The herring is the most important factor of the rapid upswing of the Icelandic economy in the 20^th century. It represents the foundations of the present society. Around the turn of the 19^th century new methods were introduced to increase the cod- and herring catch. Larger engine driven vessels and improved fishing gear were the main novelties. The walls of the many centuries’ long stagnation and poverty were suddenly vanished. The successful herring seasons during the depression of the thirties when the cod markets were closed abroad, ensured financial independence and paved the road towards the proclamation of the republic in 1944 after 563 years of Danish rule. A century’s long herring fishing was the beginning of an adventure, which has not ended yet. The beginning is traced back to the Norwegian fisheries off the east- and north coasts during the latter part of the 19^th century. They built processing factories there and sent their pickled herring products to Norway in great quantities. Norwegian fishing outfits leased or bought pieces of land for their constructions, and improved the living conditions of the inhabitants greatly by offering work and income.

The Icelanders became directly involved in the fisheries and processing in 1881 in the town Siglufiord, but a few years later the ice flows from Eastern Greenland prevented the fisheries for a number of years. In 1903, the Norwegians returned and experimented with new fishing gear with good results. Siglufiord became the centre of the herring processing with the barracks and piers of many fishing outfits, both Norwegian and Icelandic. In 1916, Icelandic companies exported about 200.000 barrels of pickled herring, considerably more than the Norwegians did. Pickled herring was an important part of the diet in many European countries, especially during both World Wars, and the most important buyers were Denmark, Finland, The Soviet Union, Germany, and USA. The part of the raw materials, which could not be pickled, was used for the production fish meal and fish oil. The fish meal was used as animal fodder and the oil for many kinds of industrial products, such as soap. Sometimes the export of herring products was 35% of the gross national income, but on the average 25%. The first fish meal and oil factories were built in Siglufiord in 1911, and later such factories turned out to be extremely profitable all over the country. They were actually the first steps into the era of large-scale industry in the country.

The fisheries are an unstable and fluctuating trade, but the herring remained mostly stable, at least there were more good seasons than bad until the sixties, when the gradual collapse started with record fishing seasons. The fishing equipment and techniques had improved constantly, which eventually led to the overexploitation of the stocks. The herring moved further and further east and eventually the Icelanders, Norwegians, and Russians succeeded in reducing the stocks to almost nothing. It took 27 years to recover. The fishing industry had to find other stocks to harvest, the cod, and the capelin fisheries took over in the seventies.