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CHAPTER I. - Eli F. Heckscher, The Continental System: An Economic Interpretation 
The Continental System: An Economic Interpretation, ed. Harald Westergaard (Oxford: Clarendon Press, 1922).
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COMMERCIAL WAR BEFORE THE BERLIN DECREE
MILITARY WAR (1799-1802)
As everybody knows, the accession of Napoleon to power at the close of 1799 did not lead to general peace, certainly not to peace with Great Britain; and the tendencies which have been described above consequently continued on both sides. The principal novelty was an increased activity on the part of the neutrals, resulting in the organization of the League of Armed Neutrality in December, 1800, between Sweden, Denmark, and Russia, with Prussia as a somewhat reluctant fourth party. It was based on the same principles as the Armed Neutrality of 1780, but with further guaranties against capture under blockade, in the form of a provision for previous warning on the part of the war-ships on guard, and also of a prohibition against the searching of trading vessels under convoy. The impulse had been given by the fact that the Scandinavian convoys had been continued even after France had annulled the law of Nivôse in December 1799, as has already been mentioned; and consequently it is apparent that the new League was directed mainly against Great Britain. The consequence of this was a succession of encounters with British war-ships; and in September 1800 Great Britain was guilty of an act of unusually flagrant aggression, when British privateers just outside the port of Barcelona seized a Swedish vessel and, under the protection of its neutral flag, succeeded in capturing the Spanish ships lying there at anchor.
The League of the Neutrals thus became an extremely welcome moral and political support for Napoleon against Great Britain; and some of his earlier utterances concerning the cutting-off of the Continent from England are due to its short career. For instance, we have his pronouncement to his assistant, Roederer (December 1800), as to the necessity of 'blockading the English on their island' and 'turning to their confusion that insular position which causes their insolence, their wealth, and their supremacy'.1 Napoleon already posed as a champion of the freedom of the seas, and in a treaty with the United States, signed in 1800 and ratified in 1801, he laid down the same principles as had been championed by the Armed Neutrality. But, as is well known, the Armed Neutrality came to an end after some few months with the murder of the Czar Paul I and the Battle of the Baltic, in March and April 1801; and the only result of the action of the neutrals was an Anglo-Russian navigation convention (June 5/17 of the same year), with the belated and somewhat reluctant adhesion of Denmark and Sweden. By this convention Great Britain succeeded in establishing the principle that free ships should not make free goods, and that war-ships, but not privateers, should be allowed to search convoyed trading vessels, in return for the abandonment, in theory, of the paper blockade and for restrictions in the definition of contraband, which was further limited by an agreement with Sweden in 1803. Napoleon, however, followed up his plans of cutting off England in other quarters by means of what the English historian, Dr. Rose, making use of an expression of Napoleon himself, has called his 'coast system', that is to say, the adoption of the French policy of the 'nineties of excluding Great Britain from access to the mainland by making himself master of its coasts in some form or other. After Austria had concluded formal peace at Lunéville, in February 1801, therefore, first Naples and the Papal States, and later on in the year Great Britain's own ally, Portugal, had to acquiesce in the closing of their ports to the British.
This phase of the blockade policy came to an end fairly soon, however, owing to the fact that peace was at length concluded between Great Britain and France, namely, the preliminaries of London, in October 1801, and the formal Peace of Amiens, in March 1802.
PEACE OF AMIENS (1802)
But the Peace of Amiens turned out to be merely a brief and feverish pause in the world struggle; and all modern investigators would seem to agree that a principal cause, not to say the principal cause, of its short duration was the continuation of the commercial war after the close of the military war, which, we may remark in passing, is a significant experience for those who wish to form a picture of the future of Europe after the recent great trial of strength. Napoleon, on the whole, adhered to his old policy of prohibitions, acting under the pressure of the French industrialists, who, according to Mollien, had never been as bent on protection as then. Confiscations continued under the old prohibitory laws of the Revolution; and these tendencies were the more unwelcome to Great Britain because Napoleon, during the short period of peace, extended or maintained his power over great non-French regions, including Holland, Switzerland, and Piedmont. The efforts made by Great Britain to bring about a renewal of the Eden Treaty were doomed beforehand to fail, since nothing was further from Napoleon's thoughts. In 1806, when peace with Great Britain was again under discussion, he is said to have declared in the Conseil d'Etat that within forty-eight hours after its conclusion he intended 'to proscribe foreign goods and promulgate a French navigation act which should close the ports for all non-French vessels.... Even coal and English milords would be compelled to land under the French flag.'
As regards the question of the influence of French policy on the economic position of Great Britain during the peace interval, the idea has spread, on the great authority of Dr. Rose, that the peace meant a change for the worse; but this, as far as one can judge, is a mistake. During the year 1802 the export figures show a rise on all points, especially for the value of domestic goods and for the re-exports of foreign and colonial goods, which rose by 15 and 23 per cent., respectively, as compared with the year before; and at the same time a lively, though somewhat speculative, trade with North and South America began. But in 1803 a great relapse occurred all along the line, the figures for which fall not only below those for 1802, but also below those for the last years of the war; and it is conceivable that one might have seen in this an effect of the French restrictions and the increased possibility of competition from other countries, which in certain quarters had been expected to be a consequence of the restored freedom of the seas.2
In any case the result of the politico-economic strain—as of various purely political matters which have nothing to do with our problem—was the outbreak of war as early as May 1803; the trial of strength between Great Britain and France was now to proceed without interruption until Napoleon's fall, and in its course to give rise to the most unlimited development of the ideas which we have previously traced.3
At first the commercial war continued on both sides, in the main, under its old forms; and to certain details of it we shall have occasion to return later on. Immediately after the outbreak of the war (May 17, 1803) England seized all French and Dutch vessels lying in British ports. A month later (June 24) the neutral trade with enemy colonies was regulated on lines half-way between those of 1794 and 1798; and shortly afterwards (June 28 and July 26) there was taken what was at least for the moment the most effective of all the British measures, namely, the declaration that the mouths of the Elbe and the Weser were in state of blockade, whereby the entire trade of Hamburg and Bremen was cut off. Again in the following year (August 9, 1804) all French ports on the Channel and the North Sea were declared under blockade. The British measures of the next two years are distinctly more difficult to summarize, not only because of the varying conditions of war, but also because of the different tendencies among the leading English statesmen. On the whole, they applied partly to the colonial trade, particularly the trade of the Americans with the European mainland, and partly to the trade with the North Sea coast in general. The colonial trade with the Americans was made the object of sweeping restrictions in 1805, not, however, through new ordinances, but through a new interpretation of the law on the part of British courts. The North Sea coast was again treated in a greatly varying manner, inasmuch as the blockade of 1803 was annulled in the autumn of 1805 and was renewed in an extended form in April 1806, when it was applied also to the mouths of the Ems and Trave. On May 16 of the same year a double blockade was proclaimed, including, in the first place, a strict blockade of the coast between the mouth of the Seine and Ostend, and, in the second place, a less strict blockade of the rest of the coast between the mouth of the Seine and Ostend, and, in the second place, a less strict blockade of the rest of the coast between the Elbe and Brest. Neutral vessels, however, were allowed, under certain conditions, to put in at ports on the less strictly blockaded section. Finally, the blockade between the Elbe and the Ems was annulled on September 25, 1806. Of course, these wobbling measures could not fail to hit the towns of North Germany especially very hard; and their paper-blockade nature kept alive the unpopularity of British policy in naval warfare.4
Napoleon, on his part, had caused many thousands of Englishmen travelling in France to be arrested immediately after the outbreak of war, and shortly afterwards had extended this method of belligerency to Holland as well; and he now proceeded to more comprehensive measures in two different directions. The first was the exclusion of England from all connexion with the mainland, especially with the North Sea coast. For this purpose he occupied Hanover, which, as is well known, belonged to the British royal house, and from there he extended his repressive measures to the great centres of maritime trade, Hamburg and Bremen. His general, Mortier, received orders to seize all British ships, goods, and sailors that were to be found there. And although this measure failed, the French largely made themselves masters of British trade to these points, both in general by the occupation of Hanover, and in particular by the seizure of the little Hamburg district of Ritzebüttel, which included its outport, Cuxhaven, at the mouth of the Elbe. The first of the above-mentioned British declarations of blockade formed the answer to this; and the independence of the Hanse Towns was consequently subjected to new blows from both antagonists. In October 1804, for instance, Napoleon simply kidnapped the British envoy from Hamburg, that is to say, from neutral soil. Moreover, in the beginning of 1804 a double action was taken against the influx of British goods farther south. The imports through Emden, in Prussian East Friesland, up the Ems to the great market of Frankfurt-am-Main were barred by the occupation of the town of Meppen on the Ems; and at the same time large quantities of British goods were confiscated in the vassal state of Holland. In May 1805, Napoleon resolved to intervene against British goods in Holland by causing French patrols to confiscate them along the Dutch side of the frontier. This led the Dutch legislature, in order to prevent such high-handed procedure in the future, to pass a law prohibiting all intercourse with Great Britain, to order the confiscation of all vessels that came from there, to prohibit the importation of British goods, and also to declare certain kinds of goods to be ipso facto British, and finally to lay down a line of demarcation within which the storing of goods was forbidden. These measures undeniably in many respects presage the events of the following year.
Nevertheless, in the matter of the Continental blockade all these things bore the mark of mere skirmishes. Meanwhile, however, Napoleon had also taken up a second line, which demands greater attention, because this side of his policy was pursued to its final goal during the first years after the outbreak of war. The second line was confined, in the main, within the limits of French jurisdiction; and its object was to close the French market to British industrial products, and at times to colonial goods of British origin.
FRENCH CUSTOMS POLICY
As a link in his general colonial policy, which in the main,scrupulously followed the lines of the Old Colonial System, Napoleon had already in 1802, during the year of peace, fixed a customs tariff on colonial goods in such a way that the duties were 50 per cent. higher for almost all specified goods, and 100 per cent. higher for unspecified goods, imported from foreign colonies than on goods imported from French colonies (Thermidor 3, year X—July 22, 1802). In the new customs statute, which became a law immediately before the outbreak of war in 1803, this arrangement was kept practically unchanged; but a high duty (8 francs per kg.) was established on cotton goods, which, of course, was aimed at the British textile industry (Floréal 8, year XI—April 28, 1803). The outbreak of war immediately revived the old line of pure prohibition, well known from the days of the Convention and the Directory, against everything British (Messidor 1—June 20). Colonial goods and industrial products coming directly or indirectly from Great Britain or its colonies were to be confiscated, and neutral vessels had to furnish detailed French consular certificates showing that the goods were of innocent origin. Nevertheless, the characteristic concession was made that the master of a ship who, 'through forgetfulness of forms or in consequence of change of destination', failed to provide himself with such certificates, might nevertheless be allowed to discharge his cargo on condition that he took French goods of corresponding value in return freight—an idea which Napoleon was destined to develop strongly in his later policy. In the new customs statute of the following year, the principle of prohibition was retained. On the one side, it is true, it was made milder, among other things by conceding the right to import certain classes of goods in vessels clearing from ports that had no French commercial representative; but, on the other hand, it was made more strict by a further prohibition with a very wide range, namely, that vessels which had cleared from, or had unnecessarily put in at, a British port should not be admitted to French ports (Ventôse 22, year XII—March 13, 1804). This last regulation anticipated the great Berlin decree, which may be looked upon as the origin of the Continental System proper.
Nevertheless one may safely assume that the whole of this system of differentiation, with special prohibitions against British goods and vessels coming from Great Britain, was calculated to prove as impracticable at this time as it had in the preceding decade. Napoleon, therefore, quietly fell back on a policy of general prohibition which was not directed specifically against Great Britain, but struck at all non-French goods alike. In reality those measures which affected industrial products were felt most severely, not by Great Britain, but by her continental competitors, especially those in the then Duchy of Berg, or what is now the Ruhr district east of the Rhine. This was not the intended result, it is true, but it further strengthened the protection of French industry. The foundation was laid in the Customs Tariff of 1805, which substantially raised the duties on colonial goods and cotton goods (Pluviôse 17, year XIII—February 6, 1805), and the culmination was reached in two decrees issued in the early part of 1806 (February 22 and March 4). These decrees, which were incorporated in the great protectionist codification of the customs laws of the Empire on April 30 of the same year, developed tendencies in two directions. On the one side, there was an enormous increase in the customs rates on colonial goods, with substantially less distinction—in certain cases none at all—between French goods and foreign goods. This was manifestly connected with the fact that Napoleon, after the battle of Trafalgar, largely lost the power of communication with his colonies and had to take into account the fact that the colonial trade would fall more and more into the hands of the British. By way of example, we may observe that, while the customs rates on both brown sugar and coffee, as well as on cocoa, in 1802 and 1803 had been 50 and 75 francs per 100 kilograms for French and foreign goods, respectively, they now increased to 80 and 100 francs, respectively, for sugar, and to 75 and 100 francs, respectively, at first, and to 125 and 150 francs, respectively, later on, for coffee; for cocoa they increased at first to 95 and 120 francs and afterwards to 175 and 200 francs, respectively. Thus the rates amounted to three and a half times as much as they had been three years before. But all this was a trifle compared with the most striking rise of all in the customs rates, namely, on an industrial raw material of such fundamental importance as cotton. Having previously paid 1 to 3 francs per 100 kilograms, it was burdened in 1806 with a duty of no less than 60 francs, which, at a low estimate, was 10 per cent. of the value, though it is true that 50 francs were allowed as a drawback on exports of cotton manufactures. Most revolutionary of all seemed the simultaneous prohibition of the importation of cotton cloths, calicoes, and muslins in February 1806; and the prohibition was extended in April to certain other kinds of cotton cloth as well. Yet at this time cotton had already become an absolute necessity. In later years, at St. Helena, Napoleon made out that the Conseil d'État had shrunk from this project, but that he had forced his will through by quoting the authority of Oberkampf, the leading man in the French textile industry. Naturally, Napoleon had no difficulty in getting his support of a policy that protected his own particular industry. At the same time the importation of cotton twist (filés pour mèches) was forbidden; the customs duty on yarn was raised, especially for the lower numbers, i.e., the coarser qualities; and it was publicly stated that this article also would have been prohibited altogether if it had been thought possible to spin sufficiently high numbers in France.5
Southern Europe came under the same régime as early as 1806. In Italy, during that year, Napoleon pursued a policy which was intermediate between the earlier and the later French method. Thus in the Kingdom of Italy (North Italy), of which Napoleon was king, a number of articles, especially textile goods, were declared, in accordance with earlier examples, to be eo ipso British, and were consequently prohibited when they did not come from France—a declaration which in reality was directed principally against the continental rivals of France. On the other hand, in the Kingdom of Naples, which was ruled by Joseph Bonaparte, only really British goods were prohibited; but in addition all British property was seized. In the same year Switzerland was suddenly obliged to pass a law which, under severe penalties, prohibited all importation of British manufactures except cotton yarn. This was an act of retribution because Swiss merchants, in the weeks just prior to the transfer of the principality of Neuchatel to France, had been importing colonial goods and manufactures there and afterwards had been daring enough to complain when they were all confiscated by Napoleon.
By these measures Napoleon felt that he had effectively closed the French, Italian, and Swiss markets to British industry and trade; but it now remained to close the rest of the continental markets in the same way. In doing this he fell back, in reality, on the old policy of prohibition directed especially against England, though without giving up the French customs policy, which was prohibitive against all; on the contrary, the latter policy went hand in hand with the former throughout his period of rule. But it was to the measures directed exclusively against Great Britain that Napoleon himself gave the name of the Continental System.6
[1.] Sorel, L'Europe et la révolution française, vol. VI, pp. 22-3; Holm, Danmark-Norges Historie fra den store nordiske Krigs Slutning til Rigernes Adskillelse, 1720-1814 (Copenhagen, 1912), vol. VII, pt. I, pp. 42-3. Cf. also de Watteville, Souvenirs d'un douanier du Premier Empire (Boucher de Perthes), in Revue Napoléonienne (N.S., Rome, 1908), vol. II, p. 71.
[2.] The value of British exports in the years 1801-3 is shown by the following figures taken from Porter, The Progress of the Nation, p. 356.
The first column expresses the change in the value of the exports, while the other two express rather the change in their quantity. The figures in Hansard's Parliamentary Debates (vol. IX, app., cols. XV-XVi) differ somewhat from these, but show no divergence in their general tendency. Dr. Rose bases his conclusions on the shipping figures, which, however, according to his own statement, show a quite insignificant decline of 3-2 per cent., and, according to Porter's figures (pp. 397-8), even a slight rise of 6-5 per cent.
[3.] Rose, in Napoleonic Studies (London, 1904), pp. 173 et seq.; Sorel, op. cit., vol. VI, pp. 168, 190, 207, 211-12, 249-50; Levasseur, Histoire des classes ouvrières, &c., de 1789 à 1870, vol. 1, pp. 465-6; Pelet, Opinions de Napoléon sur divers sujets de politique et d'administration (Paris, 1833), pp. 238-9; Cunningham, The Growth of English Industry and Commerce in Modern Times (3d ed., Cambridge, 1903), pp. 675-6; Smart, Economic Annals of the Nineteenth Century, 1801-1820 (London, 1910), pp. 57, 72; Roloff, Die Kolonialpolitik Napoleons I, in Historische Bibliothek (Munich and Leipzig, 1899), vol. X, pp. 134 et seq.
[4.] G. F. & C. Martens, Nouveau recueil de traités (G&ouuml;ttingen, 1817), vol. I, pp. 433-9; Smart, op. cit., vol. I, pp. 70-1; Stephen, War in Disguise, p. 31.
[5.] The principal changes in French customs duties on colonial produce from 1802 to 1810 are tabulated in app. II, from which a better view of the situation may perhaps be obtained than from the enumeration in the text.
[6.] Bulletin des lois, &c., 3d ser., bull. 203, no. 1,849; bull. 276, no. 2,752; bull. 287, no. 2,822; bull. 353, no. 3,669; 4th ser., bull. 29, no. 483; bull. 74, no. 1,324; bull. 78, no. 1,371; bull. 89, no. 1,515; Wohlwill, Neuere Geschichte, &c., pp. 271 et seq.; Vogel, Die Hansestädte und die Kontinentalsperre, in Pfingsblatter des Hansischen Geschichtsvereins (Munich and Leipzig, 1913), vol. IX, pp. 12 et seq.; König, Die sächsische Baumwollenindustrie am Ende des vorigen Jahrhunderts und während der Kontinentalsperre, in Leipziger Studien auf dem Gebiete der Geschichte, 45th ser. (Leipzig, 1899), vol. III, pp. 30, 43-4; Legrand, La révolution française en Hollande (Paris, 1895), pp. 309, 311, 327, 353; de Cérenville, Le système continental et la Suisse, 1803-1813 (Lausanne, 1906), pp. 36 et seq.; Levasseur, Histoire des classes ouvrières, &c., de 1789 à 1870, vol. I, pp. 467 et seq., 422 note 4; Schmidt, Le Grandduché de Berg, pp. 333 et seq.; Roloff, op. cit., pp. 132, 205 et seq.; Darmstädter, Studien zur Wapoleonischen Wirtschaftspolitik, in Vierteljahrschrift für Social- und Wirtschaftsgeschichte (1905), vol. III, pp.122-3; Rambaud, Naples sous Joseph Bonaparte, 1806-1808 (Paris, 1911), p. 436.