Stanley Engerman has been a presence in the Department of Economics at the University of Rochester for over 37 years. He was an early and eminent participant in the Cliometric Revolution that swept throughout the economichistory profession in the 1960’s and 1970’s. We doubt that anyone could have anticipated the “gathering storm” that greeted the publication of Time on the Cross, co-authored with Robert Fogel in 1974. Since that time Stan has become the world’s leading authority on slavery in the Americas and the Caribbean, as well as an important contributor to a set of issues ranging from the 19th century American iron industry to the economics of British imperialism. His own human capital, as extensive as we know it to be, is complemented by capital of the physical variety: an enormous library of research material spilling over into bookshelves and floors in several offices in Rochester and attracting a yearly stream of itinerant scholars anxious to pick his books as well as his brains. In this short note, we intend to honor Stan by applying the tools of international trade theory to illustrate several episodes in the development of industries, both in the United States and in world markets. A colleague of Stan’s at Rochester, Lionel McKenzie, once commented that, in 19th century Britain, Lancashire would have been unlikely to produce cotton cloth if the cotton had to be grown in England (McKenzie, 1954). This remark expresses in utter brevity the importance to production and trading patterns of the domain of tradability of raw materials or intermediate products. For example, it is difficult to envisage the patterns of production (and trade) in modern-day Japan should it be denied access to world supplies of oil, coal, and iron ore, local production of each of these items being negligible. Transport costs as well as man-made impediments to trade are mainly responsible for variations in the degree of access countries possess to the inputs available in the markets of other countries. Simple competitive generalequilibrium models of production, of the type intensively utilized in the theory of international trade, can usefully be harnessed to shed light on several episodes in 19th century American economic history in which the nature of trading possibilities for raw materials heavily influenced the extent to which local American production of final commodities could withstand the pressures in world markets without the aid of protective devices. The simplest model setting in which to investigate the importance of trade in raw materials is a Ricardian model, augmented by the necessity of using a produced input in addition to labor in at least one commodity. Denote the pair of final commodities by X and Y, where in order to produce Y a certain quantity of intermediate good, Z, is required. The competitive profit conditions for the two final commodities are shown in equation (1):

When income levels of some group in the economy fall behind those of others, the blame frequently is cast on the nature of international trading relationships. Such has been the case recently in the United States with the struggle to maintain real wages for relatively lessskilled workers. Much of the debate has asked how changes in world prices or in technology at home or abroad have altered wage rates (see e.g., Susan Collins, 1996; Jones and Engerman, 1996). In this note we focus on another potential culprit, immigration, and probe more widely into past historical experience in the United States and other countries when inflows of labor from abroad disturb wage rates for nationals. Such international labor flows could serve to enhance rather than to depress the earnings of the country's own laborers. If the question addressed concerns the effects of immigration on the welfare of the original inhabitants of a country, a disarmingly simple answer was provided some years ago by Harry Johnson (1967): as long as immigrants bring an accumulated bundle of labor and physical or human capital that is different from that possessed by local residents, the latter must gain from immigration. This is the basic gains-from-trade argument, appropriate only if the country originally did not engage in any other form of trade and if all residents held balanced portfolios of capital and labor. As well, it ignores the social costs incurred and extra taxes collected when migrants flow into a country. In this note we focus not on aggregate welfare effects, but on the effect of immigration on the return to some homogeneous national group of laborers. This question is the one that most sharply divides the views of labor economists from those of trade economists. On the one hand, increases in the supply of labor would seem naturally to depress the return to labor, but in the basic Heckscher-Ohlin trade model with two factors and two produced commodities, an inflow of labor can be absorbed with absolutely no change in wage rates as long as the terms of trade remain undisturbed. We begin by asking what some basic theoretical models tell us about this issue, before turning to the historical record. Simple theory reveals that there are two basic attributes of immigration that affect income distribution: relatively how substitutable immigrant labor is for the national labor force, and the occupations in which immigrants are allowed to work.

This paper examines how well the basic properties of the traditional 2 × 2 model of a competitive economy, commonly used in much of the pure theory of international trade, generalize when more goods and factors are considered. The notion of factor intensity and the Hekscher-Ohlin, Stolper-Samuelson, and Rybczynski theorems are discussed. The role played by the no-joint-production assumption as opposed to small dimensionality in the latter two results is stressed. The mathematical appendix provides a compact and formal statement of the properties discussed in the text.