For 14 years, Max Chambers observed oyster larvae floating in experimental tanks he set up near the Nanticoke River on Maryland's Eastern Shore, hoping that the culture would eventually spawn dollars as well as oysters. This year, it happened.

Flomax Enterprises, the oyster hatchery Chambers formed with his wife Florence, produced 6 million oyster spat -- tiny seed oysters attached to a larger shell -- between May and September. This is the fourth year Chambers' has had a product to sell, but the first year he could cover his expenses "and then some. I did right fair," he said.

Chambers sells the oyster spat in mesh bags to his neighbors in Nanticoke who hold state leases to Chesapeake Bay bottoms. Because it takes four years for the planted oyster to grow to market size, the earliest product from Flomax Enterprises is expected to be harvested and sold next summer.

Before Chambers launched his hatchery, the closest outlet for seed oysters was in the James River area.

As an alternative to the costly purchase of the tiny shellfish, those who hold leases to unproductive bay bottoms could lay shells for the free-swimming larvae to settle on in hopes that nature would do the rest.

Although small-scale, Chambers' pioneering efforts are being monitored by marine scientists working out of the University of Maryland's Horn Point Environmental Laboratory in neighboring Cambridge. They hope to use data collected from Nanticoke's future harvest of cultured oysters -- if successful -- to bolster what they feel could be a profitable industry.

"It will not replace the wild fishery, but it could supplement it," said Tony Mazzaccaro, assistant director for marine programs at Maryland's Cooperative Extension Service.

Mazzaccaro and others are quick to note that last year's Maryland oyster harvest was the lowest ever. According to figures from the State Department of Natural Resources, there were slightly more than 1 million oysters delivered to the docks by watermen, down from 2.5 million in the early 1970s.

"Nature has not provided very well," said Chambers. He estimates that his hatchery produced 6 million seed-stock oysters from 125 mature oysters. In nature, he said, those 125 oysters might have produced only 250 off-shoots that would have survived.

The deterrent to Maryland's fledgling oyster aquaculture industry is not technological. Watermen who view such methods as a threat to their way of life have successfully lobbied state officials to prohibit further leasing of bay bottoms. As in agriculture, land is the critical component to developing a viable aquaculture industry.

Larry Simns, president of the Maryland Watermen's Association, said he believes that an aquaculture industry would wind up in the hands of two or three large companies.

"Only the big conglomerates can afford it," Simns said. Individuals would not have the resources to overcome such problems as disease, predators or a change in the salinity of the water, all of which could wipe out a crop of oysters on a leased sandbar, he said. Speaking for local watermen, Simns said corporate control of the state oyster industry would "kill our independent life style" and make it necessary to work for the big firms. "But we wouldn't do that. We'd leave."

Even with a moratorium on most bay-bottom leasing, there are 10,000 acres still held by private individuals given a 20-year lease by the state, according to William Outten, shellfish program director of DNR. Only 1,000 acres are actually being used commercially, he said, and the state's policy now is to encourage the use of the remaining 9,000 acres.

In addition to augmenting the natural supply of oysters, harvesting planted stock from the privately leased bottoms builds a much needed year-round industry. The season for taking oysters from public sandbars extends from Sept. 15 to the end of March. Those who hold leases to private ground can use their "farmer's option" to dredge for oysters after the public season ends, said Outten.

Oscar Nelson, general manager of the Nanticoke-based H. B. Kennerly Co., a large wholesaler of Maryland oysters, purchased a million-oyster spat this year from Flomax. He stressed the importance of having a 12-month, steady supply of oysters. "We're competing with other states," he said.

Because other areas of the country have pushed forward with the relatively simple method of oyster aquaculture, the local market is flooded with out-of-state competition for the famed Chesapeake Bay oyster. Steve Himelfarb, owner of the Kensington, Md.-based U.S. Fish Co., another wholesaler, said that 75 percent of the oysters he sells come from Maine and Long Island. Other wholesalers reported that as much as 90 percent of their oysters come from outside the bay region.

The biggest obstacle in developing Maryland's oyster culture industry is the attitude of the watermen, Mazzaccaro said. "They think it will put them out of business. It won't."

In the past, Horn Point marine scientists experimented with oyster aquaculture in test plots on the nearby Choptank River. But poaching from those plots put an end to research there, Mazzaccaro said.

"We negated that problem by working with watermen who held leases to private bottoms," he said. Aquaculture can "establish credibility if local people are involved," he said.

As part of the state- and Dorchester County-funded West Side Project to further oyster aquaculture, 14 test plots were set up in 1982 among five oyster planters in Nanticoke.

Mazzaccaro said the goal of the West Side Project is to help secure funding for others willing to participate in the industry. There is a potential for profits, he said, but right now there is little data that could be used to persuade a banker to provide a loan.

A key to the ultimate profitability of oyster aquaculture lies in genetic improvement, Mazzaccaro said. He believes that the growing time for an oyster could eventually be cut in half from four years to two. There is also a need to breed for disease resistance, he said.

As for the availability of seed oysters, Flomax Enterprises is paving the way for similar hatcheries. Chambers' low-technology method of spawning oysters in salt water tanks could be set up for $25,000, Mazzaccaro said.

"If Max starts making money, others will follow," Mazzacaro said. "But it's no sure thing."