1167 
Risks are high because of uncertainities of weather, sea state, resource availa- 
bility, competitive thrusts from imports, the common property nature of most 
of the resources, and governmental regulation of the activity, or the lack of such 
regulations. These risks look particularly high to bankers not acquainted with 
the sea and accustomed to providing capital for the development of resources that 
are privately owned. 
To the extent that the United States wishes a particular fishery, or the entire 
U.S. flag fishery, developed it must provide economic climate and economic in- 
centive favorable to the purpose. 
The most immediately effective and constant economic incentive is relief from 
taxes. This has been, and is, broadly used to increase petroleum and mineral ex- 
traction, and despite complaints from other sectors of the economy it has been 
efficient from the standpoint of the total economy and effective for the public 
purpose. The United States has the strongest petroleum industry in the world 
and the beneficial effects of this on the posture of the United States in the World, 
and the strength of the energy base for its whole economy, well replaces the loss 
in tax base. No general incentive would more quickly stimulate production by 
U.S. flag fishing vessels than appropriate modification of the industry’s tax base 
along the line of the depletion allowance granted petroleum and mineral 
producers. 
A principle purpose of environmental and biological research as applied to the 
fisheries is to increase ability to predict resource availability and by doing so 
diminish economic risk in the enterprise. 
The state of the art in these research fields does not permit very precise such 
predictions and this is a principal reason why access to capital for vessel con- 
struction and gear acquisition is so difficult for fishermen. Efficiency in catch by 
modern vessels is continuously requiring higher capital investment per fish- 
-erman, or per ton of production. Fishermen must have capital to improve their 
efficiency. 
The Fishermen’s Loan Program and the Fishing Vessel Mortgage Insurance 
program have been both very effective in improving incentives for U.S. flag 
fishing and at nominal cost to the government. Not only have these programs 
enabled fishermen to modernize their equipment, it has relieved bankers of often 
onerous requirements of State Bank Examining codes inimical to the fishing busi- 
ness, and has removed the fishing vessel owner from dependence for capital on 
his customers, thus eliminating beneficially certain bad aspects of the padrone 
system in some fisheries. These programs are used so much and so effectively that 
they sometimes run out of authorization for funds. As one of the most effective 
means of providing economic incentive to U.S. flag fishing at cheapest cost to 
government the authorization limits for these programs should always be kept 
higher than demand. 
Experience on a broad and long basis in United States fisheries indicates that 
there is no judge of what sort of vessel and gear is needed in a particular fishery, 
and will work to best economic advantage in it, than a fisherman-operator-owner 
who derives a fair part of his total earnings from profit on the use of the capital 
in the vessel and gear. That is a main reason why these programs have, worked 
so well. 
These programs have operated on a tight credit basis designed to yield a 
slight profit. One of the most efficient ways to stimulate vessel modernization in 
a particular fishery that it is desired to develop would be to relax these controls 
somewhat in that particular fishery. The Federal Fishery Function should be 
authorized to do this differentially in fisheries under appropriate criteria. 
An apparently effective tool in pump priming to get a fishery started toward 
profitability is to provide incentive payments to fishermen to cover the difference 
in his costs and the processor’s ability to pay in the experimental phases of a 
fishery’s development. This has been used experimentally in the hake fishery off 
Washington and the fish meal business in the Gulf of Mexico, but on too limited 
a time basis to explore fully the methodology or effectiveness of such a tool. The 
Federal Fishery Function should be provided with substantial funds for such 
purpose, and authority to use it in this manner under appropriate criteria. 
The ground fish fishery of the United States was deliberately written off by 
the United States Government shortly after World War II for supervening na- 
tional reasons. These reasons were the necessity to quickly revive the econo- 
mies of war torn allies or friends. Those supervening reasons no longer obtain. 
This policy should be revised and restitution made. At the same time some of 
these countries (and particularly Canada) have instituted heavy subsidization of 
their own ground fisheries which gave the product of those, fisheries a prefer- 
