The use of "fish as fertiliser" is one possibility to prevent soil fertility from degradation. After all, whatever you harvest and don't feed into the local environment, be it people or livestock, and then bring back to the fields as recycling (aka manure) is lost for the next cycle.
The question immediately arising from the fish theory is of course, "isn't that wasteful?" People might have eaten the fish and got more high quality protein and fat directly, instead of waiting a season for it to be converted to measly plant protein and starches.
But people often do not eat the whole fish, or sometimes a few fish species are caught in nets that aren't thought of being very edible to begin with. Both options lend themselves to be used in soil improvement. And that is being done now, even with a reference to the claim in question. And now, it also needs to be critically evaluated.
As Wikipedia repeating the myth states for Atlantic menhaden:
Menhaden have historically been used as a fertilizer for crops. It is likely that menhaden is the fish that Squanto taught the Pilgrims to bury alongside freshly planted seeds as fertilizer. Other uses for menhaden include: feed for animals, bait for fish, oil for human consumption, oil for manufacturing purposes and oil as a fuel source.
In the early years of the United States, Atlantic menhaden were being harvested by thousand of ships of fishermen. The Atlantic coastline was lined with processing facilities to quickly transform the fish into a product of worth, typically oil but later fish meal became more popular. Tragedy of the commons set in and the menhaden population began to dwindle. Many of these small companies could not manage, which left only a handful of menhaden fishing companies to remain on the Atlantic coast.
While many sources today claim that the menhaden is inedible, the fish were once consumed as sardines might be, or fried. Maine fisherman, for example, would eat fried pogies for breakfast. The fish that were not sold for bait would be sold to the poorer classes for food.
The reduction fishery processes whole menhaden into fish meal, fish oil, and fish solubles while the bait fishery supplies fishermen with menhaden as bait for key commercial and recreational fisheries.
That's about now and the theory. The historical evidence is more complicated. Real history mixed with pure folklore made it into the textbooks. And the story is a lovely one.
An early article scrutinising fact from folklore:
… every year more than three quarters of them have said that they had learned about it in elementary school. Further discussion has brought out two other points: the students generally believe that the practice was not rare but widespread among all the farming tribes, and second, that the Indians taught the American colonists this method of using fish as fertilizer.
The first and rather obvious point to make is that fish, a valuable food, would hardly have been used as manure unless it was so abundant that people could easily catch more than they could eat. Such abundance normally occurs only along certain coasts, for example that of Peru, or in rivers where fish ascend from the sea to spawn, as in the streams of the Atlantic seaboard of the United States, which in early times were annually visited by enormous numbers of shad, alewife, and other members of the herring family. The interior of eastern North America, which constituted by far the greater part of the aboriginal farming area, was not rich enough in fish to warrant its use as fertilizer.
How old the custom of manuring with fish might be is hard to say. Some of the European “encyclopedias” and “handbooks” of agriculture published in the seventeenth and eighteenth centuries speak of the practice as known since "time immemorial," not a very precise date, but we have definite proof that the method was used in England as early as 1620 — and no doubt much earlier, for in 1620 it was described in print by Gervase Markham. We thus know that fields had been manured with fish in Europe before the Pilgrims landed at Plymouth Rock.
Erroneos Citation of Certain Early Sources: There is no question about the use of fish as fertilizer by the colonists in New England in the seventeenth century or the more widespread use of the method in later time. But what needs to be pointed out is that some of the early sources, which have been cited as proof of aboriginal manuring with fish, refer to the English settlers, not to the Indians.
The Negative Evidence: […]
The early record of aboriginal agriculture is indeed a rich one, and, for present purposes, the most significant fact is that in the entire record there is virtually no reference to the use of fish as fertilizer. Furthermore, like Laudonnihre, some of the early observers state positively that the Indians used no fertilizer of any kind. Hariot says of the Secotan in North Carolina, “The ground they never fatten with muck, dung, or any other thing.“ The Narraganset tribe planted corn without fish, according to John Winthrop (the younger), and similar statements about other New England Indians are made by Edward Winslow and William Wood. The use of fertilizers is denied for the New York Indians by van der Donck, for the Hurons by Sagard, and for the Delaware land Iroquois by Loskiel.’
The Affirmative Evidence:
So far as I know, there are only three statements in the primary sources that might be regarded as affirming the aboriginal use of fish as fertilizer. In April, 1621 the Pilgrims of Plymouth colony, according to Bradford, “began to plant their corn, in which service Squanto stood them in great stead, showing them both the manner how to set it, and after how to dress and tend it. Also he told them except they got fish and set with it, in these old grounds, it would come to nothing." [requiring comment…]
If Squanto’s statement were a reference to an old Indian custom, it would be inconsistent with native farming methods as we know them from other sources. It will be observed that both Winthrop and Squanto qualify their remarks with the terms “old” and "worn out" lands, the implication being that fish was used, or needed to be used, only on such lands. But we know that the Indians did not try to raise crops on the worn out lands; they quit them. Aboriginal agriculture in the eastern woodland was a system of shifting cultivation: land was continually being cleared, farmed for a few years, and then abandoned; and sometimes, after a period of restoring the soil fertility under forest cover, the old lands might
be cleared and cultivated again. The employment of manure or any type of fertilizer was as foreign to native Indian farming as the horse and plow.’”
The Linguistic Argument:
Another type of affirmative evidence, or at least affirmative argument, is based on the etymology of “menhaden” and “poghaden” (also called “pauhagen” and “pogy”), which are local names of Brevoortiu tyrannus, an Atlantic fish of the herring family. ‘These names, according to J. H. Trumbull as quoted by G. Browne Goode, are derived from Indian words that mean literally “to fertilize,” and Goode argues that this derivation constitutes “unanswerable evidence” for the manuring with fish in aboriginal time. […]
If a speculative note may be introduced, one may wonder, since the evidence for Indian use of fertilizers is at best rather dubious, whether they had a word meaning "to fertilize." The missionaries, who compiled many of the Indian dictionaries, studied the aboriginal languages largely for the purpose of translating the Bible, and had the problem of finding Indian expressions for manuring, for example in the parable of the fig tree, “I shall dig about it and dung it” (Luke 13,s). If the Indians had no word for dunging, they soon got an idea for it — suggested perhaps by the missionaries — from seeing the New England colonists manuring their fields with fish. ‘The question is perhaps whether the etymological cart has been put before the horse. Maybe the fish gave its name to manuring, instead of vice versa.
There is no evidence in the primary sources that the use of fish as fertilizer was a common and widespread practice in any part of native North America. The only affirmative evidence comes from a sharply restricted area in southern New England, but that evidence cannot be accepted as conclusive proof that the practice was aboriginal, for it may have been introduced from Europe in early Colonial time.
— Erhard Rostlund: "The Evidence for the Use of Fish as Fertilizer in Aboriginal North America", Journal of Geography, 56:5, 222–228, DOI
Did the native American Indians use fish as fertilizer? 'They' have. On a small scale, in a confined geography and not since time immemorial. The very detailed and far reaching Squanto-legend has most probably not much explanatory value, as the largest part there seems now to be invented history.
In fact, the many lines of evidence strongly suggest that the invention and use of fish fertilizer by northeastern Indians would have been mal-adaptive, a burdensome land-tethered chore of questionable value for improving corn yields. More adaptive, in fact, was the well documented fallowing technology, especially where beans were planted to "grow up with and against the maize" (Jameson 1909:107). In this way nitrogen became more available to the corn roots (through nitrogen fixation) and the weed area was reduced. The combined beans/corn diet is also higher in available protein and a balance of amino acids, so helps prevent deficiencies caused by corn alone. Given these strategies, might one not argue that the experienced Indians were too wise to adopt the onerous fish fertilizer "solution" taken by the early Pilgrims?
Data for the prehistoric and historic Iroquois suggest the kind of changes that would make fertilizer more adaptive for Indians. These occurred after the presence of traders and expanding colonial settlements had completely transformed the Indians' culture system and cultivation strategies. Scarce cultivable land and availability of European agricultural technology and staple foods are thought to have brought about permanent settlements (White 1963).
Missionary pressure and acceptance of western values, life on reservations, and replacement of hunting by farming as prestigious male tasks are associated with the adoption of "white agriculture" centuries after contact (Ricciardelli 1963). Similar processual changes appear to have occurred among Algonquian farmers along the coast.
The belief that fish fertilizer originated among North American Indians, and was communicated as such by Squanto to the Plymouth settlers, has achieved the status of an unquestioned legend and is therefore difficult to challenge. Responses from my original study confirm both a worldwide interest in the topic as well as the legend's cherished status in this country.
Nevertheless, while Squanto was unquestionably an important historic figure and did contribute substantially to the Pilgrims' survival, the belief that fish fertilizer was a "manner of the Indians" because Squanto knew about it should be revised. The current evidence indicates that his advice at Plymouth is best viewed as a special example of culture contact dynamics, one in which a native culture-bearer conveyed a technological idea from one group of Europeans to another.
— Lynn Ceci: "Squanto and the Pilgrims: On Planting Corn 'in the manner of the Indians'", in James A. Clifton (Ed): "The Invented Indian Cultural Fictions and Government Policies", Routledge: London, New York, 1990. (pp 71–90)
The story as read on Wikipedia about Squanto is not credible. The lifecycle of seasonal plants requires nutrients, that can be found in fish. But burying a whole fresh fish is mal-adaptive for other reasons than just wasting difficult to transport inland animal protein. It doesn't get transformed into plant nutrients in the best way and time to be of much use. Parts of it or processed fish are another story. But one fish alongside the seeds is more of magical or symbolic benefit then bringing really plant usable soil fertility in a growth related timely manner for the season.
More detail about the Life of Squanto in Jerome P. Dunn: "Squanto Before He Met The Pilgrims", Bulletin Of The Massachusetts Archaeological Society, Volume 54(1),1993 38–42. (PDF)
These details lead some researchers to summarise the story very bluntly:
Squanto & Fish Fertilizer
A familiar Thanksgiving story is that the Native American, Squanto, showed Pilgrims the Native American method of fertilizing corn with fish. It is true that Squanto showed the Pilgrims how to use fish as fertilizer. However, there is no good evidence that Native Americans east of the Mississippi River ever used any form of fertilizer (Ceci 1975; Hurt 1987; Rostlund 1957). Instead, Native Americans practiced shifting agriculture and simply moved on to a new tract of land when the natural soil fertility ran out. They also interplanted corn, beans and squash, which they called the three sisters (Marturano 1995). The nitrogen-fixing beans provided some nitrogen for the corn and squash.
How then did Squanto know about fish fertilizer?
Squanto knew because he was kidnapped by a British sea captain in 1614 and spent seven years in Spain, England, and with British colonists in Newfoundland before arriving at Plymouth on 16 March 1621 (Hurt 1987). Somewhere in his association with Europeans, Squanto learned of fish fertilizer. Thus, Squanto merely taught the Pilgrims a European agricultural practice that had been known since ancient times. The use of dead bodies as fertilizer is mentioned in the Bible and was expressed poetically by the 11th century Persian poet Omar Khayyam (Tisdale & Nelson 1975):
I sometime think that never blows so red
The rose as where some buried Caesar bled;
That every hyacinth the garden wears
Dropt in her lap from some once lovely head.
As a modern Massachusetts gardener has found (Moss 1975), use of fish fertilizer seems impractical where wildlife abounds. Skunks, raccoons, dogs and other animals dig up the rotting fish and damage or destroy the planting.
— David R. Hershey: "The Truth behind Some Great Plant Stories", The American Biology Teacher, Vol. 62, No. 6 (Jun., 2000), pp. 408–413. (jstor)