number  Drag Seine  aHaridaarid Troll Lines  Skates  Value  Number  Value  13  .005  14,875  .30  9,516  .35  1.4  11  .004  14,154  .39  9,334  . 42  467  1.4  8  .003  14,288  .37  8,474  .41  2.5  504  1.7  8  .003  13,686  .30  9,082  .37  7,014  2.6  499  1.4  6  .003  13,984  .34  8,804  .36  1957  7,416  2.6  503  1.4  8  .010  14,018  .34  10,014  .46  1958  7,5 62  2.7  518  1.5  5  .003  13,646  .36  10,392  .48  1959  7,436  2*4  516  1.5  16  .007  13,100  .45  8,683  .39  I960  8,022  2.7  509  1.6  13  .013  13,429  . .42  8,721  .40  1961  8,010  2.9  500  1.9  8  .006  13,451  .45  8,747  .41  1962  9,652  3.6  499  2.0  8  .011  12,732  •44  8,736  .43  Sourcej  Canada, Department of Fisheries, Fisheries Statistics of British Columbia.- 1952-1962.  Number  Value  - 105 -  terms.  The relatively small increase in the cost of gillnets  is quite surprising considering that much of the changeover from linen to nylon nets took place during this period.  The  number of salmon purse seines showed an 11 percent degree of variability over the period, and reached a peak total in 1958. They have continued to fall in numbers since then.  The average  value per net changed from $3,229 in 1952 to $4,034 in 1962. This represents an increase in price of 24 percent. seines, on the average, also increased in value.  Drag  The number of  troll lines has dropped continually, but there has been a steady change in the type of material used. Wire lines have now taken a dominant place in the industry.  Cotton alone accounted for  41 percent of all lines in 1952, while the total for cotton and nylon combined represented only 12.7 -percent in 1962.  The  total investment in salmon gear increased from $4,414,000 in 1952 to $6,077,000 in 1962.  This represents a substantial in-  crease of 37.6 percent. ANALYSIS The investment which has taken place during the last eleven years does not appear to have been warranted if one considers the actual conditions of the industry as of 1952. The post-war period was one of rapid expansion in the existing fishing fleet.  This was an expansion rate which reached its  peak during the years 1951-1952.  The fishing capacity of the  fleet had been expanded considerably by that time and yet expansion has continued until the present. What has warranted  - 106 -  this growth?  Expansion would have been necessary if the then  existing fleet was either unable to catch the total allowable catch or was able to do so but only at a higher cost than necessary.  This higher cost would be operative due to the  expansion in the use of the vessel beyond its optimum or most profitable output.  This does not appear to have been the case  as the number of days fishing allowed has decreased in most areas of the province during the entire period.  Capital equip-  ment has been used in the salmon fishery for shorter and shorter periods of time each year.  This would not be so bad if the  landed quantity of salmon had continued to increase, but in fact, the total landings per year of salmon have declined since 1952.  A four year average for the years 1951-1954, 1955-1958,  1959-1962 showed 181,407, 143,145 and 119,997 million pounds respectively.  This represents a decline of approximately 33  percent in the landed salmon weight over the period.  Thus, in  terms of salmon landings, the increased value of the fleet has not led to an increase in the total landings.  The decline in  the quantity landed was recompensed to some degree by the increase in the landed value.  The average value of salmon  landings for the years 1951-1954, 1955-1953, 1959-1962 was $23,594,000, $23,962,000 and $23,903,000 respectively, the last representing a 1.2 percent increase over the first.  But still,  in terms of the total salmon yield,there does not appear to have been a need for further investment. related salmon catches alone.  The figures above are  However, if the values of other  - 107 -  species of fish are examined they disclose the following.  The  average value of total fish landings in British Columbia for the years 1951-1954, 1955-1953 and 1959-1962 were respectively as follows:  $34,405,000, #36,934,000 and $37,044,000.  The  last representing a 7.6 percent increase over the first.  These  figures suggest that the increase in fishing capacity may not have been warranted if we can assume that the existing fleet in 1952 was only making a competitive profit, i.e., obtaining solely its opportunity cost.  If the fleet in 1952 was suffer-  ing from under capacity and high average cost, or, alternatively, an unusually high rate of return on the total investment, then it might be justifiable to increase its capacity. If it is assumed that 5 percent is a satisfactory rate of return on capital investment in the fishing industry, this would represent a rate of return in 1951-1954 of $2,098,000 and in 1959-1962 of $2,825,000.  A five percent rate of return  is probably too low considering the variability and uncertainty from year to year and the rate of return that could be earned on capital invested in comparable enterprises.  All this aside,  even if it is assumed that 5 percent is a sufficient return to capital, then during the period 1951-1954, 8.8 percent of the average annual salmon catch would have been required to meet this expense.  By 1959-1962, a similar 5 percent rate of return  on capital invested in the fishing fleet would have required 11,8 percent of the annual salmon landings.  If instead, the  rate of return is considered as a percentage of the average  - 108 -  value of all species of fish landed, then, 5.09 percent of this value would have been necessary in the years 1951-1954 and 7.6 percent in the years 1959-1962 to pay the rate of return on investment. The investment in the primary fishing industry is large and has grown at.a faster rate than the increase in average yearly catch.  During the 1951-1954 period, the value  of capital invested in the primary fishing fleet was equivalent to 177 percent of the annual value of the salmon catch, and this had grown to 242 percent by 1959-1962.  In other words,  the total value of salmon landed during the former period would have required 1.77 years to meet the total capital investment, while the latter would have required 2.42 years.  Once again  the situation does not appear to be so eerious if the total landed value of all fish is considered.  In this case the total  time required for repayment of the investment would be 1.23 years in 1951-1954 and 1.56 years in 1959-1962.  The growth in  the value of landings of other species of fish rather than salmon has reduced the apparent increase.  There is, however,  no real reason why in fact the average life of the capital investment may not have increased. of capital deepening at work.  There may have been a factor  This is certainly true in regards  to the increased use of electronic equipment.  A process of  capital deepening can possibly explain, at least in part, the increased amounts of capital devoted to capturing salmon. What has been the role of the share system during- this  - 109 -  period of increased capital investment?  In the earlier dis-  cussion of the share system and innovation^ it was indicated that the share system hindered the rate of innovation by forcing the entrepreneur to demand that the value of the total product of his investment be at least 2.75 times his original cost.  If an innovation did not have a yield of this magnitude  the entrepreneur would not implement it.  The same criterion  which applied to innovations can be applied to investment in the salmon seine fleet.  This criterion implies that the share  system will under-allocate capital to the fishing fleet. However, if the share system has a restraining effect on the rate of capital investment in the fishing industry it is not easily noted.  In fact, the vessels which operate at least  partially in branches of the fishing industry which use the share system, notably salmon and herring seining and halibut longlining, are among those which have increased in numbers at the fastest rate between 1951-1961. There are a number of possible explanations as to why the share system is not having the effect that was to be expected. The first explanation is to be found in the common property nature of the British Columbia sea fisheries.  This common pro-  perty feature, as was noted in Chapter V, encourages the use of more vessels than would be utilized if the fisheries were exploited as a private property.  The second reason for the increased  number of boats is the regulation of the fisheries which has led to a shortened fishing season and a need to capture as many fish  - 110 -  as possible as soon as possible after the season opens.  The  shortened fishing season for the various individual species has led to the increase in the number of multi-purpose boats and to an increased need for fishermen to man these vessels.  - Ill -  Chapter VII A Review of Employment The innovations and changes in capital investment discussed in the preceeding chapter have had important effects on the demands for labour and the composition and work habits of the labour force engaged in the fishing industry.  The  fishing regulations imposed by the Federal Department of Fisheries and the International Pacific Salmon Commission have tended to foster an increase in the number of people going fishing by their regulations which (a) stimulate the capture of as many fish as possible, as quickly as possible, and (b) prohibit the use of most effective gear, for example, monofilament nets.  Fishermen, as noted in the introduction, are a highly  diverse and complex group.  It is difficult to define what  actually constitutes a commercial fisherman.  The first prere-  quisite, of course, is that he possesses a license to fish commercially.  let many people who have commercial fishermen's  licenses, in fact, are not truly engaged in fishing to any large extent.  Some people buy commercial fishing licenses with no  intention of really engaging in selling their catch but rather to enable them as individuals to exceed their limit as sports fishermen, although since 1955 the regulations have required all licensees to sign an affidavit that they are catching fish that are to be sold.  Other Individuals have been known to take out  licenses in the hope of avoiding taxes on their boats which are really pleasure crafts.  This is illegal since boats to be exempt  - 112 -  are to be used solely for commercial fishing.  Fish packers, for  instance, are not exempt from the sales tax, as they are considered to be a type of storage facilities.  The hope of avoiding  the five percent social services tax gives some incentive for individuals to claim that they are commercial fishermen since the latter are exempt from social services tax for all equipment that is used in commercial fishing, and much of this can be used for purposes other than fishing. Another reason for individuals claiming to be commercial fishermen when in fact they are not is in the discounts they can obtain as fishermen for gear and parts. The best figures that are available on employment are relatively recent.  In 1953 the Department of Fisheries began to  examine the number and nature of the fishing licenses sold. Their procedure presents some difficulty as not all fishermen are required.to take out licenses and some fishermen are engaged in fishing for more than one species of fish. The information provided gives some indication of the changing patterns in the fishing industry.  Since 1953 "the number of licensees, that is 1  people holding at least one license, has increased as follows? 1953 Year 1954 1955 1956 1957  12,008 Mo. of Licensees 12,680  11,860  10,853  12,016  1958 Year 1959 1960 1961  14,266 No!-of Licensees 14,463 14,191  15,660  1 Canada, Department of Fisheries, Fisheries Statistics of British Columbia. 1961, Ottawa, Queen»s Printer, 1962, Table 8.  - 113 -  Even if a four year moving average is applied to smooth out the cyclical variation from year to year, the increase in the number of fishermen between 1953 and 1961 amounts to 25.6 percent.  A four year moving average gives the following result?  1953-1956 1954-1957 1955-1958 1956-1959 1957-1960 1958-1961  Total  Yearly Average  47,401 47,409 48,995 52,598 55,936 59,580  11,350 11,852 12 249 13149 13 984 14,890  Further examination of licensees also discloses another important fact; the number of individuals holding more than one license has increased each year as is shown on the following tables Year 1953 1954 1955 1956 1957 1958 1959  1960 1961  2  One License Only 9,844 9,885 8,643 §,219 8,819 10,486 10,896 10,577 11,533  Two Licenses 1,904 2,397 2,552 2,167 2,556 2,992 2,816 2,771 3,240  Three or more  .  260 398 665 467 641 788 751 843 887  Total 12,008 12,680 11,860 10,853 12,016 14,266 14,463 14,191 15,660  This is a significant change and represents a movement into multi-license holdings by some fishermen, and in part accounts for the increased catch of other species.  This movement into other  2 Canada, Department of Fisheries, Commercial Fishing Licenses. British Columbia. 1961. Vancouver, 1962, Table 6.  - 114 -  fisheries is due in part to a need by the fishermen to earn more income to cover their higher investments, and to utilize the capital investment in the vessel more efficiently.  The  shorter fishing season for most species due to the larger numbers fishing and to the improved equipment used has accentuated this movement.  The three groups of license holders repre-  sented on the above table experienced varying rates of increase between 1953 and 1961.  The one license only group increased by  17 percent, those with two licenses by 70.1 percent and those with three or more licenses by 341 percent.  Though multi-license  holding increased rapidly, it represented only 26.3 percent of the total licensed fishermen in 1961.  Probably the most striking  phenomenon is the change in the composition of the t y p e s of fishermen making up each group.  During the nine year period,  the number of fishermen in each license category varied, but this does not appear to have affected the development of some noticeable trends.  The license categories of fishermen are as  follows: gillnet, troll, captain salmon purse seine, assistant salmon purse seine, halibut, captain herring purse seine, assistant herring, and others.  In the group containing single  license holders all major categories showed gains except two; captain salmon purse seine and assistant salmon purse seine showed declines.  However, if the numbers of salmon purse seine  captains and assistants are examined in the two and three license groups, there is a notable increase.  In brief, It appears  that captains and crew members.-on salmon seiners turned to other  - 115 -  fisheries, particularly herring, to supplement their incomes. The majority of salmon purse seine captains who held two licenses were engaged either as captains or assistants on herring vessels.  Halibut fishing also is showing a greater appeal than  formerly to these seine captains, and it is this fishery which has seen the greatest expansion in recent years.  The salmon  purse seine assistants have usually held a variety of other licenses.  For many, their second license was either for trolling  or for herring seining, but in recent years the former has decreased slightly, and herring has also shown a slight decline if examined with a four year moving average.  The greatest growth,  as is to be expected from the above examination of seine captains, has been in halibut and other fisheries. The most pronounced change was in the number of fishermen holding three or more licenses.  The number of purse seine  captains in this category increased rapidly, but it is the number of salmon purse seine assistants who also hold herring and halibut licenses that has increased most rapidly. Having a commercial fishermen's license does not necessarily mean that the holder actually engages in fishing the type of gear listed on his license, particularly if he holds more than one license.  This problem was mentioned earlier.  It con-  tinues to exist and is an inherent part of the statistics which cannot be easily excluded.  It is a factor which limits the use-  fulness of any measure of employment in the fisheries by means of licenses.  - 116 -  When dealing with employment, it is possible to measure the total of those working during a particular period of time, but in the fisheries, in particular, it is also useful to know the rate of turnover among fishermen.  Fishermen along the  British Columbia coast appear at first glance to be a relatively transient group in terms of their mobility into and out of the industry. the  1961  An analysis by the Federal Department of Fisheries of  licensees notes that only  23.4  percent or  3,668  fisher-  men of the total 15,660 individuals fishing had actually fished during each of the nine years in which the survey of licensees 3 was conducted.  Of all the 1961 licensees, a total of 43.1  percent had held licenses for between 6, 7, 8 and 9 years, while in the same year, 24 percent of the total number of licensees were in their first year as license holders.  A most noticeable  fact concerning all the years surveyed was the large number of fishermen holding licenses for the first time.  The following  statistics show the annual number of new licensees entering the fishing industry for the first time:^ Year Number 1954 1955 1956 195$ 1958 1959 I960' 1961  2,235 2,392 1,775 2,303 3,673 3,843 3,036 3,754  Percentage of Yearly Total Licensees 17.6 20.2 16.4 19.2 25.7 26.6 21.4 24.0  3 Commercial Fishing L-icensees. British Columbia. 1961. Table 2. 4  Ibid.. I960. 1961. Table 3.  - 117 -  It seems that recruitment into the fishing industry occurs at a relatively fast rate, and there is no shortage of individuals wishing to go fishing commercially, at least for the first time.  This high rate of recruitment of first year  fishermen is a major factor in maintaining the growth in the." number of fishermen engaged in the industry.  Though the industry grew  at a rapid rate throughout this period, it has not increased to the degree that it would at first appear.  Recruitment into the  industry has been exceedingly high, but so indeed has been the number of departures shown for the years 1957-1961 in the 5  table below:  Year  Mo. Failing To Renew  1957 1958 1959  2,528 3,943 4,696  1961  3,770  1960  4,380  Percent of Yearly i^Total Licenses 23.0 32.8 32.9  30.3  26.6  In the above years, approximately 29.1 percent of the fishermen licensed ih each of the previous year failed to renew their licenses.  The year 1958 is particularly noticeable as this is  the year of the large Adam's River run, a factor which has been suggested as being responsible for the high rate of recruitment, yet even in this year, 32.8 percent of the individuals fishing  5 Commercial Fishing Licenses of British Columbian I960. : 1961.' Table 4. :  - 3014 -  in 1957 failed to renew their licenses. appears to be high.  The rate of turnover  This could be a factor in leading to high  costs in an industry which prides itself on the need for a high degree of skill to ensure success.  The Canadian Department of  Fisheries in I960 examined the level of experience of those fishermen who engaged in fishing over a period, 1953-1960.  The  survey results which are produced below in Table 10 suggest that there is a hard core of individuals who continue to fish virtually every year and that there is a large floating group who remain, from one to three years.  This survey notes that of  the 32,057 Individuals who had held licenses for at least one year during this period, a total of 10,455 had purchased licenses in only a single year.  This group of single-year license  holders does not include those who purchased licenses in I960. Therefore, almost a third of those individuals who bought licenses held them for a single year only, and appear to constitute by far the greatest number of those fishermen leaving the industry annually. A noteworthy fact is the distribution of experienced  6 fishermen among the various fisheries districts.  District 2  had the highest relative percentage of experienced fishermen in I960.  District 3, on the other hand, in I960 had the highest  6 There are three districts in all along--the coast. District 11 is confined to small areas around Greater Vancouver and District 3 is comprised of all other fishing areas to the south of Cape Caution, a point just north of Vanrouver; it also includes both the east and west coast of Vancouver Island and Juan de^ Fuca Straits. District 2 encompasses all areas north of Cape Caution.  - 119 -  Table 10 Number of Licensees in Each District by Years - 1953-1960 Dist 1  Dist 2  Dist 3  Total  Percent of Total  1,333  737  1,425  3,995  12.5  617  333  464  1,414  4.4  342  201  369  912  2.8  290  169  345  804  2.5  376  161  450  987  3.1  667  1,260  3-9  In all 8 years, 1953-1960 In 7 years including I960 In 6 years including I960 In 5 years including I960 In 4 years including 1960 In 3 years including I960 . In 2 years including I960 and 1 other In 1959 and I960 In 1 year I960  443  145  172 .455 1,279  62 186 320  Sub-Total I960 Licenses  5,312  2,314  6,065 14,191  44.3  not i©60 not i 9 6 0 not I960 not I960 not i 9 6 0 not i 9 6 0 not i 9 6 0  133 212 267 332 .623 1,413 4,283  72 122 154 162 266 .436 1,030  146 351 200 534 312 733 376 920 675 1,564 1,455 3,3.0.9 5,142 10,455  1.1 1.7 2.3 2.9 4.9 10.3 32.5  Sub-Total Other Years  7,313  2,242  8,306 17,866  55.7  13,130  4,556  14,371 32,057  100.0  41.0  14.2  In In In In In In In  7 years 6 years $ years 4 years 3 years 2 years 1 year  but but but but but but but  Grand Total Percentage of Total Sources  206 . 440 .702 1,343 1,437 3,036  44 • 3  1.4 4.2 9.5  100.0  Canada, Department of Fisheries, Commercial Fishing Licenses, British Columbia, I960, Vancouver;' 1961, Table 1.  - 12.® -  percentage of inexperienced fishermen, and throughout the period of the survey, from 1953 to I960 inclusive* has had the highest rate of turnover or the highest number of individuals who have held licenses for only a single year. The category of fishermen engaged in salmon fishing who appear to spend but a single year in the fishery are usually trollers and salmon purse seine assistants and/or a combination of such licnesees as is shown in Table 11 below:  Table 11  Type and Percentage Failing to Renew Their Licenses in Selected Years. 1957. 1959. I960 and 1961  Gillnet and/or Combination Captain salmon and/or Comb. Troll and/or Combination Asst. salmon and/or Comb. Halibut only Other  15-2  6.3 24-9 25.9 45.4  Average Percentage Sources  1919,  1960  1961  30.9 10.2 40.4 30.6 21.0 29.8  23.1 5.7 24.9 27.9 39.3 56.8  19.7 6.2 32.2 28.1 29.3 36.8  32.9  30.3  26.6  Canada, Department of Fisheries, Commercial Fishing Licenses, British Columbia. 1957T 19,59. 1960 and~1961. Vancouver. Table 4d.  However, the group of fishermen holding only halibut licenses, or who fall into the category of ="other" licenses, have in recent years had a poor rate of renewal.  The salmon purse seine  captains appear to be the most stable category, as is probably to be expected as they are frequently committed to the industry  - 121 -  more or less permanently due to their ownership of large fishing vessels, or to purchasing such vessels on a long-term basis. The salmon purse seine captains appear in most cases to be in the higher earning group of fishermen.  This will be noted  later when the earnings of various types of gear are examined. The rate of turnover among districts for fishermen using different gear also varies, but it appears to bear a close relationship to the quantity of the particular type of gear in the district.  The following table shows the number of licensees  and their license holdings by district in 1961s'''  Salmon Gillnet Salmon Gillnet and Combination Captain Salmon Purse Seine Captain Salmon Purse Seine and Combination Salmon Troll Salmon Troll and Combination Assistant. Salmon Purse Seine Halibut Only One Other not Salmon Other Combination not Salmoni Total Percentage  Pist 1  Dist 2  Dist 3  Total  2,683 927 54  724 319 55  513 472 77  2,925 1 713  145 969 160 526 183 414 71  55 440 133 296 165 82 30  71 3,302 $81 672 52 322 18  271 4,711 1 174 1*494 '399 818 119  6,704  2,419  6,537  42.8  15.5  41.7  15,660 100  Salmon gillnet is the most important type of license in Districts 1 and 2 though the number of gillnet licences in District 2 is only approximately one-third of the District 1 total.  Trolling  7 Commercial Fishing Licenses of British Columbia. 1961. Table 5b.  - 122 -  licenses are by far the most popular type of license in District 3 and this district accounts for approximately three quarters of them.  Captain salmon purse seine licenses are most important  in District 1, followed by Districts 3 and 2 respectively. However, District 2, which usually accounts for approximately 15 percent of the total licenses issued, is well represented in seine licenses.  District 1 accounts for the largest number  of captain salmon purse seine and combination licenses and it appears that individuals from District 1 fall into the category of those who are most likely to engage in other fisheries. This may be accounted for by the fact that fishermen from this region are possibly more aware of their opportunity income elsewhere.  - 123 -  Chapter V I I I Fishermen's  Incomes  The two previous chapters have dealt with the employment of resources in the fishing industry, but there is still one major sector that has to be examined, that is, the rate of remuneration these factors have received.  These have been  reviewed in terms of some individual projects and some individualcvessels.  This still does not answer the question as to  how the salmon fishing industry is faring in the aggregate, for it is important to know the remuneration that is being achieved per unit of effort by the various segments of the industry. The income of fishermen as individuals appears to show great variability between high and low extremes.  There are numerous  factors which may account for this, and the share system is but one among many..  Earlier in Chapter II there was a discussion  of the reasons for the presence of the share system in the fishing industry,, and of the fact that the monetary of failure were partially shifted to fishermen.  consequences  It was noted  that this risk-bearing function was certain to have some effects on fishermen's earnings, depending on their propensity to accept the consequences of failure.  It has been suggested that most  fishermen are willing to accept this risk-bearing function and do not impose a price for doing so.  Whether this is in fact  true has not been tested but the truth of this statement depends upon both the collective and individual attitudes towards  - 124  -  gambling and the possible chances of obtaining abnormally high incomes. The problems of determining a fisherman's income are, however, more inclusive than solely determining a fisherman's attitude to risk-bearing.  What are the constituents of a  fisherman's income? Fishermen'receive part of their income a!s a share payment for the work they perform while engaged on the vessel. Fishermen also receive windfall profits, on capital that has been invested by the vessel owner, as a constituent of fishermen' incomes.  These profits may be due to the fortunate invention  and implementation of an innovation or new technique.  These  profits are basically a windfall gain,since the fishermen have not been required to invest in the new innovation, and yet they have been assured of a share in the increased productivity the innovation has yielded.  Few occupations can offer their workers  such a certainty of sharing in the increased productivity of the industry. Though this is true, the share system has a particular effect on this segment of fishermen's income, since through its operation it may theoretically slow down the development and modernization of the industry and thereby the maintenance or growth of fishermen's incomes in comparison with labour incomes in other sectors of the economy.  The reduced growth rate of the  industry is a possible consequence of the share system's failure, on occasion, to allow a sufficient remuneration to capital.  - 125 -  Individual fishermen must be paid at least as much as the opportunity incomes they must forego by staying in the fishing industry.  This is assuming that they are aware of  other opportunities and are sufficiently mobile to take them up. If this is not the case, then fishermen will possibly have incomes lower than their opportunity incomes and will represent a misallocation of resources to the fishing industry which could be used more efficiently elsewhere.  The prevalence of such a  situation has been suggested as being possible because of the number of fishermen who continue to remain in the fishing industry while earning low annual incomes.  It is also possible  that some fishermen may be paid a wage higher .than their next best opportunity, and that they may in fact be earning a quasirent on their services. Gillnet, seine and troll fishing have accounted for varying percentages of the total catch over a number of years, but the results of the landings per average licensee have not yet been examined.  The remainder of this chapter intends to  determine the remuneration fishermen are really receiving and whether they a r i n fact, receiving earnings which are equivalent to their opportunity costs.  Before examining the various  returns to the specific type of licensee, there will need to be some qualifications which will apply to all types of gear.  The  tables below list the salmon landings, by weight and value, of fishermen using each type of specific gear.  This value is the  total value for the entire catch, and includes the boats' shares.  - 126 -  The number of days fishing for salmon by each type of gear is also noted.  This provides a good measure of the degree of  effort required to land the specific catch.  This figure is  related to the number of boat days that were fished, and is not related to the number of fishermen per boat. The number of days fishing is not completely accurate in the case of troll beeat;ssas these vessels sometimes fish for more than one species of fish on a specific day.  The number of licenses  issued presents some difficulties since a growing number of fishermen are holding more than one license.  This difficulty  in classification.hassbeen overcome by setting up an ordering, or ranking, of those fishermen with more than one license. Any fishermen with a gillnet license has been placed in the gillnet category even though he may also seine part-time.  Seine license  holders who also hold troll licenses, or any other licenses except salmon gillnet, would for this analysis be classified under the seine category.  The total of troll license holders  will therefore not include those licensees who hold either salmon gillnet or salmon seine licenses in combination with a troll license.  The tables also display the annual landings by  weight and value per licensee.  The resulting figures for gill-  net and seine licenses appear relatively correct, but those for trollers appear to have been influenced greatly by the number of fishermen who have taken out commercial troll licenses and yet sell few fish commercially.  - 127 -  GULNETTIHG  (See Table 12 on next page)  Gillnet vessels have experienced decfeasing landings of salmon by weight throughout the eleven-year period, but the decline in value has not been as severe.  A noticeable  trend throughout this period has been the decline in the number of days of actual fishing, and the increase that has occurred in the average daily landings.  The latter has shown an upward  trend though there were some particularly poor years, notably 1956 and I960.  The average daily return per gillnet vessel has  also shown an increase.  The above information has been related  to the returns per unit of effort in the fishery, and not "to-; the number of individuals among whom this reward has been divided. In the previous chapter, the number of licensees engaged in fishing was examined but it is only now that the real significance of the increased number of fishermen can be truly seen.  The annual catch per license has declined, particularly  in terms of the weight landed but also in terms of the value. The annual value of landings per license has fluctuated between |2,636 and $1,696 per year over the eleven-year period.  This  avdrage value has to remunerate the fisherman for the cost of the vessel as well as for his labour.  N 0 deductions have been  made for fuel and other operating expenses.  Such expenses as  these were sampled in 1953 and 1954 by the Department of Fisheries.  The results suggest that the average cash operating  expenses of gillnet vessels drawn from a random sample were  Table 12 Gillnet Caught Salmon by Weight and Value in Relation to the Effort and Number of Fishermen Licensed, 1951 _ 196j  Year  Landings (Million Pounds)  Value (#000)  Number of Days Fishing  Average Landings Per Day Lbs.  Average Return Per Day  Number of Actual Licenses Issued  $ '..  .^Yearly Yearly Value LLaiidings of Landings Per LicPer Licensee ensee, Lbs. : : f •  1951  81.66  13,070  235,682  346  55.45  5,635  14,492  2,319  1952  63.19  10,107  167,538  389  50.80  5,272  12,365  1,917  1953  76.64  10,161  204,826  374  49.60  5,203  14,730  1,952  1954  77.05  10,582  201,252  383  52.60  5,031  15,315  2,103  1955  52.20  7,396  165,061  316  44.80  4,361  11,970  1,696  1956  52.47  10,427  182,744  287  57.06  3,955  13,267  2,636  1957  57.79  7,8 30  128,171  451  61.57  4,466  12,940  1,753  1958  76.86  14,711  174,825  439.6  84.15  5,590  13,750  2,632  1959  45.91  8,851  138,985  330  63.68  5,064  9,066  1,748  I960  37.28  9,060  143,650  259.5  63.07  4,984 .  7,480  1,818  1961  56.03  12,950  128,171  437  5,840  9,594  2,217  Source?  101.04  Blake Campbell and S..L. Young, An Analysis of Gross Returns from Fishing in British Columbia by type of Gear Licensed in 1951 Fishing Year; Also" Canada, Department of Fisheries, British Columbia Catch Statistics. 1951-1961; Also unpublished information supplied by the Department of Fisheries of Canada.  - 129 -  $1,422 in 1953 and $1,366 in 1954-1  These expenses have in-  creased slightly in conjunction with the general increase'in prices since this survey.  These costs would appear to show that  the average rate of return per fisherman would not be large and that, in fact, in many cases the average fisherman appears to be only just covering his costs. This,however, is not completely true since some vessels are operated by more than one license holder, and the average return of two licenses should be compared with the operating costs.  Other information on the cost of oper-  ating gillnet vessels in the Sfceena River region indicate that the annual average operating expenditure per boat ranged between *  $1,500 and $2,000 during the 1953-1957 period.  p  This gross in-  come per annum from salmon has been earned during an ever shortening season.  In 1951 the average gillnet licensee fished 41.8  days, but by 1961 the season had been reduced to 21.9 days. This reduced fishing time has been brought about by increased closures during which commercial gillnetters are unable to fish. TROLLING  (See Table 13 on next page) The aggregate catch of all trollers declined in weight  over the eleven year period.  This decline was, however, not re-  flected in the value of the catch which increased.  The number  of days fishing remained relatively constant reflecting somewhat 1 D.R. Buchanan and B.A. Campbell, The Incomes of Salmon Fishermen in British Columbia, 1953-1954, Ottawa, Economics Service, Department of Fisheries of Canada, I957, P' 44, Table 16. 2  Sinclair, License Limitation - British Columbia, p. 173.  Table 12  Effort and Number of Fishermen Licensed. 1951 - 1961 Year  Landings (Million Pounds}  Value (#000)  Number of Days Fishing  Average Landings Per Day  Average Return Per Day  Number of Actual' Licensee-. Issued  to the  Yearly Yearly Value Landings of Landings Per LicPer Licensee ensee .Lbs . r~  1951  29.18  :-5.;i92  132,873  219  39.00  5,129  5,689  1,012  1952  27.73  4,053  120,405  213  31.11  5,272  5,269  770  1953  25.94  3,951  120,736  215  32.71  4,733 .  5,475.  772  1954  20.34  3,802  109,110  136  34.34  4,530  4,441<;  856  1955  22.98  4,728  112,983  203  41.84  3,915  5,370  805  1956  22.98  5,751  107,349  214  53.57  3,561  6,453  891  1957  26.32  4,939  123,344  213  40.04  4,373  6,019  821  1953  26.54  6,853  132,849  200  51.58  5,512  4,315  1,243  1959  23.96  5,377  130,147  142  45.16  6,084  4,103  966  I960  16.24  5,256  132,120  123  39.78  6,165  2,634  853  1961  23.56  6,605  123,344  199  53.55  6,682  3,676  988  Sources  '  Blake Campbell and S.L. Young, An Analysis of Gross Returns from Fishing in British Columbia by type of Gear Licensed in 1961 Fishing YeafTUso Canada, Department of Fisheries, British Columbia Catch Statistics, 1951-1962; Also unpublished information supplied by the Department of Fisheries of Canada.  - 131 -  the lack of closures, as they are not applied to trollers.  The  year 1962 was one of particularly heavy fishing by this type of gear with 133,550 fishing days being recorded, the highest on 3 record. Average landings have fallen slightly throughout the period, but the average value per landing has increased slightly. The number of troll licensees has continued to increase in number and the yearly landings per licensee have declined both in weight and value.  The average number of days fishing has also  diminished from 25-9 days in 1951 to 18.4 days in 1961.  This  latter change can be explained almost exclusively by the increase in the number of part-time or evening fishermen who make only occasional deliveries.  This was noted earlier when the increased  number of small vessels was examined in detail.  During 196l,  the Federal Department of Fisheries examined the distribution of the troll catch among licensees.  Their findings showed that  1,799 out of a total of 6,682 licensees failed to sell any fish and that 69.7 of the fishermen who made fish sales received 4 less than |1,000. SEININfr  (See Table 14 on next page) Salmon purse seine operators have experienced condi-  tions quite similar to those experienced by gillnetters. 3  The  British Columbia Catch Statistics, 1962, p. 15.  4 B.A. Campbell and S.L. Young, An Analysis of Gross Returns . From Fishing in British Columbia by Type of Gear Licensed 1961 Fishing Year. Ottawa, Economics Branch, Department of Fisheries. Table 10.  Table 12  Seine Caught Salmon By Weight and Value in Relation To the Effort and Number of Fishermen Licensed 1951 -"1951 ~~~—~ Year  Landings (Million Pounds}  Value ($000)'  Number of Days" Fishing ^  Average Per Day Lbs.  Returhs* Per Day  $  Number of Actual Licenses Issued Assistant Captain  Total  Yearly Landings Per Licenses Lbs.  ; Yearly Value of Landings " Per Licensee  510  2,922  30,599  3,415  2,328  46 5  2,893  19,744  1,775  391  2,647  481  3,128  27,774  2,777  4,959  537  2,851  *  525  3,406  24,662  2,670  17,174  3,376  359  2,714  *  540  3,254  17,818  1,893  5,178  13,644  3,044  380  2,252  +  489  2,728  15,157  1,889  51.21  6,020  12,873  3,973  468  2,701  +  516  3,217  15,919  1,871  1958  81.45  15,565  14,867  5,479  1,047  2,377  518  3,395  23,991  4,585  1959  38.55  5,775  12,878  2,993  448  2,641  515  3,156  12,215  1,830  I960  24.07  4,085  13,448  1,790  304  2,551  496  3,047  7,900  1,341  1961  44.73  6,597  12,873  3,475  512  2,836  -f- 489  3,325  13,453  1,984  1951  89.41  9,980  16,773  5,331  595  2,412  1952  57.12  5,140  10,550  5,414  489  1953  86.88  7,538  19,246  4,514  1954  84.OO  9,093  16,940  1955  57-98  6,613  1956  41.53  1957  Source;  *  Blake" Campbell and S.L. Young, An Analysis of Gross Returns Frorci Fishing in British Columbia by Type of Gear Licensed in 1961 Fishing Year; also Canada, Department of Fisheries., British Columbia Catch Statistics, 1961-1961; also unpublished information supplied by the Department of Fisheries of Canada.  - 133 -  total seine catch appears to have shown a relative decline compared .to that of giljnets, though this decline seems to have a cyclical movement.  Seiners have been ihethe high-catch vessel  category during the peak sockeye years of 1950, 1954, 1958 and 1962.  The decline in seine catches as a percentage of the  total catch has been quite significant, though this downward trend has not been reflected as greatly in terms of the value of landings.  The number of days fishing per vessel has de-  clined, as has the average daily weight landed.  The average  daily return has remained relatively stable with only a small decline.  The number of fishermen engaged in salmon seining has  increased, though in terms of licenses issued there are both more trollers and more gillnetters.  There has been a decline  in the annual landings per licensee and in the annual value of such landings.  The number of assistant purse seine licenses  has increased at a faster rate than those for captains.  This  appears to be a rather odd phenomenon as many of the table purse seine vessels are being converted to drum seiners and therefore require smaller crews.  A possible explanation may lie in the  fact that with the increase in multiple license holding some individuals are obtaining assistant seine licenses to allow movement between various segments of the industry.  Another  possible reason for the increase in assistant seine licenses may be a fear of entry restrictions into this segment of the fishery after publication of the Sinclair Report.  The increase  in the number of combination vessels will also have had some  - 134 -  effect, particularly combination trollers and seiners which are classified solely under seine vessels in regard to the number of licenses.  The number of days of salmon seine fishing per  purse seiner has declined from 32-9 days in 1951 to 27.9 days in 1961.  Both these years were noticeable for relatively high  average daily catches. The information which has been presented in Table 14 is difficient if one seeks to obtain the actual earnings which are equivalent to earnings in other enterprises.  All the  values given per licensee are in the gross form, i.e., no deductions have been made, to cover the necessary expenses that have to be incurred to earn this income.  For comparative  purposes, it is best to have a net income per fishermen.  The  income or yearly value of landings per licensee is a difficult variable to examine and assess,particularly for seine fishermen. Earlier it was noted that purse seiners had varying sizes of crews, and that the total catch per vessel was divided among these members under the share agreement.  The information given  in Table 14 applies only to the gross earnings per crew man or licensee, and does not refer in anyway to the boat's share which must still be deducted from this total.  If the operating  expenses are ignored for the time being, then it is possible to derive the crews' share of the vessels average daily catch; This is accomplished by reducing the average returns per day 4/llths, i.e., the boat's share.  The yearly value per licensee  excluding the boat's share may also be derived in a similar  - 135 -  manner.  The results of these computations are shorn in the  following table t  Year-  Average Crew's Return Per Day -ft  Yearly Value of Landings Per Licensee Exeluding Boat's Share -'  378 312 249 342 228 242 298 666 285 193 326  1951 1952 1953 1954 1955 1956 1957 1958 1959 I960 1961  ~  '  $  2,175 1,142 1,768 1,701 1,206 1,203 1,192 2,992 1,166 855 1,265  Both of the above estimates are still in a gross form since no deduction has been made for the expenses incurred in obtaining this income.  There are some deductions  still to be made from the above though these do not appear to be too large.  A method for deriving net income will be  discussed later in the chapter. To supplement the information on gross earnings that is derived in Table 14 and the table above, an attempt was made to secure a sample of fishing vessels listing the entire value of their catch during a ten year period.  The sample consists  of 31 vessels, the catches of which are recorded in Table 15. The sample, which is based on availability of data rather than  To-fol~law-page—131  Table 15 Annual Dollar Value of Salmon Seine Catch  Vessel Number  1952  m  i  m k  15,432  15,720  10,345 8,829  13,936 18,707 18,436  21,557 14,442 11,338 13,918 16.604  38,018 31,576 57,020 33,027 27,457  24,072 46,463  12 13 14 15  12,864 10,547 15.605 17,796 16,447  13,976 12,498 23,262 26,693  18,180  16  18,603  13,453  36,975 17,786 23,657  8:^542  20,121  1  2  3 4 5  6 7 9  10 11  17 18  19  20  14,128 10,460  18,018 22,011  10,953  35,293  20,447  23 . 24 25  26,204 13,383 15,698 9,739 8,351  29,546 15,010 22,432  26  17,163  29 30  13,955 16,085 20,171  31,941 14,838. 24,803 74,568 26,077  31  9,822  25,154  21 22  27  28  13,018.  22,692 10,358  22,638 16,633 10,007 24,417 27.831  60,116 29,782 38,909  21,437  20,384 40,700 33,874 19,885 22,776 17.832 30,419 22,864 14,712 20,498 10,839 9,877 54,025  22,884  14,584 81,059  28,588  24,568  1255."  1256  m  i  m  i  13,041 25,321 23,587  75,921 29,519 37,723 27,159 99,076  13,477 10.742  22,036  12,096 9,399  15,246  9,345 12,553  17,539  13,258 8,731 10,859 16,764 17,015  13,396  24,213  12,636 13,954  32,186  13,697 24,089 10,667 15,754  17,218  11,690 1,843 22,803  17,584 22,733  42 24 29 16 39  1 4 1 2 4  T T T T T  19,359 13,851 22,715 20,877 17,893  13 17 21 20 21  1 1 2 2 2  T T T T T  27,120  16,919 16,583 38,106  21,102  42 27 28 58 32  1 1 6 2 1  D (1959) T T T T  15,696  25  4  T  27,020  17,921 14,227  9,383 13,830  T T T T T  22,576  10,796 12,540 14,690 13,032 6,545  16,688  2 2 1 2 1  12,889 13,596 10.875 14,164 13,272  18,799  10,052  24 25 33 30 25  16,618 20,388  55,272 22,414 70,355  16,979 22,344  T T T T T  62,185  11,429 11,190 17,704 18,437 29,412  22,248  1 2 2 2 3  11,060  9,692 11,421 9,217 6,334 17,478  12,468  40 39 62 31 36  16,349 12,551  12,761 9,391 12,590 8,442 16,044  16,039 17,213  D D D T T  7,634  23,882  14,445  2 2 3 1 2  4,068  26,383 24,455 23,636  20,522  13 26 20 22 19  11,235 11,401 8,298  51,298  84,797 47,359 63,290  46,408  76,226  58,170  28*114 25,823 61,758 26,651 39,483 <  78,067 40,044 44,516  4,2 88  26,114 17,960 11,795 11,755  17,102  12,784 14,739 15,732 17,135  16,363  12,774 14,836 13,039 13,319 12,963 19,125  76,861  7,304  6,020  19,258 13,716  18,594 13,347 23,192 20,474  8,099 11,926 5,979 6,454  14,574 17,033 14,230  10.876  18,616  6,565 8,765 11,569 9,309 4,508  7,244 11,537 21,335 17,019  6,810  14,527  5,944 12,684 9,146  12,681  12,183  16,846  21,793 20,737 41,955  13,227  19,021  9,936  12,774 10,573 12,587 10,175 9,057  12,604 25,916  8,858  11,708  17,021  16,256  39,475  33,155 16,604  12,637  15,967  20,670  11,835  5,414  17,498  13,126  17,795  48,357  16,544  9,603  17,579  81,006  13,256 20,237  29>148 29,649 24,773 23,914  16,860  14,496  20,211 22,900 25,194  24.420  16,111 19,626  Average Annual Catch Per Sample Vessel 14,662  25,579  27,900  15,469  Source:  Type of Vessel  Tonnage  44,244  28,228  26,638  1961  16,183 13>346 10,375 17.419 17,375  18.741 17,927 17,296 13,493 16,699  23,173  1260 10,626  17,208 12,517 10,772 13,968 19,764  25,320  i  11,029  25,805 12,790 4,375 16,977 9,934  11,077 10,731 4,252 10,127 10,791  m  No. of Cap-  Annual Average Over 10,Years 1952 1951"  Information obtained from an examination of a fishing company's records  Period  version (1955) (1961 (1961) _  -  - 137 -  a random selection, appears to show higher earnings than would be expected from the latter method.  The major differences  between this sample and a random sample are noted below. An examination was made of the distribution of vessel tonnage for all seine vessels 10 tons or over during 1958.  The  distribution was as follows: Tonnage 10 20 30 40 50 60 70  Nol of Vessels  - 19 -29 - 39 - 49 - 59 - 69 or over  150 117 60 27 24) 23) 19)  Percentage 35.7  27.8 14.0 6.2 15.7  The sample of 31 vessels has a slightly different distribution: 10 20 30 40 50  - 19 - 29 - 39 - 49 or over  5 14 7 3 2  16.1 45.1 22.6 9.6 6.4  Another major divergence is in the location in which fishing occurred.  The majority of the vessels in the sample  travel from area to area, though none represents the Straits of Juan de Fuca.  The majority of vessels spent considerable time  fishing the Department of Fisheries Areas 12 and 13, i.e., Johnson Straits.  The vessels are almost exclusively table  seiners, only four having been converted to drum seiners.  The  sample represented 31 vessels out of a possible total of 465  - 138 -  seine vessels in 1952.  This is a slightly more than 6.6 percent  of the vessels operating during this year.  Eleven vessels  had the same captain throughout the period, fourteen vessels had only two, and the rest had more than two.  None of the  vessels in this sample are included in the sample of 21 vessels dealt with earlier.  The average annual value of catch has been  calculated over the ten year period, 1952-1961.  This value has  not been deflated for price changes which have occurred in the later years.  There appear to be some examples of large varia-  tion in yield for vessels of similar tonnage, but the coefficient of rank correlation between tonnage and average value of catch is .696.  This coefficient of rank correlation is a signi-  ficant correlation at a level of significance of 2 percent. The operating expenses for fuel are difficult to ascertain as records were not available for annual consumption by these vessels.  An estimate has had to be made based on the  experiences of salmon seine fishermen who worked during 1953 and 1954 on the similar seine vessels.  The estimated value of fuel  and oil consumed by seine vessels was f968 and $814 per year ' 5 for 1953 and 1954 respectively. Further information on fuel consumption is also available in Table A-3 of The Incomes of Salmon Fishermen in British Columbia. 1953-1954 by Buchanan and Campbell.  They estimated that the total fuel and oil costs  of salmon assistants averaged $111 and $87 per year for 1953  5  Buchanan and Campbell, Incomes of Salmon Fishermen, p. 65.  - 139 -  and 1954 respectively.  These figures would,however, include  the fuel and oil expenses of these fishermen when they also fished for species other than salmon.  The range of those  reporting fuel expenses was quite high varying between a low of $24 and a high of  $355.  The representative annual fuel  expenses per vessel derived from the above figures would be $1,221 in 1953 and $957 in 1954The above two sets of information were to be the major checks on the accuracy of estimate for fuel expenses of vessels. The annual estimates of fuel expenses were calculated by an examination of the annual number of days fishing which occurred multiplied by an arbitrary constant.  The constant figure was  $25 per day as an average of diesel operation per seine boat. Such a figure is open to criticism as there is a wide variation around this point, but it appears to be fairly correct.  This  estimate was assumed to be constant through the entire period. If the improvements that have occurred in fuel and engine efficiency, and the reduced average size of seine vessels over the last ten years are weighed against increased fuel prices, the constancy appears close to reality. To estimate the cost of operating these vessels, it was necessary to have some information on the number of days fishing that each vessel did per year. available.  Not all such information was  As a next best alternative, it was decided to  estimate the number of days fishing that these vessels were likely to have done by assuming that they were a random sample  - 140 -  of the entire salmon seine fleet, and that information derived for the fleet about, costs and the average number of days fishing per vessel would apply to this sample.  Table 16 shows the  average number of days fishing per vessel and the estimated total number of days the 31 sample vessels fished annually.  Table 16 Estimated Number of Fishing Bays for 31 Seine Vessels  Year  .'Total Days •.'Fished 'by Seine Vessels  1952 1953 1954 1955 1956 1957 1953 1959 1960 1961  10,550 19,246 16,940 17,174 13,644 12,373 14,367 12,873 13,443 12,873  Source;  No. of Captain Licenses  Average No. of Days Fished Per Vessel 22.7  465  40.0  481  32.2  525 540 439 516 518 515 496 439  Estimated No. of Days FfisHed by 31 Vessels 704  1,240  31.8  993 936  25.0  772 890 775 899 309  27.9 24.9 28.7  29.0  26.1  865  Table 14.  The calculated estimates of costs are shown in Table 17 on the following page.  These costs varied between  $567 and $1,000 per year for salmon fishing operations of seine vessels and are within 3 precent of the 1953 and 1954 sample estimates made by the Department of Fisheries. figures for these years were  $968  The Department's  and $814 respectively.  - 141 -  Table 17 Annual Average Salmon Seine Expense;  No. Days Fishing  Year 1951 1952 1953 1954 1955 1956 1957 1958 1959  1960 1961  Constant  Estimated Total Fuel No. of and Oil" Captain Expenses L-i censes  $  25 25 25 . 25 25 25 25  16,773  10,550  19,246 16,940 17,174 13,644 12,873 13,867 12,878 13,448 12,873  419,325 253,750 481,150 423,500 429,350 341,100 320,925 371,675 321,950 336,200 321,825  25 25 25 25  Average Annual Salmon Seine Expenses Per Boat  510 465 481 525 540 489 516 518 515 496 489  822 567 1,000 807 795  698  622 718 625  678 658  726  Average Source: Table 14.  Utilizing information obtained from the earlier tables an estimate was made of the annual remuneration of the fishermen working on the 31 sample vessels. Table 18 on the following page.  This estimate is given in The Department of Fisheries  1953-1954 survey of fishermen's incomes disclosed that the average net income of crewmen on seiners over 55 feet was #2,059 in 1953  6  and #2,428 in 1954. ..  <  .....  ...  The average net income of all salmon purse .  .  •  .  •  .  7  aeine assistants was $1,658 in 1957 and $3,o74 in 1958. 6  Buchanan and Campbell, Income of Salmon Fishdrmen, p. 65.  7 Canada, Department of Fisheries, B.A. Campbell, A Review of Fishing Earnings of Salmon and Halibut Fishermen in British Columbia. 1957 and. 1958, 0tta\^a7~Queents "Printer, I960, p. 29.  Table Id  Estimated Annual Fishermen's Remuneration for 31 Sample Vessels  Year  hAverage Catch Per Vessel 4  -Total Estimated Expenses i  Estimated Value of Net Stock  Average Return Pef Share  Estimate of Annual Return Per Fisherman on vessel with • 6 men crew  Estimate of Annual Return Per Fisherman on Vessel with 5 mem crew  1952  14,662  567  14,095  1,281  1,495  1,793  1953  25,579  1,000  24,579  2,234  2,606  3,128  1954  27,900  807  27,093  2,463  2,874  3,448  1955  15,469  795  14,674  1,334  1,556  1,868  1956  13,126  698  12,428  1,130  1,318  1,582  1957  17,795  622  17,173  1,561  1,821  2,185  1958  48,357  718  47,639  4,331  5,053  6,063  1959  16,544  625  15,919  1,447  1,688  2,026  I960  9,603  678  8,925  811  946  1,135  1961  17,579  658  16,921  1,529  1,784  2,141  Source i  Tables 15 and 17.  - 143 -  The sample of 31 vessels appears to show higher earnings for the fishermen of these vessels than the estimate of earnings based on the Department of Fisheries figures.  There  may be a number of reasons for this and it was to some degree to be expected.  The sample survey taken over the years by the  Fisheries Department has noted the wide divergence which has occurred in both catch and earnings.  Almost invariably 60  percent of the boats have caught only 40 percent of the catch while 40 percent of the boats have caught 60 percent of the catch.  The fact that the estimates of fishermen's incomes  based on this sample are higher than the expected average indicates a reason for the high annual rate of turnover.  How  many crew men, in fact, fished on these vessels each year is not known, but indications are that even in the early years there were less than seven men on some boats.  In the later  years, the average crew size on these vessels was probablyt close to 5 men.  The Department of Fisheries has no estimat<=ras to  the number of m e n actually fishing on seine vessels during a fishing season.  All commercial fishermen are required to buy a  license but this does not necessarily mean that all licensees go fishing, nor that all licensees fished throughout the entire season.  An estimate of the average crew's size can be derived  from an examination of the number of licenses issued in comparison to the number of boats.  On this basis, the average crew's  size would be as indicated in Table 19 on the next page. increase in 1961 may be due in part to the desire of some  The  - 144 -  prospective fishermen wishing to ensure themselves of a license following the recommendations on license limitations It is the writer S s opinion that the  in the Sinclair Report.  1956 figure of 5.5 is closer to being correct than the later ones.  Table 19 Estimated Seine Crew Sizeo 1951 - 1961  Year 1951 1952 1953 1954  1955 1956 1957 1958 1959 1960 1961  No. of Asslstafit  No. of Captain'  Total  ill-i^M Equals  Licenses T L T  LJ censes ~T2j  Licenses "13)  2,412 2,328 2,647  510 465 481  2,922 2,893 3,128  5S72 6.4 6.5  3,254 2,728 3,217 3,395 3,156 3,047 3,325  6.0 5-5 6.2 6.5 6.1 6.1 6.7  2,851  2,714 2,252 2,701 2,877 2,641 2,551 2,836  525  •  Source?  540 489 516 518 515 496 489  3,406  Estimated Crew Size  6.4  Table 14.  What are the daily earnings of salmon seine fishermen? An analysis of the Department of Fisheries information on the value of daily salmon seine fishing vessels allows for some indication of the earnings of salmon seine fishermen.  The  average daily earnings per seine vessel was noted earlier. it is assumed that §25 is a correct average of the expenses  If  - 145  required for fuel and oil, it is possible to calculate an estimate of the average net daily return per fisherman.  It is im-  possible to ascertain the exact number of men who are actually engaged in fishing salmon on seine vessels but some indication of the reduced number can be seen from an examination of the earlier example dealing with the conversion of vessels from the use of table seines to drum seines.  As well as this, there  has been the reduction in the size of the crew needdd to operate table seiners due to the introduction of the power block.  The  number of crew members in the earlier example experienced a decline over a ten year period of 13 percent.  In this earlier  example, no vessel had a crew of over six persons in 1962.  If  it were assumed that this fact was fairly general throughout the industry it could readily be understood x^rhy wages per man day have increased.  Estimated daily earnings of salmon seine  licenses are shown in Table 20 on the following page.  If in  1951 the average vessel had a crew of 7 men, then the average wages per day's fishing would be as in Table 20.  If the average  size of crew changed over the period from 7 to 5, then the new take home pay per worker would be higher, as in the last column of the table.  In fact, there has been a change in the number of  crew men per vessel.  This change should have reduced the average  vessel's complement to around 5 men and have increased the average take home pay per worker. The average income of salmon purse seine fisherman is particularly high on a per diem basis, and this has been a factor  Table 20 Estimated Daily Earnings Per Salmon 1951 - 1961  Year  Average Catch Per Day Per Seine Vessel  Average Value of Catch Per Vessel After Expenses  Estimated Expenses  Seine  Licensee.  Crew's Share Including Food  Average Earnings Crew of z  Average Earning; Crew of 1  1951  595  25  570  362.73  51.81  72.55  1952  489  25  464  295.27  42.21  59.05  1953  391  25  366  232.91  33.27  46.58  1954  537  25  512  325.82  46.55  65.16  1955  359  25  #3  334  212.55  30.36  42.51  1956  380-  25  -  355  225.91  32.27  45.18  1957  468  25  443  281.91  40.27  56.38  1953  1,047  25  1,022  650.36  92.91  130.07  1959  448  25  423  269.18  38.45  53.84  I960  304  25  279  177.55  25.36  35.51  1961  512  25  487  309.91  44 • 27  61.98  .  Source:  Table 14.  - 147 -  in attracting men into the fishery.  This high daily income is  really an unrealistic measure, since fishermen do not earn high daily wages every day of the week.  In fact, with the increased  number of fishermen who have entered the industry, there have been shorter and shorter periods of fishing allowed.  What is  really significant is the annual earnings which can be obtained from fishing.  The average annual earnings of salmon seine  assistants have been particularly low compared to their opportunity incomes and this has been a factor in encouraging  fisher-  men to participate in ..other fisheries at other times of the year.  This may be a good thing if there is a sufficient supply  of and demand for other types of fish. How favourably does the remuneration of seine fishing compare with that obtainable in other occupations?  To answer  this question the income obtainable in other industries during the period of May 1 to October 31 was calculated for the years 1956-1960.  The average weekly British Columbia wage in the  respective industries was multiplied by the number of weeks. This period was chosen as being representative of the length of the salmon season.  The estimated alternative opportunities  are tabulated belows Income for the Period May 1 - October 31 Industry Forestry Construction Water Transportation' Industrial Composite  1956  1957  1958  1959  I960  12128 2113 1766  #2221 2296 1882  I2263  2198 1957  $2493 2313 2117  12574 2451 2277  1824  1919  1973  2082  2157  - 148 -  A n examination of the net earnings of the crew members of the 31 sample vessels -shows that :even if it is assumed that these vessels had only 5 men crews their earnings would have been comparable with their alternatives only for two out of the five years, 1956-1960.  (1957-1958)  The Department of Fisheries  estimated the net earnings per licensee during 1957 and 1958 to be #1,658 and $3,674 respectively.^  Thus on the average they  appear to compare favourably with the alternatives.  The year  1958, however, was exceptional and it has not been repeated. In later years, annual salmon seine fishermen's incomes appear to have fallen behind their alternatives.  The major difficulty  with the above is that they hide quite a wide range of incomes. This variability could be due to a number of causes ranging from inefficiency on the part of the operators and scarcity of fish, to only a short period of fishing for some individuals.  Some  seine fishermen may only fish in a part-time capacity to supplement their Income from other employments.  This variability  can be seen in the table b e l o w ^ In 1957, of 2129 salmon purse seine assistants surveyed, 37.6 percent had gross earnings less than $1,000 and 67.5 percent had gross earnings less than $2,000 and yet 16.2 percent had incomes between $3,000 and $6,000.  In  8 Dominion Bureau of Statistics, Annual R,view of Employment and Payrolls. I960, Table 9. 9 Canada, Department of Fisheries, Campbell, Review of Fishing Earnings, p. 29.  - 149 -  1953, on the other hand, there was only 34.6 percent with gross earnings of less than #2,000.  1957  1953  Gross Income  Percent of Fishermen  Percent of Fishermen  Under -  37.6 . 29.9 13.8 8.2 5.4 3-7 .9  1000  2000  999  -  1999  - 2999  3000 4000 5000 7000 and  3999 4999 6999 over  20.9 13.7 14.5 11.5 10.0 12.4 17.0  100.0  100.0  A major cause of this variability in fishermen's incomes is the share system.  The most important fact is that  much of the variability is shifted, at least in part, to the seine fishermen through the share system.  If a fishing vessel  experiences a poor season, the cost of its failure is borne by; all the crew as well as the owner of the vessel.  The extent of  this variability can be seen to some degree by an examination of the distribution of the gross value of landings by seine Vessels during a number of years. below.  This is shown on Table 21  A noticeable feature is that the variability does not  appear to be as large in 1961 and in earlier years.  D.R. Buch-  anan and B.A. Campbell in their 1953-1954 survey on incomes noted an even wider divergence in seine fishermen's incomes at that time. The thought of making a "high pay packet" is a particular  Table 21 Comparison of Number and Distribution of Salmon Seiners  Gross Return Per Boat Dollars Under  500  19 5 6 Boats Percent 12,'  1 9 5 7 Boats Percent No.  18  3.6  19  3.8  22  4.5  19 5 8 Boats Percent No.  500  -  4,999  93  18.8  105  20.9  54  11.1  f5,000  -  9,999  135  27.3  95  19.0  61  12.5  10,000  - 14,999  127  25.7  110  21.9  158  32.4  15,000  - 19,999  80  16.2  97  19.4  118  24.2  20,000  - 29,999  37  7.6  70  14.0  65  13.3  30,000  - 34,999  2  .4  2  .4  5  1.0  2  .4  3  .6  5  1.0  494  100.0  501  100.0  488  100.0  35,000 and more Total  Sources  Campbell and Young, Analysis of Gross Returns. 1961, Table 4, p. 8.  - 151 -  incentive to the inexperienced fishermen.  Very high daily earn^..  ings in fishing due mainly to the efficiency of the fishing gear and the Department of Fisheries regulations gives a further definite incentive to enter the industry.  The share  system presents a possible opportunity of making a high income for relatively little work and little capital investment.  The  failure of many to obtain an income meeting their expectations must in part account for the high rate of turnover in the industry. Before leaving this subject it is appropriate to make some comments on the earnings of capital invested in the seine fleet*  No estimate is available as to the value; of the entire  fleet, but an unofficial estimate was obtained for those vessels in the 31 vessel sample.  The total aggregate value was estimated  to be approximately $1,209,000.  The total average annual value  of the salmon caught by these vessels was $641,543. expenses were calculated to be 129,723 per year.  The average  If this were  the case then the total net stock for the vessels in the sample would be $611,820 annually.  The boats' share of this was 4/llths  2 1/2 shares for the vessel and 1 1/2 for the net.  2 1/2 shares  were equivalent to $138,822 per year, but from this must be deducted the captain's bonus leaving a total of $121,471 as the gross return to vessel owners in the sample.  A 5 percent return  on invested capital estimated at $1,209,000 would require $60,450 in interest payment.  The figure of 5 percent is parti-  cularly low considering the risk and uncertainty that  individual  - 152 -  vessel owners must face.  There would also be some depreciation  to be accounted for by the investment.  This depreciation should  be between 5 percent and 6 percent for the vessel hull and possibly 7 1/2 percent, or as high as 10 percent, for the engine depending on its style.  Other equipment, e.g. electronic gear,  falls into this latter category.  All in all, a 6 percent rate  of depreciation on the vessel and its total gear is probably too low.  A 6 percent rate would result in depreciation changes  of #72,360 on this amount of equipment.  The total Interest and  depreciation charges would amount to $132,810, thus indicating a loss on investment in the industry assuming that the value, depreciation rate and the borrowing rate for investment funds are correct, and that the vessels engage only in salmon seining. The above calculations have been based on the operations of seine vessels in salmon seine operations alone.  It  appears that some of these seine vessels are also engaged in other fisheries besides salmon at other times of the year. Operations in these other fisheries should also increase the return going to capital. This chapter has reviewed the remuneration that fishermen receive for their efforts.  The general conclusion Is that  they are below the alternatives available in other  industries,  and that the share system has had some effect as have government regulations and the common property feature.  - 153 -  Chapter IX Summary and Conclusion This thesis has been designed to examine the share system and to study its effects on innovation, income and employment in the British Columbia salmon fishing industry. The approach taken has been that of examining the theoretical basis of the share system and then noting how the system has worked in practice in British Columbia. The share system has demonstrated some notable advantage over a wage system in attracting workers to a highly seasonal occupation, providing an incentive for hard work, and in the economizing of materials used0  Against these advantages  must be considered the assumption of risk which is shifted from the owners of capital to the fishermen and .which results in instability in fishermen's incomes«  Share fishermen are not  assured that they will earn any income from a particular fishin trip and may, in fact, be forced to bear part of the losses of those ventures which fail. This factor of risk shifting, however, has particular advantages to the capitalist in that it allows him to operate at a lower cost in bad times, at a sacrifice of earning less in good times.  The sharing of possible losses increases the like-  lihood that a new technique or innovation will at least be attempted while the sharing of profits reduces the chances that any technique will actually be implemented on a permanent basis  - 154 -  The effect of the share system on innovation is examined with the following results.  The share system presents a  fixed percentage cost to the entrepreneur and is a cost which varies directly with the welfare of the whole fishing enterprise.  Labour costs under such circumstances become a rigid  expense and every attempt will be made by the vessel owner to exploit his labour most efficiently.  In fact, it would appear  that the production function would be geared so as to utilize labour to a higher degree than it would' be under a purely free enterprise competitive system.  On a 4/llths:7/llths share,  the yield on new capital innovations must be at least 2.75 times their costs before they can replace more labour  intensive  techniques under the operations of the British Columbia salmon seine share agreements.  That innovation has taken place shows  that these conditions must have been met at least by those boats that first utilized the innovations.  Under the share  system, it appears strange to have labour saving  innovations  unless they yield enough to at least pay the entrepreneur his costs.  Those vessels which fall to adopt new techniques ex-  perience declining yields.  In investment, bygones are bygones  and it is the marginal return which determines the profitability of an innovation.  As other vessels innovate, the yield of a  given vessel declines, so that eventually it becomes profitable (or less costly) to either innovate or leave the fishery.  The  former is the most frequent as there are few alternative uses available for salmon seine vessels.  - 155 -  The employment of fishermen or individual salmon seine vessels has declined vathin the last ten years.  This  fact seems to contradict the expectations of the share system as being a strong force for retaining the status quo in labour utilization.  The reasons for this decline have been noted above.  The other outstanding feature of the seine fleet is the high rate of turnover among cfewmen.  These men obviously did not  find the work sufficiently rewarding to entice them to remain. The share system may, in part, be responsible for this situation, since the possibility of the "big pay packet" which it presents may attract a surplus of labour, including many people who are later disillusioned by their actual returns. The increased number of seine vessels has failed to keep pace with the expansion that the salmon fishery has experienced.  There may be a number of reasons for this, with the  share system being only one among many.  The high capital cost  involved in this type of vessel construction may be of particular significance.  There is no organized and independent source  from which a fisherman can easily and readily obtain the large amount of funds necessary for vessel construction.  The increase  in the number of combination vessels which fish in other fisheries besides salmon appears to indicate that the share system in these other fisheries is not a hindrance. The actual rate of remuneration for those employed on seine vessels is difficult to gauge.  It varies from year to  year depending on the particular salmon runs which occur.  Large  - 156 -  variability is also noted among individual vessels in the fleet.  However, the role of the share system is to accentuate  the gain of those who are on efficient vessels.  The share  system has the general effect of ensuring that a substantial part of any profits from innovation goes to the crew, while at the same time diminishing the chances that any specific innovations will take place. The rate of return to capital does not appear to be high, especially considering the risks which are involved.  To  combat these risks many vessel owners have entered into charter arrangements with fish processing companies.  These companies  have the advantage of controlling and receiving the boat's share for a number of vessels, thus enabling them to average out their gains and losses.  To the extent that such charters  occur with great frequency, the significance of the role to be played by t h e vessel owner is diminished.  The processing or  fish packing companies, through their charter arrangements, determine to a significant degree the minimum equipment that the fishing fleet will possess.  The charter rates vary depend-  ing upon the equipment on the vessel.  Most companies, for  example, pay an annual $400 bonus if a table seiner has a power block. The share system has been examined in theory and in practice.  Its merits can only be judged correctly in terms of  the larger setting of the whole economy.  In a progressive  economy with many alternative opportunities for capital and  - 157 -  labour, the share system would be open to criticism as it leads to a misallocation of resources.  If, on the other hand, the  economy of the country is underdeveloped, then the share system may have a role to play in promoting the exploitation of a resource and the utilization of labour which would not have occurred otherwise.  However, in general, the misallocation of  resources which occurs due to the share system is relatively unimportant compared to that due to the common property feature. In offering fishermen and vessel owners the opportunity of receiving an economic rent from exploiting a "free" resource, it provides a special inducement for excessive amounts of labour and capital to enter the industry.  This latter problem has  only been mentioned and no solutions have been given as they lie outside of the share arrangements.  The share system has  many features similar to those found under any wage payment system and if there is complete flexibility in the share arrangements the two almost resemble each other.  Thus the effects  or consequences of the share system must be judged in relation to its setting in the whole economy.  - 158 -  Appendix 1 SUPPLEMENTARY AGREEMENT FOR SALMON SEINE VESSELS SHARE BASIS AND FISHING  CONDITIONS  This Agreement made and entered into this 26th day of June, 1961 between the Fishing Vessel Owners 1 Association of British Columbia, hereinafter referred to as the "ASSOCIATION" and the United Fishermen and Allied Workers 1 Union, hereinafter referred to as the "UNION".  ARTICLE  I - DIVISION OF CATCH  From the gross value of the catch will be deducted the cost of fuel and lubricating oil. The resultant balance is to be divided on the basis of eleven (11) shares, four (4) shares to the boat and net, and seven (7) shares to the crew. From the seven (7) shares shall be deducted the cost of all provisions and the balance divided equally among the members of the crew. ARTICLE II - CONDITION OF VESSELS Section l:  It is agreed that at the start of the season all boats shall be inseaworthy condition in accordance with rules and regulations established by the Department of Transport.  Section 2:  Proper fire fighting and life-saving equipment shall be provided on each vessel.  Section 3:  Crew's quarters, galley and toil accommodation shall be in first class sanitary condition and the crew shall extend 100 percent cooperation.in maintaining such cleanliness.  Section 4 :  In- vessels where there is no toilet accommodation, same shall be installed if convenient and practicable before vessel leaves for the fishing grounds.  Section 5 I  The crew shall keep the fish hold and deck in a sanitary and neat condition throughout the season.  Section 6s  It is agreed that at the beginning of each season  - 159 -  vessels shall he fully equipped with adequate crockery dishes and proper cooking utensils. At the end of each season the crew shall he responsible for the replacement of broken crockery and damaged utensils. Section 7:  A medicine chest shall be furnished to each vessel in accordance with requirements of the Workmen's Compensation Board. The Owners agree to maintain adequate replacement supplies aboard the vessels and the responsibility for the upkeep of a vessel's First Aid Chest shalll be upon the Boat Delegate , elected by the Crew. ARTICLE III - BOAT DELEGATE  Section Is  A boat delegate, duly elected by the crew, shall be recognized by the Captain and the owner as the Union representative.  Section 2;  The duties of the Boat Delegate shall be as follows:  Section 3:  (a)  To ensure that correct tallies and records are kept;  (b)  To ensure that settlements made with all or any members of the crew are fairly and correctly made. Each member of the crew shall receive a copy of the full settlement.  The Boat Delegate duly elected by the crew, shall be cully recognized by the Owners as the representative of the crew and the Union on all matters connected with the weighing of fish. Ih order to facilitate the election of suitable representatives for this purpose the Owners shall, if requested by the Union, make available a list of crew members on their vessels. ARTICLE 17 - SETTLEMENTS  Section Is  When a crew member quits before the end of a season, he is entitled to his proportionate share of the catch.  Section 2:  Settlements are to be made as quickly as possible at the conclusion of each season. ARTIGLB V - TRANSPORTATION  Should fishermen be discharged by any Owner or his agent at a port other than the port of hiring, the Owner agrees to furnish  - 160 -  steamer or scheduled airline transportation back to the port of hiring. ARTICLE V I - CAPTAIN'S RIGHTS Section,!:  The Owners agree that seine boat captains shall have the right to hire and discharge their crew members.  Section 2:  Should the Captain decide to discharge any of the crew members for cause during the fishing season, or should any of the crew members decide to quit during the fishing season, such notice of termination or discharge shall be given 48 hours in advance.  Section 3t  In all matters pertaining to the operation of the boat, it is agreed and understood that the Captain's decision shall be final, subject only to instruc- tions from the Owner or his representative. ARTICLE V I I - ILLEGAL FISHING  There shall be no illegal fishing and if any is done the Captain and the crew shall be jointly responsible for any fines or penalties imposed, except that the owner of the net or, where the skipper is responsible, the skipper shall be solely liable for any penalties imposed for over-length nets. ARTICLE V I I I - FUEL Fuel tanks and lub-tanks will be filled by the Owner at start of each season and will be returned by the crew in a similar condition at close of each season. ARTICLE IX - HOLE BILLS Section l:  It is agreed and understood that hole bills shall not be collectable under the following circumstances  (a)  When men are discharged and it is definitely proven that such discharge was not due to any fault of their own;  (b)  When the vessel goes into some other trade or other type of fishing;  (c)  When crew members are discharged by the Captain for reasons other than the regular reasons;  (d)  Where vessel is a total wreck;  (e)  When an accident has occurred and the crew is not required  - 161 -  after repairs are completed. Section 2:  Definition; It is understood that hole bills as referred to in this Agreement shall denote a condition where the crew share of the landed catch at the time referred to in Section 1 (a), (b), (c), (d) or (e), is not sufficient to cover the cost of-fuel, lubricating oil and provisions as set out in Article II of this Agreement. ARTICLE X - LIMITING GATGH  The Owners agree that should it be necessary to place a limit on fish deliveries, such limit will be set on a per-man basis. ARTICLE X I - CHARTER BOATS It is agreed the terms and conditions of the Supplementary Agreement for Salmon Vessels - Share Basis and Fishing Conditions between the Fisheries Association of B.C. and the Union shall apply to all vessels chartered by the Operators during the 1961 season. All other vessels whose owners belong tbs the Fishing Vessel Owners Association of B.C. shall be bound by the terms of this Agreement. ARTICLE X I I - NET WORK Section 1;  The Union recognizes the responsibility of the seine crew to give proper care to t h e seine through out and to the end of the fishing season, including necessary repairs, washing and bluestoning in accordance with management's instructions. It being understood that if it is not management's intention to strip the seine that it shall be -returned in the same condition as received, reasonable wear excepted. Crews shall not be required to alter the dimensions of a seine or to effect major repairs when the vessel concered is terminating the season.  Section 2; ~  Loading or .unloading of seines shall not be considered net' work and on arrival in port at the end of any season or for a layup, or to change over to another type of fishing, it shall be the crew's responsibility to bluestone, wash and unload the seine within a ten day period. In the event that the net is bluestoned on the day of arrival in port the crew may be called out to wash and unload the seine on a day to be specified during the next ten days. Any crew member who fails to appear on the day  - 162 -  specified unless his absence has been mutuallyagreed upon, shall be charged for eight hours* work at the regular netman's rate which sum shall be paid to the man taking his place. If there is no replacement, then the sum shall be equallydivided amongst the seine crew members who perform the work. Section 3s  The Union recognizes the responsibility of the seine crew to deepen, shallow or shorten the seine during the fishing season in accordance with the captain's instructions. It shall also be the crew's responsibility to lengthen the seine provided that.the extension which is to be added is made up beforehand. If the extension is not made up, and the crew is called upon to do this work, then they shall be paid in accordance with the terms of the current agreement on net work.  Section hi  Work done by members of the crew in preparing nets for each season and in stripping, washing stripped web, and storing nets at the end of each season shall be paid for by the owner of the net in accordance with the terms of the current Union Agreement on net work.  Section 5 S The owners agree that should a seine, or seines, be put out which has not been relaced or rehung since the previous season and it becomes necessary for the crew to relace or rehang the seine within two weeks of the commencement of the net being fished, the members of the crew that worked on the seine shall be paid for such net work at rates set out in the Networker's agreement. Section 6s  The owner agrees that if, at the time of taking the seine, it is necessary for the crew to make up purse lines or brailers, payment shall be made for such work at the straight time rates set out in the Networker's Agreement. It is understood that putting such gear aboard is part of the regular operating and no extra payments be made.  7;  The Company shall provide seine crew members who are working on seines, including the loading, unloading, washing, bluestoning of same or working on brailers, purse lines or other fishing gear with Unemployment Insurance coverage for all such work for which payment is made by the company under the foregoing sections.  Section  -  Section  163 -  In the performance of work and responsibility for work under the foregoing sections, the captain shall participate along with crew members. ARTICLE X H I - CERTIFIED ENGINEERS BONUS  It is agreed that all certificated engineers engaged as engineers on salmon seine boats shall receive a bonus of $25.00 per month during the fishing season of 1961, said bonus to be paid by the. Owners. ARTICLE XIV - RADIO TELEPHONES (a) Where radio telephones are installed on seine boats, it is agreed that the crew will not be required to pay for any installation or rental charge. Where crew members use the radio telephone for personal calls, excepting emergency calls, the Owners shall have the right to impose and collect a surcharge of 15 percent over and above the actual cost of such calls. (b)  It is further understood and agreed that the Owners shall have the right when settlements are being made to withhold the sum of $15.00 per man as a deposit, for a period not to exceed six weeks, to cover each crew member's personal calls. ARTICLE XV - FAIR PRACTICES  During the term of this Agreement, no crew member shall be asked to make written or verbal agreements with the Owner covering rental of boat equipment or charges to gross stock unless such written or verbal agreement is approved by the General Executive Board of the Union. ARTICLE XVI - GRIEVANCE PROCEDURE  All disputes that cannot be settled on board the vessel must be referred to the Owner or Owners concerned and the Union for adjustment . ARTICLE X V I I - TERMINATION  This Agreement shall be in full force and effect from the date of signature until June 15, 1962 and shall be continued thereafter unless notification in writing is given thirty 30) days prior to June 15 1962 or of any year thereafter by either party dels ir ing to change or modify "any portion of this Agreement. Such notici where the request is made for modification or changer a^d subsequent negotiations shall be confined exS u s i l S r ^ s u c h requests. Negotiations shall commence as i s  d e s i r e d  - 164 -  quickly as possible following receipt of the thirty (30) days notice of modification of change. Signed at Vancouver, B.C. this 26th day of June, 1961.  FISHIIC VESSEL OWNERS ASSN. • - OF B.C. . . . . . . . .  UNITED FISHERMEN & ALLIED . WORKERS UNION .... .  George A. Brajcich, President  Homer Stevens, Sec»y Treasurer  H. Christenson, Secretary  A. L. Gordon, Business Agent  - 165 -  Bibliography I. Government Publications Buchanan, D.R. and Campbell, B.A. The Incomes of Salmon Fishe™§iLJ^Britj.sh. Columbia. 1 9 5 3 - 1 9 O t t a w a , Department of Fisheries, 1957Canada, Dominion Bureau of Statistics. Annual Review of Employment and Payrolls. I960. No. 72-201. " Canada, Dominion Bureau of Statistics. Fisheries Statistics. British Columbia. 1951-1961. Ottawa, Queen's Printer, Canada, Dominion Bureau of Statistics. Monthly Review of Canadian Fisheries Statistics. Ottawa, Queen's Printer. 1951-1961. Canada, Dominion Bureau of Statistics. 1951. Fisheries. British Columbia.  Ninth Census of Canada, Ottawa, 1954-  Canada, Department of Fisheries. British Columbia Catch Statistics. Ottawa, Queen's Printer, 1951-1962. Canada, Department of Fisheries. 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