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• Editor's Preface, By Harald Westergaard
• Author's Preface
• Introduction
• Part I: Antecedents of the Continental System
• Foreword
• Chapter I.: Commercial Policy
• Chapter II.: Maritime Blockade
• Chapter III.: Continental Blockade
• Chapter IV.: Economic Position of Great Britain
• Part II.
• Chapter I.
• Chapter II.
• Chapter III.
• Chapter IV.
• Chapter V.
• Part III.
• Chapter I.
• Chapter II.
• Chapter III.: Smuggling and Corruption; Fiscalism and Licensing
• Chapter IV.: The Trianon and Fontainebleau Policy In Operation (1810-12)
• Chapter V.: The British Crisis of 1810-12
• Chapter VI.: Self-destruction of the System
• Part IV: Effects of the Continental System On the Economic Life of Great Gritain and the Mainland
• Chapter I.: Different Types of Effect
• Chapter II.: Effects On France
• Chapter III.: Effects On the Rest of the Continent
• Chapter IV.: Effects On the United Kingdom
• Conclusion Comparison With the Present Day
• Bibliographical Note
• Appendices
• Appendix I. The British Orders In Council, 180759
• Appendix Ii French Customs Duties On Colonial Produce

PART IV

EFFECTS OF THE CONTINENTAL SYSTEM ON THE ECONOMIC LIFE OF GREAT GRITAIN AND THE MAINLAND

CHAPTER I.

DIFFERENT TYPES OF EFFECT

THE Napoleonic wars occurred during a period of far-reaching importance for the material development of Europe. That implies that during this period the economic life of Europe must have undergone a great transformation which can be ascribed only in part to the system under discussion. The problem will therefore be not only too widely extended, but also—which is of more consequence—altogether erroneously stated from the very outset, if we regard it as identical with the task of showing the general changes in the economic life of Western Europe during the first decade and a half of the nineteenth century. Instead of that, what we have to do is to isolate those aspects of the development which can be connected in any way with the Continental System. This is a problem of a more or less theoretical nature, which presupposes a knowledge of the general connexion that exists between cause and effect in the sphere of economics, and which can therefore not be solved by purely historical methods.

The point which offers the greatest interest in such a problem is the working of the blockade policy in so far as it became effective. Consequently, we now lay aside the weakness (proved in detail in the preceding part) of the Continental System as a measure of blockade, and turn to the results of the policy.

On the Continent proper the Continental System necessarily came to work as a gigantic protectionist policy pursued to the limit. By excluding foreign goods it stimulated the domestic production of all kinds of goods which found any general use within the country or even within the Continent. To this extent, the Continental System, like the system that prevailed during the recent war, affords an occasion of studying the effects of a high protectionism enforced with the greatest violence and with all the resources of the state for a short period. The difference between this and the régime which characterized the blockaded states of the Continent during the recent war lies solely in the fact that such a system of protection was then freely chosen, while in our own day it was imposed from without. On the other hand, the Continental System, like the state of affairs prevailing during the recent war, exhibits one significant and very fatal dissimilarity from the ordinary kind of protection that prevails in peace time, namely, that under the latter régime the obstacles in the way of imports usually embrace only the products of industry and agriculture, not the raw materials of industry, whereas the nature of the Continental System as a general self-blockade compelled, or at least should have compelled, equally rigorous embargo against all kinds of commodities imported by sea. The efforts of the all-important individual who dominated the Continent had consequently to be directed toward procuring of raw materials within his own territories, a task which always encounters more insuperable limits than that of working up materials which are to be found within one's own borders. And so far as such an effort failed, there was an irremediable self-contradiction within the policy itself. Either, in fact, it was necessary to sacrifice the industrial development by which the position of Great Britain as the workshop of the world was intended to be crushed, or it was necessary to accept raw materials through the co-operation of the ruler of the seas and thereby fail in the object of destroying the commercial and maritime power of Great Britain and consequently fail also in the object of 'conquering her by excess'. When Mollien speaks of the inexplicable 'contradiction' between the obstacles in the way of the supply of raw materials and the prohibition of British manufactures, because the former benefited British industry more than the latter damaged it, consequently he puts his finger on this irremediable doubleness of the very principle of the Continental System.1

On the Continent, however, there existed a further contrast, which was not at all implicit in the idea of the Continental System, but was a consequence of the fact that the overthrow of Great Britain was not the all-dominating thought of Napoleon or his system to the extent that he usually pretended. As has already been shown in several places in the preceding account, in fact, the purely protectionistic aims of the system for France herself practically took the same rank as the object of conquering the enemy. It was for that reason that Napoleon not only neglected what otherwise ought to have been done, in the interest of the first object, to form an economic combine of continental Europe, but even directed his policy against the countries of his own continental vassals and allies.

FRANCE

It follows that the effects of the Continental System in the country of Napoleon's heart, that is, in France itself, were all that a protectionist policy pursued with absolute ruthlessness can involve for a country that adopts it. When we say 'France' here we use it as an abbreviation for the old French monarchy and the French acquisitions of the revolutionary period, i.e., including Belgium and the left bank of the Rhine but not, in the main, the conquests of the consulate and the empire, which were otherwise treated. The effects here were bound to be the typical consequences of an embargo policy; and, as appears from what has just been said, such a policy directed not only against the supply of goods by sea and from lands beyond the seas, but also to a large extent against the supply of goods by land and from the other continental states. We might here foresee that the situation must be characterized as that of economic self-sufficiency and of a hothouse development of industrial production.

THE REST OF THE CONTINENT

As regards the other continental states within Napoleon's more or less undisputed realm of power, on the other hand, the effects were bound to be far more varied, differing not only according to the degree of their political independence and to their actual observance of the Continental decrees within their territories, but also according to the relative importance of the two opposite tendencies of which they were the object. A moment's consideration will show that their position had features in common both with that of France and with that of Great Britain. It resembled the former in so far as they, like France, had to abstain from supply by sea; it resembled the latter inasmuch as they, like Great Britain, were shut out from sales in the markets which were under the direct sway of Napoleon. Consequently, the effects in the non-French parts of Central and Southern Europe cannot be expected to have the same self-evident, consistent appearance as in France; but they have a practical and historical interest of their own.

Moreover, the effects on the Napoleonic mainland were bound to vary with the position of foreign trade and of the production of goods intended for foreign sale. In this connexion, however, we must emphasize at the outset the limitation in the effects which follow from the fact that in scarcely any of the continental states was economic life centred on international exchange. The great commercial cities of Hamburg, Bremen, Amsterdam, Rotterdam, Antwerp, and, in France, Bordeaux, Marseilles, Nantes, Havre, and La Rochelle, were, it is true, entirely dependent on foreign trade and suffered proportionately from the blockade in so far as it became effective; but this point has been already so fully illustrated in the preceding part that it is not necessary to dwell further upon it here. Among the non-French states, countries which, like Saxony, Switzerland, the Grand Duchy of Berg, Bohemia, and Silesia, had already reached the industrial stage and were therefore very dependent on international intercourse, were those most affected by the Continental System; however, they too were affected very differently, according to their political position.

The difference between industrial countries and countries especially given over to agriculture and the yielding of raw materials, namely, North Germany and especially the Baltic States, Prussia, Mecklenburg, Russia, Austria, and Hungary, did not primarily consist in the fact that the latter were independent of foreign trade, since they also had exports. It consisted, rather, in the fact that, from the standpoint of the Continental System, the industrial life of the two groups of countries was affected quite differently by the blockade. The industrial countries, on the one side, found obstacles placed in the way of their supply of raw materials; but, on the other hand, owing to the strangling of British supply, they increased the possibilities of sale for their own manufactures outside of France and Italy. It was as regards sales that the agrarian countries were more or less hard hit, partly through the general obstacles in the way of navigation, which offered almost the only possibility for the conveyance of their bulky goods, and partly also through the prohibition of intercourse with Great Britain, who was their chief buyer.2 Owing to the tendency of the Continental System to render difficult only imports into the Continent, however, the effect of this factor was considerably diminished for the countries producing raw materials and corn. For instance, it practically did not make itself felt in Mecklenburg during this first period. But, as will be explained more fully later on in this book, Napoleon's attitude toward the supplying of England with foodstuffs was so opportunistic, that it is not worth while to attempt to draw any conclusions in principle as to the results that might have ensued. So much may be asserted, however: the difficulties of the agrarian countries were due, not to Napoleon's deliberate intention to cut off England from the supply of foodstuffs or raw materials, but to his very well-grounded apprehension that an export to England from countries which were not directly under his sway would give rise to the importation of colonial goods and English manufactures. In this way, primarily, the situation for both Prussia and Russia is explained. During the second period of the Continental System, it is true, the difficulties for the agrarian countries were increased; but that was because all maritime trade within Napoleon's sphere of power was now made dependent on French licences, that is to say, on the Emperor's need of money or his favour. The particular ill-will with which the Continental System was manifestly regarded in the agrarian countries is explained less by the actual damage it did to the economic life of those countries than by the fact that the policy did not contain any protectionist elements, and consequently did not offer the popular imagination any compensation whatever for the incessant and intensely irritating intervention that it caused.

As regards all the continental states within Napoleon's realm of power, the Continental System had a restrictive effect on exports by throwing difficulties in the way of imports, which it is the sole business of exports to pay for. One may also express the matter in this way: increased self-sufficiency must diminish the need of exports by diminishing imports. The only reasonably conceivable exception from this might be if in any case imports by land increased more than imports by sea diminished; and it is not impossible that the greatly extended intercourse of Saxony with Eastern Europe led to such a result.

GREAT BRITAIN

Such, from the standpoint of general principles, must have been the position of the continental states. In regard to Great Britain, on the other hand, one may express oneself more briefly at this stage. The prime object of Napoleon's policy, of course, was to bring about a dislocation, to prevent the sale both of manufactured products and of the colonial goods imported with a view to re-export, and consequently to ruin the credit system and create unemployment in industry. So long as it was a question only of such ephemeral phenomena, the contrast between Great Britain and the Continent must have been very great, with excess of goods prevailing on the island kingdom and scarcity of goods prevailing on the Continent. On the other hand, in so far as the exclusion of goods from the Continent proved to be lasting and was not made unimportant through increased sales in other parts of the world, the economic life of Great Britain necessarily aimed in the same direction as that of the Continent, namely, toward increased self-sufficiency. The losses incurred in foreign trade, shipping and export industry, indeed, must have made production for sale at home more profitable and thus have given a backward wrench to the unprecedented development which Great Britain was just then undergoing. There is nothing to indicate that Napoleon thought so far ahead; on the contrary, any such speculations would undoubtedly have been answered by one of his usual candid expressions about 'ideologues'. But that would not have prevented the results from being what we have indicated.

Manifestly, this would have damaged the economic position of Great Britain immensely, quite apart from the great dislocations that occurred during the period of transition. It would have reduced her national income far below what it had been before, inasmuch as such a development would have involved passing over from industries which were excellently suited to her in her then position to other industries which were far less suitable. For this reason, too, the losses consequent upon a lasting mutual embargo between Great Britain and the rest of the world would have been far greater for Great Britain than for the Continent. For the international division of labour, specialization in industry and commerce—to confine ourselves now to what was most typical at the time—formed the fundamental condition for the possibility of Britain to derive benefit from her position as the almost sole possessor of the great new inventions. The position of the continental states, on the other hand, was already, at the outbreak of the great struggle, so much less widely separated from economic self-sufficiency that a return thereto would have involved far more limited sacrifices. They would thereby, it is true, have largely lost the advantages of enjoying, by means of purchase from England, the fruits of the great inventions and of covering their requirements in transmarine goods; and at the same time they would have had, with increased sacrifice and diminished results, to find substitutes for both by a kind of production which was in itself, from an economic point of view, misdirected. But the extent of all this must nevertheless have remained insignificant in comparison with the corresponding reshaping of Great Britain. Evidently this result by no means implies that the position of Great Britain would have been absolutely worse than that of the Continent, but only that Great Britain would thereby have lost far more considerable advantages which she had already gained. The turning back of the clock could only have had its worse effects on the situation in the country where the greatest advances in material development had just previously taken place. Whether Great Britain in the long run, under the suppositions just given, would have been able to preserve her relative precedence, is quite another question, and one which it is difficult to answer. Nevertheless, in this case the answer may quite well be conceived to be in the affirmative, and for the reason that the blockade itself rendered difficult, and would have continued to do so, the spread of the industrial revolution from Great Britain to the Continent. In reality, of course, the development did not at all follow this course; but, nevertheless, the theoretical results following from a given position are being examined in this place, not only to illustrate what the Continental self-blockade, thought out to its logical conclusion, would have involved, but also in order to be able to confront with it the actual course of development in due time.

COUNTRIES HAVING INTERCOURSE WITH GREAT BRITAIN

Finally, what must be made clear is the position of the countries which had unhampered supply from Great Britain, that is, chiefly Sweden and, before the complete carrying through of the American self-blockade, the United States. The position of these countries was necessarily marked by an abnormally facilitated supply, inasmuch as Great Britain was obliged to seek there the greatest possible compensation for the markets from which she was debarred. While the countries of the self-blockade were forced into the greatest possible many-sidedness of production, therefore, the countries now in question fell into a kind of hypertrophy of imports. This means that they were brought to buy industrial products and colonial goods in return for a relatively slight output of their own products—a development in itself very advantageous, in so far as it gives a great indirect result of the productive forces of the country. In contrast with these advantages, however, stand the dislocations in the economic organization of the country which would have been a consequence of the necessary discontinuance of previously existing branches of industry. But this was scarcely the case as regards either Sweden or America. Moreover, it is not really necessary in principle, because, as has been said, the development in itself merely implies that one gets more than usual in exchange for one's own goods. It is therefore of greater importance, from the standpoint of the temporary nature of the whole situation, that the industrial development of those countries was somewhat delayed by the exceptional facility of importing British goods, a matter which was of no little consequence for the United States. To this the workings of the Continental System in those countries would have been confined if the Napoleonic self-blockade of the Continent had been complete and effective. But as this was very far from the case, and as the breaking of the blockade was especially done by countries of the type now in question, there was a huge increase of re-exports, that is to say, of intermediary trade, and this became beyond all comparison the most important factor in the actual situation. Nevertheless, the importance of the former factor was not cancelled by this; there was also a great increase in the imports which remained within the country. Again, with the immense increase of prices for British and colonial goods on the Continent, the occupation of the middleman must obviously have been extremely profitable when successful, but, of course, proportionately speculative and uncertain.

Having set forth the position of the different countries in principle, we may now pass on to a consideration of the concrete development, which offers an abundance of instructive features to illustrate and compare with those of our own day.

CHAPTER II.

EFFECTS ON FRANCE

THE development of the industrial life of France under the influence of the Continental System, like the development of all the industrial countries under that system, took place especially in the sphere of textile industries; and nowhere did the conflicting tendencies appear so marked as there. Nevertheless, a great deal of the development of the French textile industry was not only devoid of connexion with the blockade policy itself, but, on the contrary, an evidence of its restricted range.3

LUXURY INDUSTRIES

This applied especially to everything which falls under the heading of luxury industries, including the most brilliant and historic textile industry of France, the manufacture of silk. We, who only recently felt the pressure of a rigorous blockade and shortage of supplies, can best appreciate the fact that in such a situation the production of luxuries would hardly expand and take more and more varied forms, and perhaps still more the fact that governments, however great their lack of intelligence in the sphere of economics, would be foolhardy indeed to go so far as to encourage, not to say enforce, such production. As this was the case during the first French empire, therefore, it is in the very nature of things that the cause can not be sought in the Continental System regarded as a measure of blockade against Great Britain. On the other hand, it is intimately connected with the general protectionist tendency that completely dominated Napoleon and forms the explanation of the peculiar nature of the Continental System as contrasted with the corresponding system of the present day. It was precisely the historic luxury industries of France that the inheritor of the administrative traditions of the Bourbons most unhesitatingly and enthusiastically supported; and it was mainly in the interest of the silk industry that, on the one side, a licensing system was carried out with its obligation to export French industrial products, and, on the other side, the commercial measures against the allies of France, which comprised a monopolization of Italian raw silk for the requirements of the French silk industry and every conceivable measure against the foreign rivals of that industry.

The vaunting luxury in both word and deed, which in Napoleon's view was a principal means of raising the prestige of the empire both internally and externally, also worked particularly well with the tendency to create sales for industries of the kind in which the French had excelled for centuries; and a great deal of the encouragement of industry therefore consisted, quite naturally, in orders of all kinds on behalf of the court and imperial palace. Probably the fact that such a policy diverted productive forces from turning out what was necessary for the support of the people as well as for the prosecution of the war, did not greatly occupy Napoleon's thoughts. To him, in fact, the function of economics presented itself more in the light of the popular notion of the necessity of 'providing employment' than as a need to bring about the greatest possible result from the efforts of limited powers. But in this respect a far more correct perception has forced its way into the minds of the governments of nearly all countries during the recent war—the German Vaterländischer Hilfsdienst (vulgo, Zivildienstpflicht), the British National Service, and various other names, form the best evidence of this—despite almost equally great economic ignorance in the beginning; and this shows how comparatively gentle, after all, was the pressure of the Continental System in comparison with that of the recent war. As the object of our investigation is to determine the actual effects of the blockade policy, therefore, there is no reason to pursue any further the industrial development on its luxury side.

WOOLLEN AND LINEN INDUSTRIES

On the other hand, the situation is quite different in the case of the other branches of the textile industry. Of these, the cloth manufacture had quite as deep roots in the history of France as the silk industry; and it had, like that, and in fact like the whole of French industrial life, suffered greatly from the storms of the revolution, both through the general insecurity of life and limb and through the hopeless state of the currency in consequence of the assignat system. It now raised itself out of its decay and had a brilliant period, which,—for instance, in Rheims—surpassed the last years of the ancien régime, which was now justly remembered as having marked the summit level of old French material culture. Undoubtedly, the development of the woollen industry was promoted by Napoleon's policy, especially by careful work in the way of production of wool and the procurement of wool from Spain, and also with regard to the coarser clothing in consequence of the military requirements, which always and everywhere in our climes make special demands on this branch of the textile trade. Remarkably enough, so far as one can judge, the greatest progress was made in one of the incorporated territories, namely, the Roer department, meaning that particular part of the present Rhine province which is situated on the left bank of the Rhine (Nieder-Rhein). In the now world-famous textile centres, Aix-la-Chapelle, Cologne, &c., there were almost the only industrial centres which the old French manufacturers recognized as equal rivals in the finer branches of the clothing trade.4 It is true that the blockade against Great Britain also played its part here, and still more, perhaps, the blockade against the continental rivals of France. But we cannot speak here of any at all decisive effect of the Continental System itself, as the woollen industry was long established in France and was not brought to any distinctly higher state of prosperity than it had attained before the Revolution, despite the fact that various new specialities were taken up and also various technical advances were made, of which more anon. Thus it was principally for the regions which had previously been outside France, or had been treated by the customs authorities as foreign countries, that the policy became important, inasmuch as it gave them a share of the sales on what was at least intended to be the hermeticallysealed French market. According to Chaptal's calculation, exports had indeed absolutely declined, if one takes into consideration only the old French territory, although internal sales and the total production had increased since 1789. The situation was less favourable as regards the linen industry, where even in the incorporated territories it was only the Belgian district of Ghent that showed any marked development.

COTTON INDUSTRY

Especially with regard to the linen and woollen industries, however, it is true that the comparatively slow development was caused by the expansion of the cotton industry, an expansion which was unique, and, in the eyes of contemporaries, quite phenomenal. Here there is no doubt that we are brought face to face with an effect of the Continental System; for, on one side, the whole of this branch of industry was comparatively undeveloped before the Revolution, while, on the other side, the competition of Great Britain was more overwhelming here than anywhere else in the industrial life of France. The French people had already accustomed themselves to cotton goods to such an extent that the prohibition on imports in 1806 was all that was required to speed up the domestic production amazingly, especially as the foundation had been largely laid by the many prohibitions and embargoes during the whole of the preceding decade.

Here again it was two incorporated territories that exhibited the most violent growth, namely, Mülhausen in Upper Alsace, with old traditions in that line, and Ghent, which under the leadership of one man, Liévin Bauwens, the great captain of industry, stands out as a striking example of one of the two kinds of development due to the Continental System. Ghent, it is true, had old and boasted textile traditions, dating from the Middle Ages; but long before the Revolution almost all manufacture had disappeared there, and as the revolutionary wars put an end to the little that remained, this old manufacturing centre had come to be looked upon as a dead town. In 1801, however, Liévin Bauwens started there a machine cotton-spinning mill and also a hand weaving establishment. To begin with, he was almost alone in the matter, being helped merely by his brothers, but as early as 1803 he had no less than 227 workmen. It was not long before his example began to be followed by a number of other persons, especially relatives, who entered into violent competition with him, particularly for the altogether inadequate supply of labour. An enormous expansion thereupon began; the whole of Flanders and northern France were covered with spinning-mills and home weavers, the new enterprises extending, in fact, as far as Paris and its environs. But Ghent remained the main centre, and for a fairly long time it was the only place in the empire where cotton goods were manufactured on a large scale, especially for military requirements; and it also obtained as markets, not only France and Belgium, but also Holland, Italy, Spain and the larger part of Germany. At the summit level of this prosperity the former 'dead town' was stated to have fifty factories and ten thousand workers in the cotton trade; and the shortage of labour was so great that wages jumped up to what was then the amazing amount of 5-8 francs per diem.

In contrast with this production for sale on a large scale there existed in Mülhausen, and in southern Alsace in general—and had long existed—a flourishing manufacture of the finest qualities of calicoes and printed cotton goods. The real impetus, however, came with the annexation of the town by the French republic in 1798; and the Continental System made it the leading centre for calicoes and prints upon the Continent, at the expense both of Basel and of British sales in Europe. The importance of the development at Mülhausen appears best, perhaps, from the population statistics, which show an increase from 6,628 in the year 1800 to 8,021 in 1805 and 9,353 in 1810, a growth of 41 per cent. in ten years. Alongside this, however, there were also very important and comparatively new centres for the cotton trade within the limits of old France, especially in the old textile districts of northern France and in Paris and its suburbs. One of the most celebrated French leaders of industry, Richard Lenoir, was stated by a German observer who is generally regarded as reliable (Fahnenberg) to have had in his factories such for that time incredible numbers of workmen as 10,600 in 1808 and 14,000 in 1810. According to the statements of Chaptal, who is throughout obviously a partisan of the new industry, it is true, but who in spite of this is in many ways our most reliable source of information, the production of cotton yarn was already sufficient for home requirements almost up to the highest number (finest grades)—in reality, however, up to number 100 only. Even as regards woven cotton goods, in his opinion, the imports had declined to about 6 per cent. of the figure for the last year of the ancien régime; but in this estimate a considerable amount of smuggling, for which an overwhelming evidence exists, was assuredly left out of account. It is also worthy of note that what was at times a very considerable export of piece goods had begun.

Evidently this development was calculated to give Napoleon himself and his helpers a great certainty of victory, both as an evidence of the profitableness of the Continental System to France and as a blow against the economic supremacy of Great Britain. To what a great extent the whole thing was regarded as an important item in the struggle against Great Britain is shown by many facts. When Napoleon visited Oberkampf, the most famous of the leaders of the cotton industry, who as early as 1760 had laid the foundation of calico printing in old France by the establishment of his famous works at Jouy, outside Versailles, he decorated him and added the explanation: 'We are both carrying on war against the British, but your war is the best.' And Liévin Bauwens produced a wonderful judgment on the part of the British Court of King's Bench, by which, on the accusation of Lord Erskine, he had been condemned to death in contumaciam, because, 'not content with having stolen the secrets of England in the art of tanning, he had also robbed her of the most important branch of her trade, the cotton manufacture, which was the apple of her eye.'

In reality, however, there was no point where the two opposing tendencies of the Continental System were so much in conflict with one another as here; and the reason was, of course, that the industry was based on a raw material which was for the most part unobtainable by other means than by the forbidden route across the seas. From the very first moment, therefore, the shortage of raw materials hung like the sword of Damocles over the head of the flourishing new development, causing continual fluctuations and constant changes. During the year 1808, for instance, Liévin Bauwens, according to his own statement, employed 1,269 workmen on May 1, but only 230 on November 1; and the same state of affairs was said to prevail among his competitors. Moreover, according to the same authority, the price of raw cotton rose at the same time from 5.25 to 11 or 12 francs per half a kilo and then sank to 6 or 7. As early as 1807 the shortage of raw cotton had begun to make itself felt in France, and in the course of 1808 it produced a genuine crisis in the cotton industry, which found expression in many forms. Thus, for instance, the prefect of the Aube department declared that the closing of the spinning-mills in Troyes caused by the 'equally sudden and unique rise in the price of raw cotton' had reduced 10,000 people to misery; and on this account he submitted a placard which was apparently insurrectionary.5 According to another statement, the difficulties of the French weaving mills were further increased by the fact that the weaving mills in Germany and Switzerland, owing to the scarcity of yarn prevailing there, had gotten hold of French cotton yarn and thus rendered that dearer. The difficulty was partly overcome this time, and the state of prosperity continued into the year 1810, which as a rule marks the summit level of the industrial prosperity of France, as also of England and the non-French parts of the Continent. But then, as we know, came the great crisis, of which the shortage of raw cotton formed one of the most obvious causes; and this shortage was made worse by Napoleon's Rambouillet decree, issued in the spring of 1810, which dealt a severe blow at American shipping. During the following years of the empire the shortage became more and more acute, and in 1813 it led to a complete stoppage of operations.

The whole of this position is not in the least degree difficult to explain, but its importance is worthy of illustration with figures. The available statistics especially show how practically impossible any real competition with the British industry—or, to be more explicit, the impossibility of creating an industry that could provide the whole population of the Continent with cotton goods on approximately the same terms as were offered to British and American consumers—must have been made by the mere fact that raw material was scarce or unobtainable. (See next page.)

On examining the columns for North and South American cotton we note the enormous distance between British and continental prices. During the years 1808-13 the prices, even in Leipzig, the centre of the European cotton trade, are almost without exception twice as high as in London, and in certain years (1808-9) they are four times as high. To a far greater extent than one would have expected beforehand, the figures follow one another at similar distances—a fact which appears with particular clearness in the increase of price on Georgia cotton in 1808 (autumn) and in the fall of prices corresponding to both qualities in 1811. This illustrates what has been previously said concerning the almost uniform increase of prices caused by smuggling. It is quite true, indeed, that we have no security here for agreement in quality between the different quotations; but the conclusions here put forward may be said to hold good a fortiori, as at least one factor is excluded which would increase, and not diminish, the distance, namely, the heavy depreciation of British currency, which makes the British prices too high when, as here, they are converted to francs at par. A levelling-down tendency first appeared in 1813, in connexion with the Anglo-American war, which raised the British prices, and the fall of the Continental System on the European mainland, which lowered the continental prices; and the year 1814, owing to the continuance of the former factor and the peace on the Continent, led to a unique situation, in that Georgia cotton was cheaper in Leipzig than in London.

However, the table shows something more, namely, that the French prices without exception stood higher than the Leipzig prices. Nor is this surprising, in view of the stricter customs watch in France; but it is none the less a fact which made still more difficult the position of the French cotton industry. Unfortunately, it is precisely these figures that least bear comparison in the table; but light can be thrown on the matter by other figures, based on French consular reports, for a number of different places at the same two points of time, namely, the two crises of May 1808 and June 1811. If we arrange these places as nearly as possible in accordance with the magnitude of the prices, the figures assume the following shape (francs per kilogram):

As we see from this table, the French industrial centres come last, with the sole exception, at the later time, of Bremen.

As all this necessarily followed from the nature of the self-blockade, it could not take Napoleon by surprise; and in point of fact he was prepared for it, although his counter-measures were somewhat hesitating. At times the only expedient he saw was to replace the colonial cotton by some other cotton which did not have to be obtained by sea. The most obvious kind was Levantine, but here, too, there were great difficulties, arising partly from its short staple and generally inferior quality and partly from the great delays and inconveniences of transportation, as it could not be conveyed across the Mediterranean and as a very expensive transport in wheeled vehicles had consequently to be arranged through Bosnia via Genoa and Marseilles. The figures given above also show how the French prices for Levantine cotton ran up, even in comparison with the British prices for the far more valuable American cotton. The situation was all the more unsatisfactory because Napoleon would by no means be satisfied with the coarse goods that alone could be produced from Levantine cotton. Thus there arose the idea of starting the cultivation of cotton nearer home, preferably within the borders of the empire; and in this connexion the most obvious choice was Naples. Naples, to use the expression of the French envoy there, was to be 'France's richest colony', or, to borrow a phrase from a French historian,6 'the tropical element' in the Continental System; it was this fact that caused Neapolitan cotton alone to be excepted from the enormously increased customs duties imposed by the Trianon tariff. But the cotton that could be obtained from Naples (Castellamare), even in combination with that which was admitted in later years from Spain (Motril) and with what could be otherwise scraped together from places nearer home (from Romagna, &c.), supplied but a small fraction of the total requirements; on the basis of Chaptal's figures for the output of the spinning-mills in 1812, one may perhaps calculate this supply at 12 per cent. of the whole.7

All this was so obvious that Napoleon could never feel unmixed joy at the prodigious development of the cotton industry, but, on the contrary, time after time occupied his thoughts with the idea of rooting out cotton goods and replacing them by other textiles, such as had long been manufactured in France and were based on domestic raw materials. Even as early as 1809 he declared that 'it would be better to use only wool, flax, and silk, the products of our own soil, and to proscribe cotton forever on the Continent, because we have no colonies; but as we cannot control the fashions, of course,...'8

The same thought lay behind his resolution, effected in the following year, to offer a prize of no less than a million francs for the invention of a flax-spinning machine; but after the outbreak of the crisis of 1810-11, he took such a strong step against what was after all largely his own work as, in January 1811, to banish cotton goods from the imperial palaces. But for the very reason that Napoleon had given two years previously, the extirpation of cotton goods—at which he assuredly did not even aim at this stage—was a hopeless undertaking; and he, like his people, had to take the consequences of a situation from which there was no escape.

The development of the cotton industry is characteristic of the effects of the Continental System, not only through the dualism that existed between the exclusion of raw materials and the forcing of manufacture, but to an equal extent through the violently enforced stimulation of a production that had not grown up out of increasing natural requirements for an article but out of a sudden embargo in combination with state measures of all kinds. There is no doubt that great over-speculation had occurred in the industry and had had its share in the French crisis of 1810-11, just as a similar over-speculation in the colonial trade gave the impulse to the crisis in Great Britain. Mollien, an observer who formed unusually cool judgments, pointed this out in a letter to Napoleon, and especially called his attention to the insufficient supply of capital possessed by the industry and its consequent dependence on loans and bills of exchange. In his memoirs he is, on the whole, very critical not only of the heads of factories, especially Richard Lenoir, whose untenable business position and reckless way of living he says that he explained to the Emperor, but also of the industry itself, where, in his opinion, many millions had been invested in what could have been made equally serviceable at half the expense.9

When, after some months, the crisis of 1810 reached the cotton industry, it hit it very hard and effectively, especially the spinning-mills, which as a rule seem to have seen their number of workmen decline by a third in the course of 1811. There was a general improvement in the course of 1812 which continued in places during most of the following year, at least if we may credit the deliberately roseate reports of the home secretary to Napoleon in the latter half of 1813. But the Ghent industry declined steadily early in 1813, and later on in the same year, that is to say, before the fall of Napoleon, the decline spread in ever-widening circles. Probably with great exaggeration, but certainly not without grounds, the Executive Committee for Cotton of the Council of Manufactures expressed the view in the following year, immediately after the Restoration, that the whole of this branch of industry was ruined in 1813 to such an extent that 600,000 individuals had to choose between begging or putting an end to their misery on a battlefield. Capital to the amount of 300,000,000 francs was paralysed and working power to the value of 230,000,000 francs was lost. The most comprehensible picture of the decline from the summit year of 1810 to the autumn of 1813 is offered by the official figures for the Ghent industries, reproduced on the next page.10

We note in these figures the powerful effect of the crisis of 1811 as regards the spinning-mills, but, in contrast with this, no effect at all as regards the weaving-mills or printing works, while the decline in 1813, with a quite different kind of uniformity, extends over all branches of the industry; and, if we judge by the number of spindles, it implies a reduction of almost a half.

The strongest evidence of the enforced stimulation of the industry, however, is shown in the events occurring at the fall of Napoleon. When the frontiers were opened in connexion with the march of the allied armies, and later, in April 1814, formally opened by a series of decrees issued by the Provisional Government, the cotton industry collapsed altogether, and almost all the leading manufacturers were ruined. The majority of them—chiefly Richard Lenoir, but also Liévin Bauwens—had received liberal support in the form of loans from Napoleon during the crisis of 1810-11, which they had not been able to repay; and with the fall of the empire all prospect of their ever repaying them disappeared. Bauwens, who had been lauded in every conceivable fashion as the benefactor of his town and as a pillar of the prosperity of France, saw his property sold by distraint, and he himself had to flee to Paris to escape imprisonment. Chaptal particularly regrets the ruin of the great nankeen manufacture owing to the overwhelming competition of Indian and British goods, which were allowed to enter on payment of duty; and the amount of the duty was in reality, according to circumstances, 45-50 centimes per metre, which can not have been less than 20-25 per cent. of the value of the goods and consequently no mean protection in itself.11 But, of course, this was a very considerable step from complete embargo, despite the smuggling.

Whatever construction one may put on the matter, the fate of the French cotton industry on the fall of Napoleon shows that it had by no means become capable, during the time of the blockade, of holding its own against foreign competition. Nor is the great prosperity which, after a quite short interval, occurred under the Restoration any real evidence of its competitive efficiency, inasmuch as a prohibition of the imports of foreign textiles was almost immediately re-introduced; and the protection of the industry was thereby even considerably increased, as raw cotton now came in free. Indeed, as will be shown throughout this chapter, the technical advances in French industry were not, on the whole, very great under the Continental System, and they still fell far behind Great Britain in almost every respect. Without the help of Englishmen very little progress could as yet be made in anything which had to do with engineering or metal working industries; and Liévin Bauwens, for instance, started his machine spinning-mills with the help of five foremen whom he had virtually kidnapped from England, and whom he detained half with their consent and half by violence. As has been indicated before, however, it was almost inevitable that the blows of the Continental decrees against everything living or dead which bore the name of English should have a restraining effect on the spread of English ideas and the removal of English mechanics or inventors to the Continent; and, indeed, Mollien said somewhat bitingly, in connexion with his general criticism of the new industry, that the machinery was built by 'roving Englishmen who were not the best mechanics of their country'. Chaptal's complacent account of how, through his far-sightedness, machines were procured which were the best in Europe and were continually being developed by improvements from without and by native invention, must also be taken cum grano salis.

This appears best from what, in the main, is distinctive of the two great branches of industry that were revolutionized by the inventions of the immediately preceding generation (the textile and iron industries), namely, that France and the Continent in general were even at the time of Napoleon's fall far from being in a position to take up the new fundamental processes on which the industrial life of England had been based for quite a long time.

FUNDAMENTAL PROCESSES

In the sphere of the textile industry this holds good both of the power to spin high numbers of yarn (fine grades), the use of the steam-engine in the spinning industry, and the power-loom. Regarding the first of these, as has already been mentioned, they had not gotten beyond number 100 in cotton yarn in 1815; it was reserved for the Restoration to move forward in a few years to number 200 or (as a rarity) even 291. With regard to the steam-engine, we have already mentioned that one single French spinning-mill had passed, as early as 1787 (the year after the Eden Treaty) to the use of steam power, which was at that date a complete novelty even in England. It would be difficult to find anything more indicative of the technical stagnation which then occurred that the fact that the next time a French steam spinning-mill is mentioned is no less than twenty-five years later. It was not until 1812 that the pioneering firm of Dollfus, Mieg & Cie., which is still famous all over the world, set up such a mill in Mülhausen—that is to say, in an incorporated territory. Power-loom works, which, it is true, came far later than the revolution in spinning in England also, but which nevertheless began to be set up there as early as 1801, are scarcely mentioned on the Continent during the whole of this period. The only examples known to the writer from the territory of the empire—where, for that matter, there is a total lack of detail—belong, like steam spinning-mills, to the incorporated territories, namely, Ghent and Sennheim (in Upper Alsace); and neither of them can have been of any great consequence, as the information about them is so sporadic. In the department of mechanical printing, it is true, greater advances were made on the Continent, in that the great invention in this department, cylinder printing, appears to have come into use at Oberkampf's factory at Jouy, as the first place on the Continent, in 1800, and in Mülhausen and other places in 1805-6; but even this was just twenty years after the institution of similar technical processes in England. In the department of engineering technics it was only outside the cotton industry that the Continent during this period ever took the lead in any decisive respect, namely, as regards both the Jacquard loom, which at first really served the silk industry alone, and Girard's invention of a flax-spinning machine. This last, which was patented in 1810 and thus realized one of Napoleon's hopes, significantly enough, left France before anything had been achieved; the inventor had to flee from his creditors to Austria, and an Englishman got hold of his invention. This gave rise to a flourishing English industry, which did not return to the native country of the inventor until twenty-five years after the invention. The continental textile industry reached the same level as the British textile industry in only one single department, namely, in dyeing and other branches where chemistry could be employed, of which more anon.

IRON INDUSTRY

Still more striking is the stagnation and backwardness of French economic life in the sphere of the iron industry; and it is highly significant that Chaptal, in his detailed and enthusiastic description of the progress of industry, here confines himself exclusively to the department of manufacturing—especially the making of scythes, pins and needles, files, awls, hammers, and other tools—and says nothing about the production of iron, although it was just that which in England had undergone a complete revolution in all its stages during the preceding period. The explanation must be found in an almost incredible backwardness attributable to the French iron industry, which is all the more remarkable in view of the fact that that branch of industry was manifestly of the greatest importance in the incessant wars, and, to judge by accessible figures, had also undergone a very great quantitative development. Nevertheless, the fact itself seems to be quite evident, as shall now be shown.

Although coking and the making of pig-iron by means of coke—that is to say, the smelting of iron-ore with the help of fossil fuel—date back to about 1735, and at least twenty years later had begun to be widespread in English iron-working, French smelting-furnaces continued to be operated almost entirely with charcoal, even after 1808, in spite of the shortage of wood which made its appearance in that year. The only known example of coke smelting-furnaces was offered by the now world-famous Creusot works, which had started the new methods in 1785; but the entire process went steadily backward during the revolutionary era. In 1796 the iron was so bad that it could be used only for ballast; in 1806 the orders of cannon for the Navy were taken away; and the annual production during the years 1809 to 1812 rose to no more than 2,300 to 3,000 tons. Quite parallel was the case with the revolutionary change in the production of malleable iron—smelting in Cort's reverberatory furnace or the puddling process—which freed this second stage of iron-working from dependence on charcoal. This invention was considerably younger, it is true, as it dates from 1783; but even during the eighties it had come into use in England and was at the time of the Continental System widely employed in English ironworking. During the years 1802 and 1803 it had been searchingly studied by the Swede, Svedenstjerna, and the Frenchman, Bonnard, working together. Here, too, the Creusot works seem to have been the only ones of any importance, inasmuch as a reverberatory furnace was started there in 1810, though it is not clear whether this involved any use of coal fuel; other experiments with puddling were failures from the very start.

As regards the production of steel, that is to say, iron with a large content of carbon, Huntsman—also in England—had found a solution of the problem of producing cast-steel (crucible steel) about 1750,a solution which was rapidly noised abroad and twenty years later was pretty generally adopted in England. On the Continent this method seems to have been introduced in 1808 by the Swiss manufacturer, J. C. Fischer, whose establishment outside Schaffhausen became the object of great attention; and in 1812 the firm of Krupp was founded for the same purpose. But in the territories of the French empire only one isolated example of such manufacture is known, and that was introduced by two Belgians in Liège, incorporated territory. Finally, the level attained was also remarkably low in the engineering trade, which in England was already enormously developed as compared with the preceding period. The real pioneers in this respect within the French empire seem to have been two Scotsmen, father and son, of the afterwards famous name of Cockerill, who—also in Liège, in 1807—laid the foundation of the Belgian engineering trade.12

Thus France proper and the most important parts of the empire, as regards the iron and iron-working industries, practically remained unaffected by the advances of the preceding generation; this fact stands out in comparison, not only with England, but also with Germany, as well as Sweden, a country which held fast to old processes, but which even with them had attained great eminence. Consequently, the economist Blanqui was quite justified in saying toward the close of the Restoration that the advances in the iron industry in France were made almost entirely after 1814. In consequence of this the French iron industry in 1814 was quite defenceless in face of foreign competitors, who were stated to sell at 30-40 per cent. under French prices; the blockade had had no more stimulating effect than that a 50 per cent. customs duty was necessary to keep the industry going.

The total impression we get in these essential industries, therefore, may be summarized somewhat as follows: The effect of the Continental System was primarily to exclude at least the industry of the French empire from British influences; and under the conditions then prevailing these influences were indispensable for every country desirous of participating in the fruits of the great economic revolution.

CHEMICAL INDUSTRY

There was one department, however, in which the superiority and pioneering work of French industry were plainly to be seen; and that department is at the same time one where we have an opportunity to study the positive side of the Continental System, the side that promoted progress. This is the chemical industry, or, to put it better, all processes where the results of chemical studies could benefit production.13

The fact that the course of development took this direction in France rather than elsewhere, it is true, was fundamentally due to something quite different from politics, namely, the fact that Lavoisier, through his work during the two decades immediately preceding the French Revolution, had laid the foundation of the whole of modern chemistry and had made it immediately applicable to a number of practical tasks. Moreover, he had had a number of eminent pupils whose work, to a still higher degree, was directly beneficial to industry; their results, too, were to a large extent apparent before or about the outbreak of the Revolution, when the external pressure had not yet begun to make itself felt. In certain cases, also, they had become economically usable before the Continental System and consequently had great importance for industrial development during its sway. In this connexion the first place should be given to Berthollet's theory, based on the discovery of the Swede, Scheele, for the production of chlorine, which became of very great importance for the whole of the weaving industry owing to the fact that as early as 1785 chlorine bleaching took the place of sun bleaching. James Watt almost immediately brought about the transference of the new method to England, which undoubtedly here followed in the wake of French progress instead of taking the lead. Another chemical method of still more central importance—which also had come into use during the years before the outbreak of the Revolution—was the production of sulphuric acid, which became the starting-point for a whole series of other branches of production.

In this connexion, however, it is evidently not the chemical advances of this kind that possess the greatest interest, but rather such as were first helped on their way by the great self-blockade, the importance of which for the process of development was—if the expression may be allowed—maieutic. It may be laid down as a general rule, indeed, that the economic service rendered by a war or by a blockade consists mainly in breaking down the barriers which impede the use of new inventions rather than in evoking those new inventions or discoveries themselves. So far the dictum to the effect that 'necessity is the mother of invention'would hit the point better if it were rephrased 'necessity is the nurse of invention'. In a war situation, indeed, public feeling is so unnerved, as a rule, that there is seldom sufficient calm for profound scientific work; and even if there were calm, time is lacking, for everything has to be done on the spur of the moment, and science seldom allows herself to be commandeered. What is done in war and in case of blockade, therefore, is rather to seize violently upon inventions which have been already or almost completed—that is, in a purely technical sense—but which have previously been devoid of economic importance. When a country is suddenly cut off from the old sources of supply, processes that previously lacked economic importance may become the best or even the only expedient. This is largely the explanation of the 'development of the great industrial marvels', of which Chaptal and others of that period speak. Afterwards, when the exceptional situation disappeared, the marvels also vanished, for they had done their work. They fell back under the threshold of consciousness, so to speak, and became once more potential instead of actual; and this is the only proper thing, if we wish to keep the economic position of the people at its highest level. In this way is explained without difficulty the general débâcle which overwhelmed the industrial creations of the Napoleonic age at the dawn of peace. In certain happy cases, however, the blockade has given rise to a new production that has only needed such a help to strike root; and in those cases it has really carried economic development onward and proved itself a genuine protectress.

In the sphere of chemical industry proper the great example here is the production of soda from sea salt. This discovery had been made by Leblanc as early as some time about 1789—statements as to the year vary somewhat, as is usually, and quite naturally, the case in the matter of inventions and discoveries. The efforts of the great French chemist during the whole of the revolutionary age to make his work bear fruit had come completely to grief, however, and he was ruined several years before his death in 1806. Then came the severance of intercourse with Spain, whence soda had previously been obtained, and this gave a hitherto undreamt of importance to the production of soda, which now proved itself to be, even economically, thoroughly justified, inasmuch as it was developed to such an extent that the price could be reduced from 80-100 francs to 10 francs per 100 kgs. A similar development attended the manufacture of another product, which in the fullness of time was one day to become the basic material for a substitute of Leblanc soda, namely, ammonia; and the production of alum and camphor by chemical methods may perhaps be mentioned here, and possibly, too, the advances made in the important production of nitric acid.

These fundamental discoveries led afterwards to a great many others, as has always been the case in the sphere of chemistry, owing to the many different products that are obtained by a synthesis. But it would fall far beyond the writer's competence to give a detailed account of all this. Yet one might venture the assertion that the French chemical industry during this period, on the basis of the first great advances of modern chemistry, went through, and caused the world to go through, a development of somewhat the same kind as did the chemical industry of Germany after 1870, chiefly on the basis of the derivatives of coal-tar. To mention only one or two more examples, the supply of soda formed the foundation for the manufacture of soap, while the hydrochloric acid obtained as a by-product of sea salt in recovering soda became, in its turn, the basis for the manufacture of chlorine. Of special importance also in the development of the textile industry were the new possibilities in the manufacture of dyes and the printing of them on different kinds of material, which were brought about by the increased knowledge of chemistry. Most famous in the former respect was the manufacture of 'Berlin blue'—also called 'Raymond blue', after its inventor—and the use of 'Adrianople red' in calicoprinting, where a member of the famous textile firm of Koechlin (Mülhausen) made advances in 1810 and 1811 which far exceeded what had been achieved in England.

SUBSTITUTES FOR COLONIAL GOODS

The question of the dye industry led one naturally to the problem of finding substitutes for the more or less inaccessible, and always condemned, colonial goods. It was quite natural that the work of the French government and its organs, perhaps Chaptal above all, should be directed primarily to this point.

That measures were urgently needed here with regard to dyeing substances can be deduced from the great rise in prices, which, at least at Leipzig, was sometimes more marked than for raw cotton: for indigo the price was ordinarily twice as high, but sometimes even three, four, or five times as high, while for cochineal, dyewood and other dyes the price was usually doubled.14 By far the most important dyeing substances were the two first-named: indigo and cochineal. As a matter of fact, this was no great novelty in either case, for people had long used two native dyeing plants, woad (Isatis tinctoria) and madder (Rubia tinctorum), for the production of blue and red, respectively, but it was now regarded as a great advance that the chemists had been able to establish the presence of the same dyeing substance, indigo, in woad as existed in Indian and American indigofera. Expectations, particularly as to the domestic production of indigo, were raised extremely high. People expected to be forever independent of the colonial product, and even as late as 1818, that is to say, after the Restoration, Chaptal cherished the hope that France, by means of her domestic production of indigo, would even get an export article that might compensate her for the profitable trade in colonial goods that she had lost when in 1814 and 1815 she had had to sacrifice the greater part of her colonial empire. In reality, however, the results were very small, and they had no importance whatever for the future. The cultivation of 32,000 hectares with woad had been prescribed; Indian indigo had been declared an English product and its importation had consequently been forbidden; three imperial indigo factories had been founded and prizes had been awarded to private individuals; but even as late as 1813 the output came to only 6,000 kgs., apart from 500 kgs, of Indian indigo (called 'anil indigo') from an Italian plantation. Only one single factory survived 1814; and the whole episode vanished without leaving any traces behind. As is well known, it is by synthetic methods that substitutes have been found in our own day for the natural dyeing substances, indigo and alisarin (the dyeing substance contained in madder); and during the recent war the reverse state of things prevailed to such an extent that Great Britain had sometimes to fall back on natural indigo to take the place of the unobtainable synthetic indigo from Germany.

With regard to the other colonial goods, the substitutes for coffee and tobacco offer us no interest other than that which lies in 'looking into one's own windows'. Among coffee substitutes were included chicory, dried carrots, acorns, sunflower seeds, and sugar beets; as substitutes for tobacco were used leaves of gooseberries and chestnuts and milfoil (Achillea millefolium); and the scope of the production of Europe as a whole is illustrated by the fact that Denmark alone had seventeen factories for making coffee substitutes.15

BEET SUGAR INDUSTRY

But the great example indicating the importance of the Continental System for industrial development that is usually cited is the manufacture of beet sugar; and there certainly is a kernel of truth in this, if one only recalls what was said above regarding the character of the effects distinctive of such times.

The fact is that it is far from true that the possibility of obtaining sugar from beets was a novelty dating from the time of the Continental System. As early as the year 1747, the German chemist Marggraf, of Berlin, had discovered that sugar beets contained the same substance as sugar cane; and from the close of the eighteenth century another German chemist, Achard, had worked incessantly on experiments in the production of beet sugar. In a raw-sugar factory located on his Silesian estate, Kunern, Achard had even succeeded in producing sugar and had published his results in 1809; but no manufacture of importance had arisen in consequence of all this. Achard's fate exhibits a great resemblance to that of Leblanc some ten years earlier, in spite of the fact that a domestic production of sugar had also been the subject of investigation in France, through a committee appointed by the Institut de France in 1800. Thus the matter was technically in a fairly advanced state, though it served no economic purpose as long as it was possible to procure colonial sugar under something like the old conditions. When those conditions were changed, therefore, it is not at all surprising that advantage was taken of the theoretical results already attained; on the contrary, there is more reason to be astonished that there was so long a delay before it was determined to replace colonial sugar in this way. Before that the shortage of sugar had had time to make itself very perceptible. At Leipzig the price of sugar rose almost uninterruptedly until 1813, when it was approximately three and one-half times the amount it had been seven years earlier; and in Paris the price rose first (1810) to four francs per livre, and later (1812) to six francs, or approximately eight and twelve francs, respectively, per kg. Meanwhile, the London quotations for even the best qualities of sugar during 1812 corresponded to between 1.35 and 2 francs per kg., that is to say, from one-fourth to one-ninth of the French price.16

Naturally enough, therefore, people had at a much earlier date begun to search the Continent for a substitute, and there was scarcely any substance containing sugar that was not employed before they came to the beet. Honey, whey, chestnuts, pears, apples, maize, maple, potatoes, figs, cherries, plums, sea-weed, and finally grapes were tried. Grape sugar was the first stage, and as much as 2,000,000 kgs. were manufactured in the years 1810-11 and given a bounty; but this syrup, which was black and did not crystallize, was repulsive and had an unpleasant odour.

At this time, however, the cultivation of sugar beets had already been started, and the manufacture of beet sugar had begun at several places, especially at Passy by the firm of Delessert. It is only natural that enthusiasm was great when the result appeared; and it was alleged, assuredly for that time with great exaggeration, that the product could not be distinguished from cane sugar. There followed a visit (dramatically described by Chaptal in his Memoirs) by Napoleon to Delessert, who was decorated by the Emperor and regarded as a pioneer. The imperial administration took the matter in hand, in accordance with its usual methods, by means of measures which ran exactly parallel with the treatment of the manufacture of indigo, and which followed one another in rapid succession. A prohibition was established on the importation of colonial sugar, and it was ordered that beets should be cultivated first on 32,000 hectares and afterwards on 100,000 hectares, which order, it is true, was never carried out. It was ordered further that there should be four imperial sugar factories, and a special one in Rambouillet. There is no question that this gave rise to a lively development of both the culture of sugar beets and the manufacture of sugar, not least among the German-speaking people residing within and without the borders of the empire, and experimentally as far north as Denmark. And Napoleon's organs made all that could be made of this success in the work of becoming independent of the supply by sea. Thus the home secretary, in his survey of the condition of the empire submitted to the Corps législatif in February 1813, stated how it had seemed an impossibility to find anything to replace sugar, indigo, cochineal, soda, and cotton; but 'we have exercised a strong will, and the impossible has been accomplished through our efforts'. From the year 1813 onward, he held out prospects of a manufacture of 7,000,000 livres (nearly 3,500,000 kgs.) of sugar in 334 factories, which were stated to be 'almost all' at work; and this he considered to correspond to at least half of the demand, which had diminished greatly owing to the rise of price.

As usual, the reality was somewhat less brilliant. According to the home secretary's own report to Napoleon later in the year, it turned out that, owing to ignorance and unfavourable weather, they had only got 1,100,000 kgs. of sugar and that of the 334 licences issued only 158 had been actually used; and if one may believe a statement made by the director-general of manufactures and trades immediately after the Restoration, the quality of the sugar placed on the market was so bad that it had created a prejudice against the home product. As a matter of fact, the retrograde tendency began as early as that same year (1813), and afterwards the fall of the empire drew with it the decline of the industry, so that not a single one of the sugar factories held its own. But after only two years two new factories were started, one of them by Chaptal on his estate at Chanteloup. A high duty on colonial sugar set the manufacture of beet sugar on its feet toward the close of the 'twenties, so that the contribution of the Continental System on this point turned out to bear fruit after the lapse of a decade and a half. Thus the sugar beet industry stands, by the side of the Leblanc soda, as an evidence that a blockade may, in certain cases, remove some of the obstacles that stand in the way of an important economic development.

CHAPTER III.

EFFECTS ON THE REST OF THE CONTINENT

FRENCH POLICY OF INTERESTS

THE strain of egoism in Napoleon's policy is a well-known and abundantly proved side of the Continental System, which naturally weakens the sympathy usually shown by German writers for the fundamental idea of the plan to exclude England from the Continent.17 The pretended object18 of combining the Continent of Europe into an economic unit against Great Britain did not, it is true, altogether lack champions. The fairly obvious and undeniably important idea of developing the Confederation of the Rhine (which embraced the whole of Germany, with the exception of the possessions of Austria, Prussia, Sweden, and Denmark, and whose creator and powerful protector Napoleon was) into a customs union, which, incidentally, would have been an antecedent of the German Zollverein of 1833, was put forward by Beugnot, the 'imperial commissary' or supreme head of the local administration in the Grand-Duchy of Berg, on two or three different occasions; it also had a spokesman in Bacher, Napoleon's minister to the Confederation of the Rhine at Frankfurt; but it was not in the least degree this spirit that prevailed in Paris. In the late summer of 1807 Napoleon charged Champagny, who was just then passing from the Home Office to the Foreign Office, with the task of determining what the princes of the Confederation of the Rhine wished for their trade, and what measures should be taken to secure a market for French industrial products in their territories. It was assuredly in accordance with the Emperor's intention that the second question was the one that Champagny in reality answered, and in doing so he followed the significant line that it was necessary to prevent the now consolidated German states from throwing obstacles in the way of French sales and particularly the transport of French goods across Germany, obstacles which had been impossible at the time when the states were small and divided. In accordance with this idea, Napoleon maintained a whole swarm of commercial spies all over Germany, and these made reports on the smuggling of English and continental goods and on the capacity of French manufacturers to beat foreign competitors; and to a large extent it was on the strength of such information that Napoleon later directed his measures against sales in other countries.

A celebrated illustration of the way in which Napoleon in reality regarded his political mission in this department is contained in a letter which he dispatched from Schönbrunn to Fouché (acting home secretary at the time) after his victory over Austria in 1809 (September 27). In that letter the master empties the vials of his wrath over the commercial department of the French Home Office:

If the department had done its duty, it would have taken advantage of my march into Vienna to encourage merchants and manufacturers to export their cloth, pottery, and other goods which pay considerable duties in Austria, cloth alone paying 60 per cent. I should, as a matter of course, have released them from these dues and filled the warehouses of Vienna chock-full of French goods. But that department thinks of nothing and does nothing.

Accordingly, it was not to exclude England, but to make a breach in the customs wall against French goods, that he here wished to make use of his victories; and in full accordance with this the French manufacturers just a week later tried to bring about an export of fine French cloth to Vienna on payment of a very insignificant duty, without any reciprocity for Austrian goods in France.

But Napoleon's egoistic policy was most clearly framed with regard to the Kingdom of Italy (North Italy), which he was anxious to transform entirely into an economic dependency of France. Hermetically sealed to the sales of the industrial products of all other countries, it was open to receive French goods and to provide France with needed raw materials (chiefly silk), but without any corresponding right to derive advantages from the French market; finally, it was designed as a barrier to prevent goods from the competitors of France from penetrating into Naples, Sardinia, and South Europe in general. Owing to the fact that Italy for hundreds and even thousands of years had been economically connected with Switzerland and Germany by close commercial ties, this policy involved a severe dislocation of the industrial life of these last two countries and compelled them to have recourse to other markets or to other branches of activity. Napoleon has never given his general principles relating to the treatment of allies and subordinate non-French territories a more intensive expression than in another famous letter which he addressed on August 23, 1810, to his faithful and reliable step-son, Eugene Beauharnais, who governed Italy in his name as Viceroy. The fundamental idea of this letter appears in the following extract, with Napoleon's own highly significant italics:

My fundamental principle is, France first and foremost (la France avant tout). You must never lose sight of the fact that if English trade triumphs on the seas it is because the English are the strongest there. It is reasonable, therefore, that as France is the strongest on land, French trade should also triumph there. Otherwise all is lost.... Italy has France to thank for so much that she really should not mind if France acquired some commercial advantages there. Therefore, take as your motto: La France avant tout.

The beginning of this policy in Italy has already been described,19 and the continuation followed along the same lines. The decree of the year 1806 was directed against Bohemian, Saxon, Swiss, Bavarian, and Berg textile goods, and seems to have hit hardest the Grand-Duchy of Berg. That country, which was at that time nominally ruled by Napoleon's brother-in-law, Joachim Murat, but in reality by the Emperor's own organs, managed to obtain an exemption for itself in January 1807; but as early as December of the same year this exemption was cancelled. Beginning with the following year its goods were definitely excluded from the Italian market, while the exports of Switzerland were hit particularly hard by an intensification, introduced about the same time, of the decree of 1806, which forbade all imports of cotton goods except from France. The position of French goods in the Italian market was further strengthened in 1808 by a curious Franco-Italian 'commercial treaty' which Napoleon, in his capacity as autocratic ruler of both countries, concluded with himself. Finally, this policy culminated in 1810 in a triple regulation which in the first place extended the prohibition of imports from cotton goods to woollen goods, when they came from other countries than France, in the second place supplemented the prohibition on imports by a prohibition of transit, and in the third place forbade the export of Italian raw silk except to Lyons, the export of silk from Piedmont, which was incorporated with France, having been forbidden as early as 1805. The explanation given for this (in the letter to Eugene just cited) was that it would otherwise go to England, because Germany did not manufacture silk; but this explanation ignored the fact, well known to Napoleon, that Switzerland both carried on a trade in Italian raw silk and also had a flourishing silk manufacture. In the Kingdom of Naples, which was ruled first by Joseph Bonaparte and afterwards by Murat, there was applied, under the hard pressure of Napoleon, a similar policy, first with preferential duties on French goods and afterwards with a prohibition on the import of foreign goods.

As regards the states of the Confederation of the Rhine, Napoleon observed considerably greater restraint; and comparatively little is known as to violations of their right of self-determination, despite Champagny's proposals just mentioned. On the other hand, it is highly significant that not even the territories incorporated with the empire in Napoleon's own time were thereby automatically placed on the same footing as 'the old departments'. This was a weakness which had, as a rule, characterized the loosely combined states of the old regime, not least France herself; but in Napoleon's strictly centralized realm it did not mean any such looseness of structure, but something quite different. There, indeed, it is an expression of the fact that the territories were worked into the empire in order to be shut out from British supplies, and at the same time were not to be more than proselytes of the gate; that is to say, they were to be left without participation in the advantages of the French market. This policy, which has not yet been made the subject of special investigation, was applied, for instance, as against Holland and 'the Hanseatic departments,' in such a way that French goods could be conveyed to the incorporated territories without let or hindrance in the same way as to the other parts of the empire; but goods from there, on the other hand, were regarded as foreign when they were conveyed to France. For Holland, it is true, it was laid down in the decree of incorporation that the customs frontier with France should disappear as early as the beginning of 1811, but this disappearance was repeatedly put off and seems never to have been realized. It makes a peculiar impression, for instance, to hear of people from Leyden, in 1811, and from Osnabrück, in 1812, praying for free intercourse with the empire, although both places belonged to the territories incorporated in 1810; and the same was the case with the Hanse Towns.

The whole of this egoistical system probably had an even more irritating than economically injurious effect on the other countries because it ran counter to the most cherished economic sentiments of the natural man as to the advantages of exports and the disadvantages of imports. Moreover, it did not even have the redeeming feature of providing the export goods of France with the dominant position that was its sole object and raison d'être. To a considerable extent this was due to the fundamental character of the Continental System, with its tendency to make the supply of raw materials enormously dear and difficult; for, as the figures already given show very clearly, this hit France the hardest, because smuggling by sea was checked more effectually there than farther to the north, while goods smuggled by land had to be filtered through many customs frontiers before they reached France. But it was further aided by the fact that French industry was marked by the production of luxuries, which rendered sales extremely difficult, especially toward the close of the period, when the burden of the endless wars, both bloody and bloodless, on the whole of Europe was pressing with increasing weight. Finally, there was the fact that France could not by any violent measures overcome the circumstance that her industries had not made so much progress as those of certain other countries. In Italy, it is true, these factors made themselves felt to a less extent, for the industries of that country did not really appear as competitors; and the blockade towards the north would seem to have had a certain degree of efficacy. At any rate, the available figures for the Kingdom of Italy show that Franco-Italian commerce increased many times over, so that about half the foreign trade, including both imports and exports, fell to the exchange of commodities with France; and from Naples also there could be ascertained a rise in imports from France. On the other hand, this implies no increase in the exports of France on the whole. Only one year during the period of the empire (1806), according to the official returns, could show figures as high as those of the last years of the ancien régime, despite the huge annexations of important industrial regions that had taken place since then; and, as has already been mentioned, the export of woollens had declined. It is particularly striking how poor a showing France made in competition with her continental rivals in the German market. It is fairly obvious, and also confirmed by the sources, that the obstacles which Napoleon placed in the way of the exports of those countries to the south of Europe must have helped to further their penetration into other markets, where they entered into competition with France. Thus the Swiss showed themselves at a Leipzig fair for the first time at Easter, 1808, after the closing of the frontier toward Italy had been made more strict at the end of 1807; and their sales of muslins were forced anew on that market after the still stricter embargo of 1810. In that case it is evident that little had been gained from a French point of view, even though injury was inflicted on the trade of the other countries as a result of its being diverted from its natural course.

The reports of the French commercial spies completely agree with the statements found in German and Swiss sources as to the difficulty for France to compete with the other countries. Thus from Switzerland we learn that French competition was unimportant in Germany, except for silk; from Bohemia, that French goods could not compete; and from Frankfurt, that French goods were the least important of all. The French reports usually sought an explanation of the fact that German and Swiss goods had the upper hand in various accidental circumstances, such as greater proximity to the place of production, simpler qualities, greater ease in obtaining raw materials, &c. But some, on the other hand, are more frank. Thus the report from Darmstadt runs: 'The cashmere and cotton factories of Saxony and Switzerland injure our trade in Germany, where they find great sales and are much in request under the name of English wares, the appearance of which they imitate.' And in the autumn of 1810 one of the French commercial spies made a statement which, from the standpoint of Napoleon's egoistic policy, must be regarded as a condemnation of the entire Continental System: Their competition' is perhaps at the present moment more dangerous for France and Italy than that of the English manufacturers, because they dispute the Continent with us'. Thus, despite the best will in the world and despite unlimited powers to reserve for France what had become free through the blockade against England, Napoleon had scarcely succeeded in obtaining any increased sales for French export industries. As a measure to promote exports in the interest of France, therefore, the Continental System cannot be regarded as having achieved any great results.

We must now examine somewhat more closely how the economic life of certain other continental countries, and particularly their manufactures, was affected by the Continental System; and in this matter, especially with regard to the general effect, it seems proper to limit ourselves to a few typical examples.

SAXONY

Of all manufacturing countries on the Continent there is scarcely one which developed so powerfully under the Continental System as Saxony. Various factors contributed to this. To begin with, Saxony lay at some distance from France and was governed by a native prince in whom Napoleon had confidence. A powerful French interest further demanded that its economic life should be spared from violent dislocations and galling restrictions, because the Leipzig Fair, which has seldom had in its long history so much importance as during the Napoleonic wars, demanded a certain liberty of movement for its existence, and that existence was of great importance to French exports, the direct connexions of which seldom extended farther to the east than Leipzig. Under these circumstances it was natural that Napoleon should take care not to exercise there the continual intervention that fell to the lot of his vassal states that bordered on France. On the other hand, Saxony had an excellent situation for connexions both with the North Sea and with the Baltic, and also, before the incorporation of Trieste, with the Mediterranean, and it was therefore less affected than most countries by the changed directions of maritime trade. Even though the Leipzig Fair, owing to this change, diminished in importance during the last years of the Continental System, yet the supply of cotton for the country's own requirements was even then, as far as one can judge, sufficient; and in any case it was incomparably better than in France, as is very clearly shown by the foregoing tables illustrating the prices of cotton.20

Saxony was already at this time a manufacturing country with a many-sided development, both as regards the majority of textile industries—cotton, wool, linen—and iron-working. But so far as I know, it is the history of the cotton industry under the Continental System that has been subjected to the most thorough investigation. This has been done especially in the work that has so often been cited in these pages, namely, König's Die Sächsische Baumwollenindustrie am Ende des vorigen Jahrhunderts und während der Kontinentalsperre (1899), which on the whole would seem to be the most useful of the existing monographs on the industrial conditions of this period. In general, this one-sidedness in the literature very well corresponds to the reality, for it is in the sphere of the cotton industry that one really has to expect the workings of the Continental System in Saxony.

The Saxon cotton industry, which had a long history behind it, had not become the object of British competition until the seventeen-seventies, after the inventions in the spinning industry, principally as regards the fine goods (muslins) that were manufactured in Voigtland in the south of Saxony, mainly in Plauen. The competition had been met by the imitation of the British goods, but for this purpose the Saxon yarn was too coarse; and this brought about the admission of British yarn for the muslin factories shortly after 1790. But even then there was no more than a short breathing space, for before the close of the century the British competition was regarded as overwhelming, even in the matter of muslins. The second main division of Saxon cottons, the coarser calicoes intended for printing, which were produced on the northern slope of the Erzgebirge, centering in Chemnitz, held out some-what longer. That too was based on British yarn as warp, but it also went under immediately before the introduction of the Continental System.

What made it possible to check this development under the Continental System, however, was not only the fact that Saxony was an old home of the cotton industry, which was only gradually disturbed in its position, but also two other important facts. One was that what had been revolutionized in the British cotton trade at this time was really only spinning, while the power-loom was still only in its infancy. The beginning of the Continental System was simultaneous with the well-known and peculiar phase of the British industrial revolution when the hand-weavers, who were later reduced to abysmal misery, had brilliant incomes owing to the scarcity of workers to weave the increased quantities of yarn produced by spinning-machines. No doubt the economic organization of British weaving also had been changed under the pressure of the great spinning-mills, and the technique of weaving had also been improved in Great Britain. But for a country which was able to bring its own spinning industry into approximate equality with the British spinning industry, there was still some possibility of holding out against British competition; and we here come to the second fact that made possible a restoration of the Saxon cotton industry when the Continental System placed difficulties in the way of the importation of British cotton. This second fact was that the spinning-machinery had already obtained a firm footing in the country before the blockade rendered difficult the importation of British machines and British operators. Hargreaves's spinning-jenny, which was only a multiple spinning-wheel and therefore did not put an end to, but rather supported, home industry, had already reached Saxony in the seventeen-eighties, and there were thousands of machines there before the Continental System. But of far greater significance was the fact that in the year 1801, in consequence of the importation of British operators, two great spinning-mills were started in Chemnitz, one with Crompton's mule and the other with Arkwright's water-frame. This created the possibility of producing both long and fine thread, though not by any means so fine as the British thread (mule-twist up to no. 70 and water-twist up to no. 36), and, in general, of keeping pace with the development of British technique. It was really only the mule-spindles that obtained a firm footing during the period of the Continental System; while water-frames never came into common use, and jennies almost completely disappeared, the number of mule-spindles increasing steadily from 13,200 in 1806 to 255,900 in 1813 (of which in the half-year between Michaelmas 1811 and Easter 1812, there was a rise from 132,000 to 210,150, an increase of 59 per cent.). The development of machine spinning suffered a slight check at the collapse of the Continental System in 1813-14; but on the whole the results attained in this matter seem to have held their ground. Alongside this, moreover, there arose a special and comprehensive industry for the manufacture of spinning-machinery, distributed over some dozen workshops, of which the most technically advanced, though not the largest, was under the management of the British mechanic who had fitted up the first mule spinning-mill in 1801.

Thus it is fairly clear what causes made it possible for the Continental System to check the decline in the Saxon textile industries. Despite their importance, the period did not bring any general quantitative increase in production. According to König's calculations, which are based on the year 1805 when the effects of British competition had already appeared all along the line, there was only one year (1810) that exhibited higher figures (an increase of 25 per cent.) than the year taken as the basis, while the figures of the other years and average were lower. The course of development showed a decline for the muslin industry, which was dependent on the almost unobtainable high numbers of yarn. That industry partly passed to Switzerland, and partly lost through British competition its most important remaining market, Turkey. On the other hand, there was an increase of nearly 40 per cent. for unprinted calicoes, so that the cotton industry of Voigtland, and consequently of Saxony as a whole, passed more and more to the production of calicoes. In a somewhat similar way calico-printing grew, and the results were so satisfactory that the British could sell nothing whatever when, after Napoleon's fall, they first showed themselves openly at the Michaelmas Fair at Leipzig in 1814.

In spite of all this—and here is perhaps the point that presents the greatest interest—the Saxon cotton industry, like the correspondent French one, had not been in a position to keep pace with the technical development of Great Britain during the period of the blockade. There were practically no steam spinning-mills, but somewhat more than half of the spinning-mills were driven by water-power and the rest by animal-power or hand-power. Far more important, however—for the former was evidently mainly due to a good supply of natural power—is the fact that cylinder-printing did not come into use during the period, but calico-printing was still performed by the extremely slow hand method. Consequently, it took the British only three or four years (1817) to get the better of the Saxon calico industry; and under the influence of this competition the transition to machine-printing, which it had not been possible, or, more correctly, necessary, to adopt during the long period of blockade, took place in 1820. Although the Continental System had a very strong stimulating effect on industrial development in many directions, therefore, yet it had not built up industry so firmly as to prevent a relapse for some years after the close of the blockade; and this was due to the incapacity of protection to provide for the adoption of the technical advances that had not been introduced before the beginning of the blockade.

SWITZERLAND

While the industrial development of Saxony, on the whole, was stimulated by the Continental System, in certain regions in Switzerland the result was quite the opposite, the situation there being far more complicated. And what is now to be said about Switzerland applies also in large measure to the Black Forest and, peculiarly enough, to Geneva as well, though the latter was incorporated with France.21 In the Swiss and Baden regions (with the exception of one single branch of production) there was a violent decline in the previously well-marked industrial development and a distress which was widespread, and, in certain districts, frightful. Nevertheless, it is a great mistake to regard the blockade as the sole cause of this devastating backward movement. The character of Swiss industry made it peculiarly susceptible both to the revolutionary influence of the great inventions and to the changes undergone by the general economic position of Europe toward the close of the Napoleonic wars.

About 1770 Switzerland was the pioneer country in the European cotton industry, with both spinning and weaving highly developed under the forms of home industry, for which the country was uniquely adapted. Shortly afterwards the machine-spun British yarn began to penetrate into the country, but this development was checked by the obstacles which the course of the French Revolution placed in the way of intercourse with England. Also, when Napoleon began to close the land frontiers more and more tightly a new change took place in the situation. The importation of raw materials for all the Swiss textile industries—cotton, flax, hemp, raw silk—was rendered difficult, while the calico-printing works of Geneva, on the contrary, suffered through being placed within the French customs frontier and thereby being shut off from the supply of unprinted cotton from Switzerland. The severance of the many ties that connected Switzerland. The severance of the many ties that connected Switzerland with all the bordering countries was thus primarily responsible for the confusion that prevailed during the first five years of the nineteenth century. The earlier years of the Continental System brought about, as we already know, the closing of the Italian market, but, on the other hand, they led to what were sometimes great sales in Germany. We are told that at the Easter Fair at Frankfurt, in 1809, the Swiss completely dominated the market. They left the town after having sold their stocks, but furnished themselves anew and had an equally sweeping success with their new supplies and at equally good prices. Until this time Switzerland had had no very great difficulty in providing herself with raw cotton or even with British yarn, especially because the important port of Trieste was still open. It is true that a shortage of Brazilian cotton had made itself felt, but this had been partly replaced by North American cotton.

What really caused suffering during this period was not the general state of the trade, but the hopeless struggle that hand-spinning was carrying on against machine-spinning, hastened, as it was, by the importation of yarn and also by the increasing necessity to fall back on the short-stapled Levantine cotton; for this quality did not admit of the spinning of fine numbers of yarn, which otherwise constituted the only chance left to hand-spinning. The misery of the Swiss hand-spinners would seem, as regards the range of the injury, to surpass considerably what we know of the corresponding effects of the industrial revolution in Great Britain. But it is in the very nature of the case that we here have to deal with sacrifices for what cannot possibly be looked upon as anything but lasting material progress. The definitive introduction of machine-spinning went on in Switzerland, as in Saxony, under the protection of the Continental System, but on a foundation which had been laid beforehand in both countries—in the year 1801. In Switzerland, in much the same way as in Saxony, the new branch of production had been in the way of falling a victim to British competition; but it was saved and now developed itself, partly under Saxon influence, by means of a spinning-machine industry. The last-named industry gradually became independent, and acquired a great reputation, like machine-spinning itself. It maintained its prosperity, not only under the Continental System, but also after its fall, though it suffered a momentary dislocation. Probably the manufacture of spinning-machinery in its turn is connected with the manufacture of cast or crucible steel at Schaffhausen, and possibly also with the general development of the engineering industry in Switzerland that has played an important part in the economic history of the country during the nineteenth century.

However, Napoleon, the 'mediator' of the Swiss Confederation, undeniably had an eye on its industry; and there was no comparison between his ruthless and continuous intervention in Switzerland and his relatively mild treatment of Saxony. This fact explains many of the dissimilarities in the consequent evolution of the two countries. The Emperor never neglected an opportunity to make Switzerland, a dangerous competitor that was politically powerless, feel the whole weight of the measures both of the Italian and of the French governments; and the states of the Confederation of the Rhine, especially Bavaria, were not slow to follow suit. In 1809 occurred the incorporation of Trieste, which was a hard blow for both the imports and the sales of Switzerland; but it was the years 1810-11 which, so far as external policy is concerned, gave the decisive turn to events. It was then that the last measures were taken in Italy which definitively shut off the south of Europe. At the same time the Trianon tariff led both to repeated and violent ransackings of Switzerland for British goods and to prohibitions on the transport of colonial goods (cotton) from the states of the Confederation of the Rhine, and finally also to the decline both of the Frankfurt and the Leipzig Fairs, so that sales for the north were rendered difficult at the same time that sales to the south were strangled. Nevertheless, we do not form the impression that these external events were the main cause of the almost all-embracing crisis which now broke over the whole of Swiss economic life. Of the seriousness of this set-back there does not appear to be any doubt. The Landammann (President) summed up the situation in April 1812, in the distressful proposition that 'the industries of Switzerland are now nearing their end'; and a considerable emigration took place, among other places, to the left bank of the Rhine.

The fundamental cause of this hard blow seems rather to have been the general distress which now spread over Europe, and which struck Swiss industry with particular severity because most of its branches were concerned with the production of luxuries. In the cotton industry this especially held good of the manufacture of muslins and embroidered goods, in which Switzerland and Baden had been beyond the reach of competition on the Continent and had suffered no inconvenience worth mentioning from the Continental System. But it was just here that a devastating crisis broke out which put an end forever to these branches of production in certain districts, and for the moment practically everywhere. To a somewhat smaller extent the position was the same for calicoes and coarser unprinted cottons. Outside the sphere of the cotton industry, both the silk manufacture and the making of watches and jewellery obviously satisfied what was in the main a demand for luxuries. The most highly developed watch industry, that of Geneva, is stated to have declined to a tenth of its former magnitude. Evidently it will not do to see in this an effect of the Continental System; and the fact that Switzerland during the recent war, despite far greater difficulties in the supply of raw materials and foodstuffs, was yet able to avoid such great dislocations as in 1811-13 is evidently connected with the fact that it has now, not only industries that supply the luxury demand but also, and perhaps to a still greater extent, other kinds of industries.

To outward appearances, consequently, the difference between Switzerland and Saxony is very great. If one tries to get to the bottom of the significance of the Continental System for Switzerland, the dissimilarity, however, will diminish considerably. In both countries machine-spinning secured a firm foothold, while the weaving industry could not maintain itself in either country. But things were undeniably far worse in Switzerland for three reasons; because of the much greater ruthlessness of the Napoleonic policy there; because of its more intimate connexion with surrounding countries; and, above all, because of the fact that Swiss industries were far more concerned with the production of luxuries.

GRAND DUCHY OF BERG

Of all the regions of the Continent beyond the borders of France there is scarcely one whose fortunes under the Continental System are so indicative of the dualism of the policy as those parts of the right bank of the Rhine that Napoleon combined into the Grand-Duchy of Berg. What this territory at the present moment means to the industry of Europe is well understood when its most important part is mentioned, namely, the Ruhr district; to this was added the closely allied Siegerland, which forms a continuation of the district farther to the south. To that region belong such centres of trade and Rhine navigation as Duisburg and Ruhrort, textile centres such as Elberfeld, Barmen, and Mülheim, some of the foremost coal and iron mines in the world, and iron-working and metalmanufacturing centres, such as Essen, Gelsenkirchen, Dortmund, Bochum, Siegen, Dillenburg, Remscheid, and Solingen. In a word, it is one of the most eminent and highly concentrated industrial districts in the world. Even though the development of the Rhenish-Westphalian territory into its present position has progressed with giant strides, especially since 1870, yet, even at the beginning of the last century, Berg was one of the most advanced industrial countries of the Continent, particularly in the departments of metal manufacture and of textiles, both woollen and cotton. It was, as a rule, superior to the corresponding French industrial areas and was called, not without reason, 'a miniature England'.

It is evident that a region of this kind would have served better than almost any other to form the central point in a combination of the Continent against the industry of Great Britain; and few regions would, at least for the moment, have gained more by such a position. But evidently this would have presupposed a willingness to subordinate French manufacturing interests to the demands of the uniform continental policy; and it was precisely this willingness that was lacking. The very industrial superiority of Berg thereby became its misfortune under the Continental System; it fell between two stools, being inexorably excluded from the French market, but no less inexorably bound to French policy.

Situated quite close to the French frontier, which at that time, as everybody knows, was formed by the Rhine itself, its mere geographical position threw obstacles in the way of its retaining the relative independence enjoyed by the majority of the other states of the Confederation of the Rhine. But this was all the more impossible because the country in reality was governed throughout on Napoleon's own account, at first in the name of Joachim Murat, but from 1808 even nominally under the rule of the Emperor in his capacity as guardian of the new Grand-Duke, the minor son of Louis Bonaparte. Its position, in combination with the measures described above22 for the blockade against Holland by means of a customs cordon between Rees and Bremen in 1809 and the incorporation of Holland in 1810, placed difficulties in the way of the supply of colonial goods both from the Baltic and from the North Sea to quite a different extent than was the case in Saxony. This was especially the case after the Trianon tariff, which particularly during its earlier phases involved dues in all the states through which the goods had to pass; and there was still less possibility of any supply through the Mediterranean than there was in the case of Switzerland. The native minister of the Grand-Duchy, Nesselrode, said with bitterness that Berg was the only country that had ever conscientiously applied the Trianon tariff. Every reason conspired to force her to the French side in the great struggle.

Under such circumstances it constituted an excess of punishment to place the country outside the French customs frontier, so much the more so because a very extensive mutual exchange of commodities with France had commenced before the Revolution, consisting, on the one hand, of the exportation of metal wares, cloth, and ribbons, and, on the other hand, of the importation of wine, oil, and colonial goods. The more unavoidable the sufferings that the new situation caused to Berg, the more persistent and ardent became the desire of its inhabitants to be incorporated with the empire, like their more fortunately situated countrymen on the left bank of the Rhine; and if that were impossible, at least they asked to enjoy some modification in the prohibitive French regulations regarding customs duties and prohibitions on imports, which, as has been previously stated,23 did most effectually prevent competition from the right bank of the Rhine. The unbroken stream of prayers from the population in this direction was also actively supported by both Beugnot, the local French governor at Düsseldorf, and Roederer, the secretary of state for Berg in Paris. But all was in vain. Sometimes Napoleon's heart softened, as in January 1807, when he admitted the goods of Berg into Italy; but the old tendencies always regained the upper hand, and, as has already been mentioned, the specific concession referred to was revoked before the end of the year. Particularly violent was the resistance to the incorporation of Berg that was raised from the Roer department on the left bank of the Rhine, where a new and flourishing textile industry in Aix-la-Chapelle, Cologne, and Krefeld was greatly profiting by sales on the closed French market and feared nothing so much as competition from the superior industry of Berg. In this matter there was unusual truth in the saying, 'Preserve me from my relatives'. It makes an impression which is half-amusing and half-repulsive when one reads the addresses, reeking with French patriotism, to Napoleon or to the prefect of the department, in which the Chambers of Commerce of Cologne, Aix-la-Chapelle, and Krefeld, and also the cotton manufacturers of the Roer department, tried, with every conceivable sophism, to prevent any listening to the prayers of Berg, owing to its industrial superiority, its unfair methods of business, and its already sufficient sales in the north of Europe. When we read all this, we are forcibly reminded of a very apt remark made by Professor Morgenstierne to the effect that even a purely temporary frontier calls forth claims to protection against competition, while the same sort of competition is regarded as a healthy and natural development when it takes place within the boundaries of a country. The summit level of cynicism was probably attained in an address to the Emperor from the Cologne Chamber of Commerce in the autumn of 1811, where a plea was coolly put forward to move the population from the unfertile right bank of the Rhine to its fertile left bank:

Instead of growing milder, the French attitude toward Berg rather became more rigorous, especially under the influence of the severe crisis of 1810-11 in France, which naturally made competition from a superior industry still more objectionable than ever; and as was so often the case during this period, the difficulties were increased by almost meaningless annoyances, as, for instance, when Remscheid's steel manufactures were not allowed to be conveyed through France for exportation to America.

Under such circumstances Berg, on the whole, suffered nothing but injury from the Continental System; and after 1810, when conditions everywhere began to get worse, the situation in the Grand-Duchy was represented as heart-rending, with unemployment and the increasing emigration of skilled workers across the Rhine (as the Cologne Chamber of Commerce had hoped) and a general discontent which Beugnot, immediately before the Russian Campaign, tried to exorcise by a reduction of the duties of the Trianon tariff, but which broke out into open revolts in the beginning of 1813. It is true that the complaints may be reduced to some extent, as is indeed always the case; for nothing would be more misleading than to write history, and particularly economic history, on the basis of complaints alone, for 'every torment hath its cry, while health doth hold its peace'. The loss of the French, Italian, and northwest German markets, and also the scarcity of raw cotton, certainly brought about great suffering; but, on the other side, the smuggling of cotton went on to the last, and at the German fairs, where Napoleon's measures had no effect, the sales were good; in particular, the woollens of Berg were regarded as keeping all others out in Frankfurt. The diminution in the exports of manufactures by a bare 30 per cent. (from 55,000,000 to 39,000,000 francs), which Roederer ascertained at the close of 1810, cannot in itself be regarded as overwhelming; but, of course, it meant a great deal for a country that was industrialized to such an extent as Berg and was especially well equipped for foreign sales. Above all, there was here, in sharp contrast with the state of things in Saxony and Switzerland, practically no single point in which the rigid and detested system afforded any compensation for its inconveniences. When the effects of the war on Europe in general began to make themselves felt more and more strongly, therefore, it was only natural that the situation should become unendurable in a country which was pressed so hard between two antagonists—almost literally between the devil and the deep sea—especially when it quite naturally seemed to the population as if the officially announced aim of the policy might have led to a very different treatment and rendered possible a favourable development of the country. Just as the left bank of the Rhine was grateful, and with reason, for the orderly administration and the economic prosperity brought about there by the French rule, and just as the time of Napoleon was also important for various autonomous German states of the Confederation of the Rhine, e.g., Bavaria, through the indirect French influence, so did the pressure of the Continental System make itself detestable in this unique industrial region which was shut out from all quarters through the egoism of French policy.

INDUSTRIES IN OTHER COUNTRIES

The development of industry in the other states of the mainland offers comparatively few new features; and there is no reason to essay a monographic treatment of the several countries. Conditions in Bohemia seem to have accorded more or less completely with the developments in Saxony, while not only Baden, as has already been mentioned, but to a very large extent Italy, like Switzerland, came to suffer from the closing of the frontier of South Europe to all quarters. In the north the famous linen manufactures of Silesia especially suffered through the closing of the Italian frontier, so that the well-known misery of the Silesian linen-weavers—so dramatically treated by Gerhart Hauptmann, among others—began during this period. Thus we have here a very close parallel to the Swiss development. The industries of Denmark were of so little importance that they could not suffer much harm; but what the Continental System did to them was of a typical forcing-house character; the number of looms in the Copenhagen cloth manufacture increased from 22 in 1807 to 213 in 1814, only to fall back to 74 in 1825.25

It is characteristic that the regions which worked for maritime trade were hard hit, not only by the stagnation of trade and shipping, but also by the fact that the blockade removed the very ground from under the feet of their industries, a thing which quite naturally could most easily happen in such countries because their industries are usually based to a very great degree on trade relations with other countries, either for raw materials or for sales or for both. In accordance with this, the industries of Hamburg were seriously crippled in every respect, because its sugar factories suffered from the scarcity of raw sugar and English coal, and its calico-printing works (to a small degree, it is true) from a shortage of unprinted calicoes; in the same way Holland suffered not only through the entire annihilation of its carrying trade, but also through the scarcity of salt for its fisheries and an absence of markets for its spirit manufacture.

COUNTRIES PRODUCING RAW MATERIALS

The account of the development under the Continental System of the countries that provided raw materials must necessarily be very brief, as the sources are strikingly scanty, and as the blockade on the Baltic and in Austria was so intermittent.

In Russia the dislike of the nobility and of persons of political influence for the alliance with Napoleon and the Continental System was extremely strong from the very start, as has been set forth with typical French animation and wealth of colour in Vandal's famous work Napoléon et Alexandre Ier (1891-6); and without doubt economic factors also played their part. But one has nevertheless a kind of impression that their importance has been exaggerated. What especially gives occasion for doubt is the fact that the evidence for the stagnation of trade which is always met with is the great decline of the Russian rate of exchange (a loss of 72 per cent.). This cannot be explained by an 'unfavourable balance of trade', for this cause is never sufficient in any case that occurs in practice to bring about a result of that magnitude. The true cause was and is the depreciation of the currency in Russia and Austria, both then and now caused by an excessive issue of paper money.26 But this, of course, does not make it impossible that the stagnation in Russian timber exports may have been great, as is indeed stated from French quarters which had some interest in maintaining the opposite; and the fact is partly and quite irrefutably confirmed by the great increase in the price of timber, to which we have already called attention,27 in both Great Britain and France. This stagnation was brought about, however, not only by the increased difficulty of maritime intercourse, but also by a rather unique consequence of the blockade, which has had analogies during the recent war, namely, the great part that Englishmen played in the economic life of Russia before the Peace of Tilsit. This is illustrated by the vast amount of information from official Russian sources that can be found in Oddy's work. For instance, in 1804, 35 per cent. of the imports and no less than 63 per cent. of the exports of St. Petersburg were in the hands of British merchants; and the three greatest commercial houses, all of them British, taken by themselves, carried on more than one-fourth of the export trade of the Russian capital. French evidence testifies to the same conditions. General Savary, who reached St. Petersburg in July 1807, on behalf of Napoleon, gave a detailed description in his report of the all-dominating position of the British trade, telling how half of all the vessels were British and how Englishmen took over all the timber from the nobility and thereby provided them with their safest source of income; and he also remarked that they themselves founded industrial concerns in Russia when the importation of British manufactures was too much hampered by customs duties. When so important a part of the economic activity of Russia ceased to exist without warning, it was naturally impossible to obtain substitutes either in Russia itself or from France; and the natural consequence was a stagnation in Russian exports. Napoleon was quite conscious of this position, and in November 1807, he ordered his ambassador, Caulaincourt, to lay before Emperor Alexander a proposition whereby the French government should buy several million francs' worth of mast wood and other naval stores for its shipyards. It is uncertain, however, whether this plan was ever carried out.28

The Continental System seems to have had a much more marked restraining effect on the exports of raw materials and foodstuffs from Prussia, that is to say, chiefly from the districts east of the Elbe, probably because Napoleon had still greater reason to distrust the loyalty of the Prussian government than that of the Russian government toward the system, and because, moreover, he had considerably greater means of exercising pressure against the former than against the latter. According to an account by Hoeniger, great stocks of timber rotted away at Memel, while the price of corn fell by 60-80 per cent. between 1806 and 1810 owing to the absence of markets. The same phenomena appeared in northwest Germany, which had been wont to dispose of its surplus corn to England via Bremen and now saw its means of export barred, with the consequence that, while the price of colonial goods at Bremen increased many times, the price of wheat there declined by 62 per cent. between 1806 and 1811, and the price of rye correspondingly. On the other hand, the shipping and corn exports of Mecklenburg were allowed to remain practically undisturbed until the latter half of 1810. In fact, according to accessible figures, the year between August 1809 and July 1810 marks the summit-level of development, which, it is true, was largely caused by the trade with Sweden which was resumed after the conclusion of the Finnish war. From Rostock there sailed during that twelvemonth no fewer than 439 vessels, as compared with 55 in the year 1808-9 and 31 in the year 1810-11; and the exports of corn exhibit equal figures. Here, as has been previously mentioned,29 it was the licence system that put an end to the export of corn.30

ENTREPȒT COUNTRIES

Finally, as regards countries carrying on an intermediary trade, Sweden and—before the passing of the Embargo Act—the United States, it appears from what has already been said that the effects of the Continental System were necessarily limited substantially to the sphere of trade; and in the preceding pages materials have been supplied for the illustration of this development. The United States is of particular interest in this connexion in that it shows a quite different development before and after the enforcement of the self-blockade. At one single blow this transformed the country to the type of France and gave a huge stimulus to the development of industry, especially the cotton industry, which, according to an inquiry of Secretary of the Treasury Gallatin, seems to have sextupled during the four years preceding 1809.

GENERAL SITUATION ON THE CONTINENT

When, after this discussion of the development of different countries, one undertakes to form a general picture of the situation on the Continent of Europe, it cannot escape the observation of anyone who is at all free from prejudice that the effects of the Continental System on the actual material foundation of the life of the people—what economists call the satisfaction of the wants of the people—were far less than those which accompanied the recent blockade. What was lacking with regard to pure articles of consumption was little else than coffee and sugar, and, to some extent, tobacco; and however severely the scarcity of coffee may have been felt during the recent war, surely no one will deny that the material effects of the war would have been quite insignificant in comparison with what they actually were if they had not extended beyond that. For the rest, the scarcity under the Continental System applied to industrial raw materials, mainly cotton and dyestuffs, but in many countries also other textile raw materials, such as wool, flax, hemp, and silk. So far, therefore, the situation seems to correspond to our recent experience; but in reality this is not the case. For while the shortage in our own time seriously reduced the supply of woven goods themselves, that is to say, articles actually required for consumption, during the time of the Continental System complaints were always, at least as far as I know, limited to the inconveniences suffered by production in consequence of the lack of raw materials and the resulting unemployment. Unemployment, in particular, with its consequences in the way of mendicancy and vagrancy, is a consistently recurring theme in the descriptions of the effects of the Continental System—during the whole period in the ports, and in times of war and under the influence of shortage of raw materials in the industrial districts. Parallel with this run the accounts of the death-like silence in the great coast towns, grass growing in the streets of La Rochelle, the ruin of shipping, and the like. In order to conceive the importance of these phenomena aright, one must necessarily have a firm grip of the fact that trade, shipping, and industrial activity are means for covering the wants of the people, not ends in themselves; and what settles the matter in the last resort is to what extent those wants could be satisfied more or less as usual. So far as we can judge, that was far more the case a hundred years ago than it has been in our own day.

We might perhaps summarize this contrast by saying that the effect of the Continental System on the European mainland was continuous dislocation, while the dislocation of the recent war was, in the main, overcome during the first year of hostilities. On the other hand, during the recent war, in contrast with the great war of a century ago, the lowering of the standards of life and the decrease in supplies necessary for the general wants continued uninterruptedly and probably at an accelerated pace, but without dislocations, in the proper sense of the term, and with an immense decline in unemployment, as compared with peace conditions. The fact that the course of development took two such opposite directions then and now and that there was no dislocating effect in our own day shows, on the one hand, how much more flexible and adaptable economic organization has become during the last century. But, on the other hand, the difference is due to the dissimilarity of the two blockades, which is the reason why the satisfaction of general wants remained comparatively undisturbed a hundred years ago. At a time when Great Britain asked for nothing more than an opportunity to flood the Continent with colonial goods and industrial products, the supply must, despite all selfblockade, have been quite different from what it was when the normal producers proceed to hinder all supply.

Finally, another contributory cause was the relative selfsufficiency , which evidently greatly limited the effects of the Continental System as regards the satisfaction of general wants of the population of the continental states. The most important fact is that difficulties regarding food did not possess anything like the importance that they had during the recent war; indeed they practically played no part whatever on the Continent before the winter of 1811-12. The one exception was in Norway.31 This self-sufficiency as regards food was far greater than can be found in our own time, even in countries that produce the necessary amount of food for their own population, because they are dependent upon imports of manure and fodder, while such a situation was practically unknown a hundred years ago. Moreover, the self-sufficiency within the continental countries, the relative economic independence of the particular household, went far to prevent the hardships occasioned by a blockade in the twentieth century. The fact that, as a consequence of this, the corn problem was really a problem only for England, makes it proper to postpone its treatment to the section in the following chapter dealing with the effects of the Continental System in that country, and makes a mere reference to it sufficient in this place. In that connexion, too, Norway will be considered. The explanation of the seeming paradox that the scarcity of raw materials principally hit production and left consumption almost unchanged, also lies in the consumers' comparatively great independence of market conditions as well as in the great reserves of linen, cloth, and wearing apparel kept in every self-respecting household.

In spite of the limitation in the general effects of the Continental System that follows from all this, one cannot shut one's eyes to the fact that the years 1811-13, after the crisis in France, Great Britain, and most of the other countries, are characterized by a serious deterioration of the economic conditions prevailing everywhere on the Napoleonic mainland. It is true that the character of this deterioration is anything but clear and would deserve a really searching examination; but the fact stands out clearly in many different quarters. As early as the autumn of 1810 one of the French commercial spies speaks openly and very pointedly of the 'pretty general condition of ill-being (malaise)' in Germany; and afterwards the situation finds particular expression in the difficulties, already indicated, that the luxury industries experienced in finding a market. Moreover, the same thing is shown by the difficulty in overcoming the crisis of 1810-11 and its more or less latent continuation down to the great transformation brought about by Napoleon's fall. It was just at that time, too, that food difficulties showed themselves to some extent all over Europe and hit the most vital of the general needs. There is no justification, it is true, for laying the blame for this position entirely on the Continental System, which was merely one side of a state of war that had then existed for twenty years; but undoubtedly the trade blockade had its share in the result. It is possible that conditions would have come to develop in a direction more like our recent experiences if the fall of Napoleon had been delayed a few more years. As things turned out, however, people got scarcely more than a preliminary taste of what would have been involved in such a situation.

CHAPTER IV.

EFFECTS ON THE UNITED KINGDOM

THERE remains the question of the effects of the Continental System on the United Kingdom, which is in a way the most important of all, inasmuch as it must show the importance of the policy in relation to its special purpose.

LIMITATIONS OF OBSTACLES TO EXPORTS

In order to be able to judge this matter aright, we must realize clearly the serious weakness that existed in Napoleon's position from the standpoint of the Continental System, a weakness that lay in the fact that the very most that he could be expected to attain by his own resources was the closing of the mainland of Europe. The importance of this for his object of smothering the exports of Great Britain probably appears with sufficient exactitude if we reduce the value figures corresponding to her exports to percentages and then divide them into three groups according to countries of destination. The position is then revealed as follows:32

This summary shows, to judge by the position immediately before the organization of the Continental System, that at the very highest about one-third of the exports of domestic goods could be affected by the self-blockade of the Continent, although, it is true, there must be added to this three-fourths of the re-exports. It was, therefore, a factor of fundamental importance for Napoleon's success that the United States should also be driven to the establishment of a self-blockade, inasmuch as that would put an end to another third of the exports of British goods. It is impossible to deny that in this matter he received excellent help from the British government itself, when it allowed things to come to an almost unbroken series of conflicts with America, mainly because of the Orders in Council, which as a matter of fact were never more than quite a secondary weapon in the great struggle. This meant that, strictly speaking, everything had been done which was really possible in the direction of preventing British exports; and so far Napoleon had achieved even more than he could have achieved with the resources of his own empire alone.

But precisely the development thereby created, as it is illustrated in the above figures, shows a limitation in the range even in a course of action which was so surprisingly successful, namely, that it always left trade with the rest of the world undisturbed. We see from the third column of the table how the share of this department of exports with regard to British goods increases in relative importance under the Continental System in comparison with the preceding years; and this tendency will be clear whether the situation is regarded from an English or from a continental point of view. British industry would seek transmarine markets as substitutes for lost European ones; and it would likewise find them, as the increased selfsufficiency of the European Continent would make the rest of the world more dependent upon British supply than before. Of interest in this connexion is the fact that the Continental System gave the impulse for British transmarine exports of calicoes and prints, which had been unheard of before.33 And in this respect Napoleon was almost hopelessly impotent, for it must have been inconceivable to prevent for any long time the power that commanded all the seas of the world from exporting goods to other continents. Even if the self-blockade of the Continent of Europe had been complete, which was, of course, far from the case, the immediate effect would probably have been to hasten the economic orientation of Great Britain both from Europe and also, to a large extent, from the United States, to the rest of the world; and this orientation, as a matter of fact, has taken place gradually during the last hundred years and has formed one of the most significant changes in the position of Great Britain in the economy of the world. In one of his famous and most overweening utterances (1826), Canning justified British co-operation in the liberation of the South American colonies on the ground that 'he called the New World into existence to redress the balance of the Old'. In the sphere of economics this British tendency already had century-old roots, and indeed it was precisely what was attempted under the Continental System by the speculative exports to Brazil. When one follows the later development of transmarine exports, one scarcely doubts that this speculative touch would soon have vanished if the blockade of the Continent had become permanently effective. How important the change has been since the time immediately before the Continental System is shown by the following comparison with the situation immediately before the outbreak of the World War.34

The same thing can also be illustrated by the quantity figures, namely, the tons actually shipped to the same groups of countries; but in this case we can deal only with the first half of the nineteenth century, because statistics are no longer compiled in this way.

More or less parenthetically it should be observed that at the present time Great Britain, as a consequence of this, would be considerably less susceptible to being barred from exports to Europe than she was a hundred years ago.

The limitation of Napoleon's possibilities of affecting British exports was thus obvious even during the comparatively few years that his continental empire lasted; and, as far as one can judge, it would have become still more so, in ever-increasing degree, if the Continent of Europe had passed through a long period of isolation. We must now try to form a notion of British economic life under the pressure of the blockade as far as it actually became a reality.

Unfortunately it must be regarded as impossible, in the main, to separate these effects in any kind of inductive way from the general tangle of economic development. Not even in the peculiar department of war measures does the Continental System stand in isolation; that is to say, the effects of the war and the effects of the Continental System do not coincide. Here the self-blockade of the Continent has by its side the Orders in Council and the many other subjects of dispute with the United States, which brought about the closing of that great market to British exports; and they were accompanied also by the burdens peculiar to the war itself, which could not possibly have been without importance even if there had been a complete lack of measures and countermeasures in the sphere of commercial policy. But in addition to all this there was the circumstance that not even this complex of factors could take effect as a whole in anything which could be called, even approximately, a community in a state of economic equilibrium. On the contrary, the economic life of Great Britain would have been in a state of violent transformation quite irrespective of the Napoleonic wars, owing to all the different movements included in the industrial revolution, the effects of which were made still worse by a poor law system which was entirely devoid of guiding principles and was therefore extremely pauperizing. Finally, moreover, the confusion of the British currency caused dislocations which must be referred to yet a third cause, which was in the main independent of the others. It is manifestly impossible, under such circumstances, to arrive at more than rather general conclusions as to the effect of the Continental System on the economic life of Great Britain as a whole.

RATE OF INDUSTRIAL DEVELOPMENT

The main thing is to determine to what extent the industry of the country was hit in the way that Napoleon intended. We ask ourselves, therefore, whether the six years during which the Continental System may be regarded as having been in force (1807-12) exhibited any stagnation or decline with respect to the preceding and succeeding development; if there was, we may possibly see in this an effect of this special cause.

The question is not easy to answer, as the period was so short and so full of ups and downs. But one starting-point might possibly be obtained in the figures for the supply of coal, if such were available; for during the age of coal, coal has usually formed the best common standard of industrial development. As it is, however, we have no figures for the total amount of coal produced, but only for the quantities of coal shipped from Newcastle and Sunderland; while probably the greater part, and the part that underwent the greatest increase, was consumed within the huge cotton, wool, and iron areas that lay on or behind the coal-fields. But in any case the figures (yearly averages) are of interest.35

These figures do not in the least degree indicate that the rate of industrial development was retarded under the Continental System, but, on the contrary, they show that the growth was not greater even during the first years of peace; and the figures for the particular years give the same impression. For the cotton industry by itself we have no figures to go by save those referring to the imports of raw cotton; and as appears from the tables given in a preceding chapter,36 the fluctuations here were very great from year to year. But a summary of the figures for net imports, on the same method as before, gives the following result:

Here too, therefore, we are confronted with an increase which is even several times greater than in the former case, although it falls far short of the increase during the following peace period, which, of course, is only natural.

Nor does the rest of the somewhat scattered material that is available show any visible signs that the uniquely rapid industrial development which is characteristic of this period was retarded by the Continental System. The population of Great Britain and Ireland increased 13 per cent. between the years 1801 and 1811, as compared with 15&frac;14 per cent. during the following decade; and naturally it was considerably greater for the industrial districts. Calico-printing works quadrupled their production between 1800-14, and the exports of iron increased. Nor did the years of the Continental System form an exception to the general transition to new technical methods which constituted the primus motor of the industrial revolution. Thus Cort's son stated in a petition to the House of Commons in 1812 that even at that date 250,000 tons of malleable iron were annually produced by puddling and that Cort's processes had obtained practically general acceptance.37 The power-loom likewise made progress, though at a considerably slower pace. A great new revolution took place in calico-printing with the year 1808, in that the pattern was transferred to the cylinders from a little steel cylinder instead of being engraved direct; and the lace machine came into existence in 1809, &c.

There was certainly no pause in the industrial revolution, nor any tendency to a backward development of the industrial life of Great Britain toward increased self-sufficiency, such as, in accordance with our previous findings, would have been the consequence of complete success for the Continental System. But, of course, it was not in that way that Napoleon himself thought of the matter; his hopes were limited to dislocations in the system.

EFFECTS OF DISLOCATION OF EXPORTS

It appears from the account in part III that these hopes were not frustrated, but, on the contrary, were very nearly fulfilled through the British crisis of 1810-11. Also it appears equally clear that this crisis cannot be regarded wholly, or even mainly (though certainly in part), as a fruit of the blows of the Continental System against Great Britain; nor was the extent of its effects at all what Napoleon had imagined.

On the whole, we have no reason to regard the economic effect of purely dislocation phenomena as particularly important. It is possible in this connexion that we are too much impressed by the unique experiences of the recent war in this direction; but even if we think of crises occurring during otherwise normal times—even crises of such an incalculable character as the cotton famine in England during the American Civil War—it is striking how soon their traces are swept away by subsequent development. The whole of Napoleon's plan on this point, made out at short sight as it was, cannot be regarded as having had any great prospect of attaining its object, that is, the crippling of Great Britain's military power by undermining the foundations of her economic life.

This, then, holds good of the purely economic effects of the dislocation; with regard to its social and political effects the matter assumes quite a different aspect. Here the political economist can really neither contest nor confirm the process of thought, for the result depends almost exclusively on the character of the people in question. An impulsive race, which has also become accustomed to receiving help from the state in all things great and small, may be led by a mere trifle to overthrow a government, a constitution, perhaps a whole order of society, while another people, which is more phlegmatic and less trained to rely on the state, may leave the conduct of the state entirely undisturbed even in times of serious distress and great difficulties. It is quite obvious that Englishmen, especially during the time of the Napoleonic wars, belonged to the latter category; and as Miss Cunningham has justly observed, the rage of the unemployed was directed in the "Luddite riots" against the new machinery (frame-breaking), but not really against the government.38 One can easily imagine that Napoleon, with his experience of the continual coups d'état during the French Revolution, could not see this; but this makes no difference with respect to the fact that he made a thorough miscalculation.

But to all this must be added the fact—and this is a very important fact—that the particular kind of dislocation in Great Britain due to the Continental System which was most favourable to Napoleon, was necessarily of a comparatively superficial nature, just because it was a dislocation caused by obstacles in the way of exports and not of obstacles in the way of imports. A failure of exports can always be alleviated by production with a view to accumulating stocks—supported, if necessary, by public funds; but that is not the case with the failure of imports, for if irreplaceable commodities are irretrievably left outside no measures can be of any avail.39

Napoleon's thoughts certainly did not run in that direction, and the explanation lies in an attitude we have already learned to know, and which he shared not only with all his countrymen, but also, probably, with the majority of Englishmen. But even with due allowance for this, the position he took up was very peculiar; for what England would have needed to do was pretty much what he himself did at that very time. His own remedy for unemployment, in fact, was state support in different forms, in order to enable manufacturers to continue operations; and there is no reason to suppose that he ever ceased to believe in the efficacy of this remedy. In that case it would not have been a great flight of imagination to expect the same capacity on the part of his adversaries, whose fertility of resource and endurance he was not wont to deny.

In reality, it is true, these remedies were employed in Great Britain only to a very limited extent, owing to the fact that the principle of laissez-faire had already obtained a great influence over the classes that held political power in England. But we may certainly assume that Napoleon was not so familiar with his enemies or their economic views that he took such a factor into account. The British measures were limited to an issue of treasury bills for £6,000,000 for the support of embarrassed business men, chiefly manufacturers, the intention being to tide them over the time of waiting until the assets locked up in South America or elsewhere could be released. The proposal on this subject, based on a precedent of 1793, had been brought forward by a committee of the House of Commons in March 1811, but was not very enthusiastically received in any quarter. None the less the plan was carried out, because no one really wished to be responsible for throwing obstacles in the way of anything that might possibly be helpful in an unusually ticklish situation.40

The arguments brought against the plan, especially by the economic authorities of the opposition, such as Huskisson, were especially that the crisis had been brought on by an excess of credit, which in its turn was connected with the excessive issue of notes by the Bank of England, and that these new loans would merely augment the speculation, the issue of notes and the rise of prices. To what extent this diagnosis was correct is a question that does not pertain to our present subject. We need only observe that if obstacles in the way of sale arise that are really caused by blockade and not by excessive speculation, then the transition to that form of production which in such a situation would be the right one can be rendered easier by a granting of credit that permits of a limited production for stock during the period of transition. Further, if this granting of credit is effected by genuine saving, that is to say, by a diminution of the demand for credit for other purposes—a thing which the banks can bring about by raising the rate of discount—then there do not arise the consequences alleged by Huskisson and by those who shared his views. This implies that the dislocation at which Napoleon aimed by placing obstacles in the way of British exports could have been overcome without insuperable difficulties. As things were, one may say that, on the whole, the dislocation was overcome by itself, without any measure at all worth mentioning; and it is not impossible that this was the best way out of the difficulty.

The impenetrable conviction as to the harm of all kinds of state interference found unmixed expression when it was a question of the sufferings of the workmen. With reference to petitions from the cotton operatives in Lancashire and Scotland, the House of Commons appointed, at the beginning of June 1811, a committee, which made its report after eight days. In that report it was stated, in the first place, 'that no interference of the legislature with the freedom of trade or with the perfect liberty of every individual to dispose of his time and of his labour, in the way and on the terms which he may judge most conducive to his own interest, can take place without violating general principles of the first importance to the prosperity and happiness of the community'—this as a reply to the petitions of the workmen for a regulation of the actual conditions of labour. In the second place, it was laid down that help in the form of money 'would be utterly inefficacious as to every good purpose, and most objectionable in all points of view', and after this there was no alternative left. Nevertheless, it would be a misjudgment of the leading men of the time if we should choose to see in their position mainly indifference as to the welfare of the workers, who, on the contrary, had indisputably sincere spokesmen in both the House of Commons and in the committee in question, especially the great cotton manufacturer, Sir Robert Peel, the father of the statesman. The fact of the matter is, as far as one can judge, that they sincerely regarded any kind of relief to the workers as harmful—although, in striking contrast, relief in the form of loans was finally granted to the manufacturers—because it was calculated to raise hopes which could not be fulfilled and to bind the workers firmly to an industry which could not give them employment. One speaker in the House of Commons particularly emphasized the necessity of the transfer of labour to agriculture, with the object of making the country independent of the import of foodstuffs. This was precisely a demand for the reorganization of economic life with a view to increased self-sufficiency. But the very fact that the working classes of Great Britain acquiesced with comparative patience in their tremendously heavy sufferings, even in the presence of so uncompromising a rejection, shows how limited the possibilities in reality were of putting an end to British power of resistance by any social movements caused by economic dislocations. This will be particularly clear if we compare the attitude of the holders of political power at that time with the concessions that had to be made to the demands of the workmen during the recent war in order not to endanger their good-will toward a continuance of the struggle.

POSSIBILITY OF PREVENTING IMPORTS

All that has just been said, however, applies only to obstacles in the way of exports, with their obviously limited possibilities of causing ruin in the economic life of a country. As the economic function of exports is absolutely limited to providing payment for imports, it is quite meaningless when there are no imports. Imports, on the other hand, are ends in themselves, because they satisfy the wants of the people directly, which is the final function of all economic activity. Consequently, we cannot possibly turn our backs on the question as to what chances Napoleon would have had for gaining his object if he had directed the point of his blockade against the imports of Great Britain instead of against her exports. It is indeed true that this was quite incompatible with the economic views that he shared with the majority of persons of political consequence, as has been shown throughout our previous account. But it does not necessarily follow from this that he could not have made his object the cutting-off both of imports and of exports, as, on the whole, took place during the recent war; in any case the problem is so important that it cannot be ignored. What especially necessitates an investigation of the whole thing, including Napoleon's policy in the matter, is that the view which has been pretty generally accepted during the last decade happens to have been determined by a popular article by Dr. J. H. Rose, which was hastily drafted for a purely practical purpose and which scarcely gives sufficient, or even correct, guidance in the question.41

BRITISH IMPORTS OF FOODSTUFFS

The question of the dependence of Great Britain on imports from the European mainland has generally been regarded as identical with the question of its provision with food. To a large extent this is correct, inasmuch as the majority of industrial raw materials imported came from transmarine countries, and practically all industrial products of importance for the mass of the community could be manufactured within the country. Yet it should be mentioned that both naval stores (especially timber) and wool formed exceptions from this general rule, inasmuch as they were taken from the Baltic lands (including Scandinavia) and from Spain or Germany, respectively; and, as we have already mentioned, there was at times a scarcity of both these kinds of commodities during the course of the Continental System. Consequently it is not impossible that two such fundamental sides of war requirements as shipbuilding and the clothing of troops might have offered difficulties if the supply from Europe had been cut off. It is far from probable, however, that these factors would have been decisive, since timber, like other things required for ships, could have been obtained from Canada; and according to an estimate for the year 1800 more than nine-tenths of the wool required can be assumed to have been provided from domestic sources. Obviously the question of foodstuffs went much further.

The importance of Great Britain's imports of foodstuffs, which can practically be regarded as identical with her imports of wheat, is anything but clear, it is true, as we have no information at all as to the agricultural production of the country itself.42 Nevertheless, there can be no doubt that the previously existing surplus available for export had been replaced, within the twenty years before the outbreak of the revolutionary wars at the latest, by a normal excess of imports, and that the self-sufficiency of the country had thus ceased to exist. In absolute figures the excess imports of wheat quite naturally varied much from year to year, according to the harvest. The British imports during the Napoleonic wars—always including what came from Ireland—attained their maximum in 1810 with 336,400 tons, while one solitary year (1808) even showed an insignificant excess of exports. The average figure during the period of the Continental System (1807-12) was an import excess of 104,000 tons. The absolute significance of this figure will be made clearer if in connexion with it we mention the fact that the wheat imports of a country such as Sweden, for instance, during the period immediately before the outbreak of the World War in 1914, was about 200,000 tons, and its combined imports of wheat and rye were about 300,000 tons, that is to say, two or three times as much, respectively. Thus there can be no doubt that the quantities in themselves were small according to our notions. It is more important, however, to form a clear notion of the relative importance of such imports for the total British consumption of wheat; but unfortunately this is impossible, as we do not know the amount of the harvests. The majority of estimates, both contemporary and later, however, are based on a consumption per inhabitant in Great Britain, that is to say, excluding Ireland, of one quarter or about 225 kgs. per annum, not counting seed-wheat. This undeniably strikes one as a very high figure, as, for instance, the Swedish consumption of wheat and rye together before the outbreak of the World War, that is to say, a hundred years later, was only about 180 kgs. However, if we take British calculations as to consumption as our basis, we find that, according to the average population of Great Britain during the decade 1801-10 (about 11¾ millions) the total consumption of wheat would have been 2,655,000 tons, of which the average import excess during that decennial period (132,600 tons) formed just 5 per cent., or one-twentieth. This very modest amount would thus have been the normal import demand; but if instead of this we wish to investigate the relative magnitude of the greatest shortage during the period, that for the year 1810, we find that not even that, in relation to the then greater population, rises to more than about 12 per cent. However, there also occurs a lower calculation of the consumption than one quarter (eight bushels) per inhabitant, namely, six bushels, which falls slightly short of the Swedish consumption of rye and wheat a hundred years later. As the home supply in Great Britain can only be obtained from a figure based on consumption, this gives a smaller amount for the harvest, and consequently a greater share for imports. On such a supposition, that share forms 6½ per cent., or somewhat over one-sixteenth, on an average, for the decennial period of 1801-10, and a good 16 per cent., or scarcely one-sixth, for the year of maximum imports, 1810.

Even if the imports of wheat had been totally cut off, therefore, the deficiency, even in years of bad harvest and on the most unfavourable estimate, would have been a mere trifle in comparison with what we had to accustom ourselves to during the recent war. For Sweden the average imports during the quinquennial period before the outbreak of that war formed a good fourth of the total requirements of wheat and rye, while the total supply of cereals in Sweden during the bad year 1917-18 was probably less than half of the normal. This shows to what extent normal food requirements have been curtailed, even in neutral countries in our own day, and the shortage a hundred years ago consequently dwindles into comparative insignificance. In spite of this, the blockade during the revolutionary and Napoleonic wars was sufficiently effective both to stimulate the cultivation of corn in Great Britain,43 and also to bring about a severely felt shortage of food, which was especially marked in the years 1795, 1800, and 1812, and which gave rise to constant apprehensions. A large number of the measures adopted during the recent war were also employed a hundred years ago, though not the most effective and far-reaching among them, and especially not rationing. These measures included a suspension of the corn duties, the prohibition of the distillation of spirits and the manufacture of starch, the postponement of the sale of bread until twenty-four hours after baking, incessant exhortations in royal proclamations and also organized agreements to reduce the consumption of bread by a third, as well as a prohibition against baking bread of unmixed fine bolted wheat flour, which is known as the Brown Bread Act of 1800. But the population found it much more difficult to put up with these interferences with their food habits than with other privations which, to our way of thinking, were considerably greater. It proved impossible to enforce the Brown Bread Act, so that it had to be repealed immediately; and serious food disturbances occurred both in 1800 and in 1812. So far, therefore, it is fairly evident that the placing of obstacles in the way of importing corn would have had far greater prospects of affecting public opinion and tranquillity in Great Britain than the barring of exports, in which Napoleon placed his confidence. On the other hand, the assumption that even the barring of imports would have forced the conclusion of peace, or overthrown the British government, is one which is more or less refuted by experience. During the year 1812, when the prices of wheat reached a record height and remained there until the last weeks of the old harvest year, there prevailed just that position which would have been the consequence of a blockade as complete as one can reasonably imagine to have been enforced. For owing to the bad harvest, which was general in Europe, as well as to immense purchases made by Napoleon as a preparation for the Russian campaign, the rise in prices in Great Britain did not cause any imports worth mentioning; for the whole year there entered the country only 55,000 tons, which is little more than half of the average figure for the sexennial period of the Continental System, and considerably less than half of the average figure for the preceding decennial period. Thus the fact that, despite all this, difficulties could be overcome indicates more or less plainly that not even a complete barring of imports would have attained its object, even apart from the fact that an effective blockade would probably have been able, after some time, to pave the way for some of the effective measures with which a much greater scarcity of food was met during the recent war.

Napoleon's chances of striking at British food supplies were evidently limited to what had to be taken from the mainland of Europe, or, in the case most favourable to him, from there and from the United States. In sources accessible to me there do not exist figures relating to all the countries of origin of the wheat imported into Great Britain during this period. But the American wheat went mainly to South Europe, especially to the Iberian peninsula during the tremendous struggles there, while all our information points to the idea that the Baltic lands formed the main source of supply of corn for Great Britain, with Danzig as the centre. From the very full statistics on the Baltic seaports printed in Oddy's work, it appears that in the year 1800, when British imports of wheat were great, 47 per cent. came from the three ports, Königsberg, Elbing, and Danzig, 34 per cent. from Danzig alone.44 And besides these, other Baltic ports were of importance also. Consequently, so far as Napoleon could make his will prevail, not only on the North Sea coast of Germany, but also upon the south and, to some extent, the east coast of the Baltic, he did not lack the possibility of hampering the food supply of Great Britain. Accordingly, the question is, How did he really regard such a task and what steps did he take to accomplish it?

FOOD POLICY OF NAPOLEON AND HIS OPPONENT

It is on this point that the accepted views have been determined by the conclusions of Dr. Rose in the article referred to above. They come to this, that Napoleon not only did nothing to hinder British imports of foodstuffs, but actually sought to encourage the exports of corn to that country with the object of ruining the enemy through the unfavourable trade balance which would be the consequence thereof. But this account gives a misleading impression both of the measures and of the motives of Napoleon, and it is not borne out by the letters cited by Dr. Rose in its support.

It is true that the notion of ruining the enemy by imports fitted in very well with the economic conceptions of Napoleon and of many of his contemporaries, as has been sufficiently shown in the foregoing pages. But the matter of food supplies here took an exceptional position, inasmuch as it was regulated in the continental states, and especially in France, along the lines of the mediaeval 'policy of plenty' rather than in accordance with the principles of mercantilism, in that it was desired, primarily, to provide for an abundant supply and not for profitable production and sale. Napoleon did not swerve from the economic traditions of France any more in this department of economic policy than in others; and it would have been highly peculiar if he had allowed himself to be led by one set of ideas where his own country was concerned and by another set when the enemy was concerned. Nor was that the case, but, on the contrary, his opinion is quite consistent and not at all difficult to explain.

The fundamental object of Napoleon's food policy was, as has just been mentioned, to secure supplies within the country; and this not only from the same motives that actuated his Bourbon predecessors, but also because of his desire to prevent labour disturbances. Consequently, he is always reminding his French helpers of the danger of being insufficiently provided with foodstuffs, urging them to remember what it had cost him in the Year X (1801-2) to procure a few thousand quintaux of corn, and insisting that it would involve the greatest danger if they had not a 'double supply'. 'You have not sufficient experience in this matter,' he wrote in 1810 to Eugene, the viceroy of Italy. 'The corn question is for sovereigns the most important and the most delicate of all.... The first duty of the prince in this question is to hold to the people, without listening to the sophisms of the landowners.' During the difficulties of the winter of 1812 he strove, by the distribution of bread and soup, 'to make the most needy part of the multitude independent' of food difficulties. Just as before, therefore, he forbade the export of corn when scarcity was apprehended, or even, as in 1810, while awaiting the results of the harvest. And although on August 6, 1810, he had authorized Eugene to permit the exportation of corn from Italy, he wrote to him three weeks later (August 31): 'It is said that the Italian harvest is bad. Take care that not too much corn is exported and that we do not get into difficulties.' For this reason, too, he authorized his Italian minister of finance in 1813 to permit the export of French and Italian products with the exception of corn and rice, regarding which he wished to have a report first—a policy that marks the special position of food exports—and, in full analogy with this, Napoleon, in January 1812, expressed the opinion that licences for the importation of foodstuffs should be granted without conditions; that is to say, he waived the customary obligation of exporting goods to the corresponding value.

The same point of view determined the whole series of measures that the Emperor took in the winter and spring of 1811-12, when, according to his own declaration, there was a real scarcity of corn in Paris. At the same time he deemed it necessary to take more pains than usual to secure quiet in Paris during his absence on the Russian campaign. His feverish zeal to intervene and regulate drove his helpers, especially Pasquier, the eminent prefect of police in Paris, to despair, and afterwards led Chaptal to make the biting remark that Napoleon took every measure that was calculated to further the rise in prices and the shortage of foodstuffs. These measures included the buying up and seizure of corn in the departments adjoining Paris, the taking over of the mills, secret sales by the agents of the government in order to force down prices when they rose in consequence of the previous measures—the only consequence of which was to raise them still farther, and the final result, as the culmination of the abortive 'policy of plenty', was the establishment of maximum prices. It should be obvious, on the face of it, that the whole of this series of measures was totally incompatible with the notion that it would injure an enemy to provide him with food.45

On the other hand, it certainly did not follow from such a point of view that the export of foodstuffs would be considered inexpedient or even looked at askance, under all circumstances. As soon as the supply of food within the country was considered safeguarded, the general interest for exports showed itself at once; and the ruler of such countries as North Germany, Italy, and France, which were distinctively countries that exported foods and stimulants, could hardly be imagined as adopting any other standpoint, when in other respects he favoured the mercantilist or 'bullionist' policy. It was only natural, therefore, that Napoleon, in a letter of 1810 to Gaudin, his minister of finance, which has already been cited once or twice, spoke of his object of favouring, by means of smuggling, the export of French foodstuffs and the import of precious metals; and that in the same year he caused Champagny to inform the French ambassador at St. Petersburg—evidently with reference to complaints on the part of Russia—that he granted licences for the exportation of wine and corn as beneficial to his territories, without inquiring too closely as to how the English afterwards treated the vessels provided with licences. Similarly, in a letter of July 28, 1809 (cited by Dr. Rose), to the acting home secretary, Fouché, he bitterly denounced the allegation that he discountenanced export in itself, which he, on the contrary, regarded as being hindered by the British and not by him. 'Exports occur,' he said, 'as soon as there is a possibility of sale.' Not one of these letters, or any other letter known to the writer, contains even a hint of an intention to injure England by the exports of foodstuffs, but, on the other hand, an evident intention to benefit France thereby. The real motive stands out distinctly in the most celebrated cases when extensive exports of corn from France, Holland, and Flanders to Great Britain took place in the years 1809 and 1810. During 1809 it is stated that about 90,000 tons of wheat, besides other grain, came from those countries; and of the unprecedented imports in the following year—which, without deducting exports, amounted to 353,500 tons of wheat and 135,400 tons of other grain and represented a total value of more than £7,000,000—one-third of the wheat (evidently unground) and half of the flour were said to have come from Napoleon's empire, all by means of mutual licences. The remarkable thing in this connexion is that not only Napoleon but also many Englishmen considered these large imports from France, under the existing conditions, to be extremely advantageous for the French, and consequently open to grave objection from a British point of view. This was partly because it provided means of disposing of surplus products, and partly because it was an important source of income to Napoleon owing to the huge licensing fees, which, together with freight and insurance, were alleged to raise the price by 30-50s. per quarter, or from £6 15s. to £11 per ton. This mode of thought, which is just as much French as British, was given characteristic expression in a speech in the House of Commons (February 13, 1810) by the politician Marryat, the father of the famous novelist, from which we cite the following:

This leads us to the third motive determining Napoleon's corn policy, the motive that had decisive weight for more and more of his economic measures the longer the war went on—the need of money. This, and nothing else, dictated the whole of the motley multitude of export licences for corn to French, Italian, and Neapolitan ports, the Hanse Towns, Mecklenburg, Danzig, &c., in combination with special export fees, especially in the last-named place, which was the most important exporting port of all. This fact alone shows that there was no thought of flooding Great Britain with corn, for in that case there would have been no question of export dues, least of all to such amounts as now occurred, which, according to General Rapp, the French commander in Danzig, were 60 francs per ton in 1810, and were so high that they were quite expected to smother the trade of Danzig.

So far was Napoleon from believing that he was injuring England by the mere fact of supplying her with corn, that he evidently perceived the profit of that supply to his adversary, as indeed is obvious beforehand. In the above-mentioned instructions to Champagny, meant to be forwarded to Caulain-court, the ambassador in St. Petersburg, he expressly says: 'The English, having need of corn, will naturally let them (the vessels) enter and leave, because the corn is a prime necessity for them.'

Since that was the case, however, the question arises whether the Emperor had no thought of giving a new turn to his policy and making a direct effort to starve out England. Thus far we have had no knowledge of this matter; but some contributions toward an answer to the question have become available through the publication, in 1913, of the first part of the work of the Russian historian, Tarle, entitled Kontinental'naja blokada. Thus in a report dated July 17, 1810, Montalivet, the home secretary, wrote to Napoleon as follows: 'If our rival is eventually threatened with famine, it would seem to be quite natural to close all ports to him. It would be beneficial to the common cause if all the peoples of the North Sea and the Baltic united to deprive Great Britain of her means of existence.' But Tarle's supposition that Napoleon really entertained any serious plans in that direction at the time seems to be refuted by the fact that his licences for the export of corn were being issued in torrents just then; and in any case he adhered to exactly the opposite view in the following year, as appears from a particularly illuminative imperial dictated utterance of June 24, 1811, which Tarle has also brought to light. The situation then was stated to be such that there was a scarcity of corn in Great Britain at the same time as there was a surplus thereof in Germany and Poland, which naturally caused the British to import the commodity by sea. The question, therefore, was whether this should be prevented. Napoleon's answer to this question was in the negative, for three reasons: In the first place, he regarded it as useless because the English would procure the corn from America if they could not get it from the Baltic. Thus it was the limitations to his power over the supplies that here blocked the way. In the second place, it was, according to Napoleon's declaration, impossible, even with all watchfulness, to prevent Prussia and Poland from exporting. This is undeniably a surprising utterance on the part of a man who was not wont to acknowledge economic impossibilities; but an explanation of it may possibly be found in his conception that exports are always more natural, and consequently more difficult to prevent, than imports. Finally, in the third place, fiscalism stuck up its head as usual, in that the Emperor debated the question of moving the exports to the Hanse Towns, which were at that time incorporated in his empire, in order thereby to give the French treasury the benefit of the export dues. It is obvious that these reasons do not bear witness to any special zeal to prevent the importation of foodstuffs into Great Britain; but, like everything else, they show that Napoleon did not overlook the utility to England of those imports, but rejected measures against them owing to their futility. The remarkable thing is that he recognized the unfeasibility of the thing only in this case, while the argument might seem to apply with at least equally great strength to that kind of blockade which he tried to enforce.46

GREAT BRITAIN AND NORWAY

Before leaving the subject of food supply, it may be asked whether the policy of Great Britain followed the same lines as that of Napoleon in regard to the unrestricted exportation of corn to enemy countries. It follows from what has previously been said that the question was hardly of importance in more than one case, namely, that of Norway, where, according to the recent work of Worm-Müller, about a quarter of the normal consumption of corn (raw materials for the distilleries not included) was covered by imports. The motives which guided British policy on this particular point hardly appear with the necessary clearness from hitherto-published materials; but at least the external facts are not open to doubt.

In the first years after the bombardment of Copenhagen, (1807-9) Great Britain maintained a rigorous blockade, but apparently with no object other than that of bringing about a relaxation of the rigours of embargo prevailing on the other side, and especially of securing a supply of Norwegian timber. When the needs of Norway prevailed over the somewhat quixotic loyalty of Frederick VI to the Continental System, the importation of food, as well as trade in general, was allowed to continue unhampered, upon the usual system of British licences, to such a degree that the situation was said to border on commercial relations in times of profound peace. So far British policy was apparently guided by the same principles which had dictated her earlier measures, e.g., the prohibitions on the exports of raw cotton and 'Jesuit's bark'. But in the last years of the struggle (1812-13) these methods were again reversed, and a food blockade was brought to bear on Norway— so far as is known, the only serious instance of such a measure in the course of the revolutionary and Napoleonic wars. The blockade could be made exceptionally binding and effective, especially after Sweden and Russia had joined the anti-Napoleonic alliance. A contributory cause undoubtedly was that the need for Norwegian timber, as well as for exports to Norwegian markets, had lost their importance to Great Britain. In other words, the policy which made exports of vital interest had lost a great deal of its force since the palpable breakdown of the Continental System. But even if these conjectures prove to be correct, the incident shows that Great Britain was already at that time more willing than her adversary to use a food blockade as a weapon of war.

The weapon, however, came far from gaining general approval even among Englishmen, and naturally it called forth anathemas from the opposite side. The British chargé d'affaires in Stockholm, Foster, openly told the Swedish statesmen that 'the starvation system appeared to him to be blameworthy, difficult to execute, and conducive to numerous dangers'.

The result was that Norway came nearer to starvation than any other country during this period, so that her pitiful situation was alleged by Frederick VI as a reason for renouncing his rights to the country in the peace of Kiel in January, 1814. Had it not been possible for spirited Norwegians and Danes to break through the blockade with their small corn vessels, the situation would have appeared all but hopeless in the eyes of contemporaries.47

BRITISH SUPPORT OF THE CONTINENT

We may now return to the economic life of Great Britain herself. It has been shown that the more fundamental effects of the Continental System on her organism did not play a decisive part in the issue of the struggle. But as the reader may remember from part 1, chapter IV, it was assumed in French circles that there was a more immediate connexion between the self-blockade of the Continent and the political elimination of Great Britain than that which was provided by its general economic ruin. It was thought, in fact, that, owing to the inability to export, Great Britain would be prevented from supporting the Continent either by means of subsidies or by the maintenance of troops. Miss Cunningham, in the little study that has often been cited in this work, has not only successfully elucidated these ideas and their bearing on the policy of Napoleon but has also, with less success, so far as I can judge, sought to show the validity of that train of thought to such an extent as to prove the correctness of Napoleon's (falsely assumed) object of ruining Great Britain by supplying her with foodstuffs. Miss Cunningham's thesis, indeed, is that the excess of imports gave rise to an export of gold which came near to exhausting the metal reserve of the Bank of England and thus shaking 'the real foundation of the credit system'.48 This contention does not appear to give due weight to the real significance of international exchange as that was brought out, not only by Adam Smith, but more particularly by the leading economists, in the great currency debate which went on during the actual period of the Continental System. To begin with, we must see whether that French line of thought was correct which made British exports the antecedent condition for the making of payments on the Continent; and in so doing we must connect the matter with the discussion in our first part to which reference has just been made.

The kernel of the question, then, is the point that Adam Smith maintained, namely, that both war and other functions are in reality paid for by goods and human efforts (services), and not by money or precious metals. The subsidies that Great Britain had to pay on the Continent were intended to procure necessaries for her allies, and the same were required for the maintenance of the British troops after Great Britain had begun operations by land. Consequently, the business in hand was either to provide the necessaries direct or else to provide the means with which they might be purchased.

If, then, the situation was such that British goods could be imported into the Continent, the simplest arrangement of the matter was that described by Adam Smith, namely, an export of goods from Great Britain without corresponding imports. It was of no consequence whether the British goods were or were not precisely of the kind required by the troops or by the continental governments. Their sale on the Continent created in the latter case British assets which could be used to pay for the domestic goods needed by the troops or by the allies; that is to say, the purchasers of the British goods in reality paid their debt, not to the British, but to the sellers of the domestic goods that were used by the British troops or by the governments supported by Great Britain. But the fact that the matter was simplified by the possibility of exporting British goods to the Continent by no means implies that the support of the continental governments would have been impossible without the realization of such a condition. If, for instance, we suppose, instead, that no British, but, only transmarine goods, could get into the Continent, the system only needed to be supplemented by the participation of a third country, for instance, the United States, in the operation. At times this was undoubtedly the case with the payments on the Iberian peninsula, where American corn went in great quantities. The assets that Great Britain acquired by her exports in transmarine countries went, under this supposition, to the European mainland in payment for continental imports of colonial goods, that is to say, British exports for the non-European countries paid for British support to the Continent of Europe. In the one case as in the other it was a question of the exchange of commodities, and not of any need of payment in money or in gold and silver. When, therefore, it came about that Wellington wished to make cash payment during his campaigns in Spain and Portugal, this by no means meant that he had to have the requisite amount sent to him in precious metal. The only thing necessary was that the British government should have assets on the Iberian peninsula, for instance, in the form of bills of exchange or claims on business establishments there, to an amount corresponding to the requirements of the British army, so far as those requirements could not be satisfied by the supply of goods on British account.

It is true that it is possible to imagine a situation in which Great Britain was cut off from exporting to transmarine countries as well as to the European Continent; and it would then become a question of what possibilities there would be for supporting the Continent under such conditions. In that case the matter was manifestly hopeless; for a completely isolated Great Britain—and a country without exports is practically the same as an isolated country—must, no less than a completely isolated European Continent, necessarily imply the impossibility of British help for the adversaries of Napoleon. But this connexion is self-evident to such a degree that it need scarcely be pointed out; and what is more, the supposition of its existence is so devoid of practical importance that it can never have played any part in the conduct of Napoleon or any other statesman of the time.

The next question, then, is whether even a diminution of British exports would not have been able to place obstacles in the way of supporting the Continent, inasmuch as the assets held by Great Britain to pay for the support might in that case be expected to be smaller. But even this idea is incorrect, because the decisive thing is not the absolute amount of exports but the amount in relation to imports, i.e., the excess of exports. If only imports were diminished to the same extent as exports, the possibility of giving support would be in no wise altered. It is in the nature of things that the support must be paid for by limitation of domestic consumption when a country cannot count upon borrowing abroad, a thing which was not to be thought of for Great Britain during the period of the Continental System. The general conclusion thus remains simply this, that exports (including carrying profits and other foreign trade profits) must exceed imports by the amount of the support given to foreign countries. It is true that British commercial statistics for this period are altogether too uncertain to admit of any positive arithmetical proof in such a question; but it may be mentioned that the British customs statistics for the years 1805-9 show an excess in the trade balance itself (that is to say, apart from freights, &c.) varying between 5,900,000 and 14,900,000 pounds sterling, or, as an average for those five years, amounting to almost precisely £10,000,000.49

However, still another possibility may be conceived, namely, that the European Continent might take no necessaries at all, either British or continental, or might take only money or precious metals. This was undoubtedly what Napoleon aimed at, although he never even approximately reached his goal. So far as Great Britain succeeded in carrying on military operations on the Continent, however, even this possibility was quite out of the question; for where troops could be landed, it is evident that goods could be landed with still greater ease. And as regards the allies, the matter would have been of importance only in the highly curious situation that the countries in question applied the Continental System strictly and received British subsidies at the same time. For the sake of completeness, however, this line of thought may be followed out. Here, too, the same thing holds good; the idea to which Adam Smith had given expression, namely, that the precious metals in this connexion were commodities like others and would have had to be purchased by means of British exports. The only difference in the situation from a British point of view would have lain in the fact that precious metals might prove difficult to obtain, as indeed was probably often the case. From the point of view of the Continent, on the other hand, such a form of payment meant that in reality nothing was imported that could serve military purpose; and consequently the thing could have been of importance only in case one or more of the individual continental states could thereby acquire necessary goods from other continental countries.

If we pause to consider the actual circumstances in greater detail, we are immediately impressed by the fact that it was precisely the flourishing period of the Continental System that was marked by quite insignificant subsidies to the continental states; and the reason for this is closely connected with the fact just mentioned that efficacy of the self-blockade ceased as soon as Great Britain gained the support of allies on the Continent. For the whole of the sexennial period 1807-12, the sum total of the cash subsidies subsequently reported to Parliament was £14,722,000; and it is in the very nature of things that most of this amount fell to countries with which Great Britain had unimpeded intercourse, e.g. (in round numbers), Portugal (1809-12) nearly £6,000,000; Spain (1808-12) £3,660,000; Sicily (1808-12) £1,700,000; Sweden (1808-9 and 1812) £1,660,000; and Russia (1807, before the Peace of Tilsit) £600,000. Altogether these came to £13,580,000, or more than nine-tenths of the total amount. There is no material available for estimating the total amount spent on British military operations on the Continent; but in 1808-10 the total payments of the British government abroad ran to something over £32,000,000.50 As has been observed above, however, the military expenses must always have been among those where the normal system of international payments could be employed.

As a matter of fact, however, we have the seemingly incompatible facts that, on the one hand, Great Britain had great difficulties with her payments on the Continent, and, on the other hand, was exposed to an outflow of precious metals, which constantly threatened the bank reserve and was usually connected with the heavy decline in the rates of exchange on England. It might thus seem as if Napoleon was right after all in trying to read the success of his war against the credit of England in the decline of the exchanges and in the difficulties of payment. But the true connexion was quite different.

First, as regards the difficulty of financing the military operations on the Continent, we may say that that difficulty was mainly due to bad financial organization, and also to an apparently ineradicable notion of the unimportance of the war in the Iberian peninsula. Wellington had many occasions to complain of the inadequacy of pecuniary support and the shortage of the most necessary things, while at the same time huge sums were dissipated in far less important ways, even on the Continent, such as for the notorious and thoroughly abortive expedition to the island of Walcheren, off the coast of Holland, in 1809. As regards the modus operandi, Wellington had to obtain funds by drawing bills on the British treasury and selling them on the spot, that is to say, without there being any available British assets; and as there was an entire lack of organization, this could not take place without a heavy decline in their value. Nathan Mayer Rothschild, the greatest financial genius of the house of Rothschild and its true founder, who at this time had already moved from Frankfurt to London, mentioned to Sir Thomas Fowell Buxton, in the course of a conversation many years afterwards, that once during this period he set about buying up, on the one hand, a great number of Wellington's bills on the British government, which were under par, and, on the other hand, gold, which was sold by the East India Company; and by so doing he declared that he compelled the government to come to an agreement with him, on the one hand, to prolong the bills which it had no means to pay, and, on the other hand, to pass over the gold, for which Wellington was very hard pressed. 'When the Government had got the money,' he said, with well-founded contempt, 'they did not know how to get it to Portugal. I undertook all that, and I sent it through France. It was the best business I ever did.'

Apart from this scanty and late item, which is as meagre as most of the contributions to the history of the house of Rothschild, we seem to know hardly anything about the actual manner in which the Continent was financed by the British government under the Continental System. On the other hand, we have a somewhat fuller knowledge of the circumstances during the next period, that of the Wars of Liberation and of the Hundred Days in 1813-15, owing to the materials collected in a biography of the politician J. C. Herries, the commissary in chief in the British financial administration of that time (1811-16), on which the German economic historian, Professor Richard Ehrenberg, has based that part of his study of the house of Rothschild. Even at that time, with the greatly multiplied continental expenses for both subsidies and military requirements, the financing was at first managed partly by very cumbrous movements of silver from England, and partly, and more particularly, by bills drawn from the Continent on the British treasury in London. These last the continental governments and generals afterwards had the greatest difficulty in selling, and therefore they declined heavily in value. But now there was gradually carried out, through N. M. Rothschild, a change of system by which bills and coins were privately bought up on the Continent, with the result that difficulties of placing bills and the consequent dislocations in the exchanges almost ceased. Thus Herries states in his official report that during 1813 bills on Holland and Frankfurt for £700,000 were bought up without depressing the exchange, while a payment of £100,000 on the old methods would, in his opinion, have had ten times as great an effect upon the exchanges.51

The whole of this account shows clearly enough that the difficulties lay in the matter of technical organization and were not due to any profound economic obstacles in the way of payments on the Continent; for it is manifest that such obstacles, had they existed, would no less fully have lain in the way of Rothschild's purchases of commercial paper on the Continent, that is to say, his acquisition of continental assets on British account. What the change of system implied, therefore, was to organize the support in the main on the lines of international payments in general.

But it was recently mentioned that in the earlier stage Rothschild sent gold to Wellington on the account of the British government, and that the later payments on the Continent were partly effected by sending silver. One thus gets the impression, in spite of all that has been said, that precious metals were necessary, at least at times, in order to support the Continent. This evidently needs explanation; and the explanation mainly lies in the state of British currency during the Napoleonic wars.

BRITISH CURRENCY

As has been mentioned in part I, Great Britain had had an irredeemable paper currency ever since 1797; but before 1808 this currency had only in particular years shown any great deviations from its par value. The quotations for gold do not appear to have been very reliable at the time, but the rates of exchange on Hamburg and Paris, both of which, characteristically enough, were quoted in London without intermission during the whole course of the last Napoleonic war, make the matter sufficiently clear. In 1808, however, a great change set in. Especially from 1809 the exchanges began to show a very remarkable fall, i.e., the amount of foreign money to be obtained for £1 sterling declined heavily. The average depreciation for 1809 is given by Mr. Hawtrey as 21 and 23.3 per cent. as compared with Hamburg and Paris, respectively. This gave rise to a great controversy—which offers a number of points of contact with the discussion during the recent war—concerning the connexion between the changes in the value of gold and the rates of exchange, on the one hand, and the decline in the value of the British paper currency, on the other hand, and also concerning the true cause of the latter phenomenon. The first important contributions to this controversy were made by Ricardo in the late summer and autumn of 1809 in the form of three articles published in the Morning Chronicle, which were followed up in December by a celebrated pamphlet, the title of which, The High Price of Bullion a Proof of the Depreciation of Bank Notes, sufficiently expresses his point of view. In this pamphlet, Ricardo, who at that time was known only as a successful and highly respected broker on the Stock Exchange, laid down what is called the quantity theory of money and laid the foundation of his still unpresaged fame as the most acute of economic theorists. In order to test the question, the House of Commons in February 1810 appointed a committee, known as the Bullion Committee, whose report, framed entirely in the spirit of Ricardo, was announced in June but did not come before Parliament until the following spring. The discussion was carried on with great zeal outside Parliament as well, simultaneously with an almost continuous rise in the price of gold. According to the computations of Mr. Hawtrey, that rise was 36.4 per cent. in 1813 (that of silver being 36.7 per cent.), while the fall in the exchanges had already culminated in 1811 with 39.1 per cent. and 44 per cent. on Paris and Hamburg, respectively. During these long discussions there also arose the question of the cause of the export of gold and its connexion with payments on the Continent; and it may be said that in the course of this discussion the connexion was made clear in all essentials, especially by Ricardo.52

As a starting-point in this discussion Ricardo took the case where a country, owing to failure of the harvest, has to embark upon unusually large imports of corn; but he maintained that the payment of subsidies to a foreign power formed a still more marked instance of the same thing. Now, if the country in question, that is to say, Great Britain, had a metallic system of money and no 'redundant currency', that is, not a greater quantity of money in relation to the quantity of commodities than other countries, there was, in his opinion, no occasion for the export of precious metals. In that case, corn, like the subsidies, would be paid for by exports of commodities in the usual way, as has been explained at length above. If, on the other hand, there prevailed a 'superabundant circulation', that is, a greater quantity of money in the subsidy-paying country than in the country to which the subsidies were paid, it meant that the value of money was lower or the price-level of commodities higher in the former place than in the latter, in which case the precious metals flowed to the place where their value was highest; in other words, an export of gold took place. Or, as also explained by him, if money or gold was exported instead of commodities, this was due to the fact that the transaction could be settled more cheaply in this way. In that case gold or money was what stood relatively lowest in value in the paying country (Great Britain), as compared with its value in the other country, and consequently people fulfilled their obligations at a smaller sacrifice if they paid with money or gold than if they paid with commodities. Otherwise, if the value of money was the same in both countries, the export of gold would never be worth while, but the payment must take the form of commodities. Ricardo did not dispute absolutely, it is true, that the transmission of gold could take place in all events; he considered it highly improbable, however, because in that case the gold would have gone to a country where its purchasing power was less, or at least not greater, than in the country from which it came. But both he and his opponents were agreed that in that case the gold must soon flow back to the former country; and even if this factor played a larger part than Ricardo supposed, it could never explain that one-sided movement of precious metal from Great Britain to the Continent that exhausted the gold reserves of the Bank of England and therefore gave rise to such great anxiety.

The outflow of gold was thus an evidence that money had a lower value in Great Britain than on the Continent. But if Great Britain, like the Continent, had been on a metallic basis, this dissimilarity would have been removed by the outflow, inasmuch as the quantity of money would have been diminished in the former place and augmented in the latter. As it was, Great Britain had a paper currency which stood far below its nominal value in gold; and in that case the export of gold could continue for any length of time without restoring equilibrium, because the vacuum was constantly being filled with new notes. Thus it was not the payment of subsidies or any extraordinary export of corn that caused the outflow of gold, but 'the superabundant circulation', or, in other words, the lower value of money in Great Britain.

This account, which goes to the root of the matter, can be regarded as conclusive in all essentials and needs to be supplemented only in one or two points, which are also touched upon by Ricardo. If the country in question has a mixed paper and gold circulation, as was the case with Great Britain, not only the paper money but also the metallic money declines in value within the country. In other words, prices rise in whichever currency they are quoted, inasmuch as they are both legal tender and their combined quantity has been increased. It is precisely this circumstance that drives out the 'better', that is, the metallic money, because people get more goods for that in other countries.

If, then, it was the case, on the whole, that the export of gold had its root in the depreciation of British currency, it should nevertheless be added, in common fairness, that a payment of subsidies in itself, regarded as an isolated phenomenon and without any connexion with the depreciation of the currency, would also set going a definitive export of gold from the subsidy-paying country, inasmuch as it would diminish its stock of commodities; and an unchanged relation between the quantity of money and the quantity of commodities—in other words, an unchanged comparative price-level—would thus require a corresponding diminution on the other side of the equation. But the quantity of goods is exposed to so many changes in different directions that this matter is probably of no practical interest whatever.

The argument brought forward against all this by Ricardo's opponents, especially by Malthus in the Edinburgh Review, in February 1811, was that a great export of corn, or claims to subsidies on the part of the continental states, need not evoke among them a greatly increased demand for 'muslins, hardware, and colonial produce', and that, therefore, it might be necessary for Great Britain to pay instead with money, which was always welcome. Applied to the payment of subsidies, however, this argument was particularly unfortunate, as the function of the subsidies was quite obviously that of procuring goods for the work undertaken by the continental powers, as has been explained at length above; and consequently for our purpose the objection can be dismissed without further ado. For the sake of completeness, however, it may be added that the same conditions prevail in other cases. No country sells corn except to get something else instead; and no country has so much of all commodities that it cannot use more. The origin of these commodities is a matter of no importance, as we have already seen; and the limitation, in Malthus's instance, to the articles of British trade itself is consequently quite unjustifiable. The only exception, which is scarcely treated by Ricardo, but which is discussed in detail, from a somewhat different standpoint, in the report of the Bullion Committee, would be if a country had some special reason to increase its stock of precious metals, e.g., to form a war fund or to pass from a paper to a metallic currency. The Bullion Committee here showed the untenability of the supposition that the Continent had any such increased need of gold as could explain the course of development in Great Britain.

The gist of all this is, therefore, that the export of gold from Great Britain can be regarded neither as a necessary condition nor a necessary consequence of the payment of subsidies to the Continent, but had its essential cause in the deterioration of the currency. From this, two conclusions follow. In the first place, the British government could have prevented, not only the export of gold, but also the permanent fall in the rate of exchange (to be carefully distinguished from the temporary dislocation occasioned by especially large payments on the Continent) by raising the value of money. Whether in that case the remedy would have been less harmful than the disease, after the depreciation had gone so far, it is not easy to say; but that matter need not be discussed in this place, as it is at all events clear that the Continental System, as such, was not the cause of the situation, or at any rate not one of its principal causes.

In the second place, from the standpoint of the payment of subsidies, it cannot even be regarded as having been necessary to let the export of gold or silver continue when the British government had once ceased to keep the currency at par with gold. From a purely formal point of view, it had obtained the possibility of independence in this respect by the Bank Restriction Act, that is to say, by making bank notes irredeemable; nor was there any insuperable obstacle in the way of this expedient in actual fact. Strictly speaking, the Continent needed no importation of either gold or silver; and it is far from the case, of course, that all the payments of the British government on the Continent were effected by the export of precious metal. For the moment it is not possible to state the relation between the total foreign payments and the transference of coin on behalf of the government except for the two years 1808 and 1809; but even the figures for those two years show how casual the proportion was.53 In 1808 the foreign payments of the government (here, as elsewhere, the figures refer to all countries outside the British Isles, and not merely the Continent of Europe) amounted to £10,235,000, while the exports of precious metal on public account amounted to at least £3,905,000, or, if we include that sum which was paid for the purchase of silver dollars (without our being able to see whether they were purchased inside or outside the country) to £4,543,000, or over 44 per cent. of the whole. The principal part in this matter was played by over twenty remittances, principally silver, to the Iberian peninsula to a total of more than £2,666,000, and also £855,000 in silver to Gothenburg, sums which the British government could not contrive to provide in a more convenient fashion. In the year 1809, on the other hand, when the total payments abroad were larger than in the previous year (amounting to £12,372,000), the exports of precious metal on account of the government reached only £1,206,000, according to the lower calculation, and £1,290,000, according to the higher calculation; that is to say, at the most only 12 ¼ per cent. of the total payments. Now if it was regarded as necessary, out of regard for British 'prestige' or for any other cause, not to let so much metal go out of the country as actually did, these mere figures make it clear (and the idea is confirmed by the experiences of the recent war) that it would have been quite possible to avoid sending out gold or silver. Even if one had not been able to come to this conclusion by theoretical methods, it follows from the practical experience gained by Rothschild's rearrangement of the system of foreign payments in 1813, that these payments did not involve any inevitable need for the export of gold or silver; and for other purposes such export was, considering the general position of currency policy, a somewhat purposeless means of limiting the fall in value of British currency to a negligible extent, without restricting the circulation of bank notes.

BRITISH CREDIT SYSTEM

The above largely supplies the answer to the question that still remains, namely, as to the importance of the Continental System in relation to the solidity of the British credit system. If it was considered that the credit of Great Britain stood and fell with the metallic reserves of the Bank of England, neither Napoleon's measures nor the depreciation of the currency would have prevented the preservation of the gold reserve, as has just been shown. It is true that the very conception of the importance of the metallic reserves for the credit of a country with a paper currency lacks support both in theory and in experience, although popular notions to this effect have been diligently nourished at all times; and it is difficult to see what inconveniences would have followed if the metallic reserves of the Bank of England when it did not redeem its notes, had had to sink to the same level as at the Bank Restriction of 1797 or even lower. But if it had been desired to avoid that state of things, then, as has been said, there would have been no insuperable difficulties, as is also shown by the experiences of the following years.

It is a quite different and far more searching question, to what extent the British credit system could have been thrown into disorder by the general difficulties and dislocations caused to British economic life by the Continental System in combination with a number of other factors. As regards the credit of the state, nothing of the kind occurred. The system of the national debt was so firmly founded that it resisted the strain without difficulty, though the cost of the revolutionary and Napoleonic wars certainly appears, for various reasons, to have been much greater than would have been the case if the borrowing had been effected in some other way. The private credit system, on the other hand, had not yet attained the same vital position in the economic life of the country as it has now. The new large-scale industry was to a predominant extent based on its own capital, and was mainly extended with the help of its own profits—a fact which is seldom properly emphasized. Consequently, the harm that could be involved by a dislocation of credit can probably be measured by the results of the crisis of 1810-11—that is to say, bankruptcies by the merchants with reaction on the manufacturers from whom they bought their goods. Besides, it is an open question whether the credit system of a country can be regarded as being so delicate as it has long been the fashion to make out. The experience of the recent war has largely suggested that our credit organization has a much more robust physique than anyone had previously suspected.

[1.][1] Mollien, Mémoires, &c., vol. II, p. 462; vol. III, pp. 32-3.

[2.][2] The great advantages accruing to the northern countries in their intercourse with Great Britain constitute the main contention upheld in J. Jepson Oddy's valuable book, European Commerce (London, 1805), and his figures bear out his statements. As regards Russia, he 'cannot help observing how amazingly advantageous its trade is with the British dominions. Not only is the amount of the sales nearly equal to those of all other nations, but it is from Great Britain only that Russia receives a balance in cash' (p. 209).

[3.][3] Chaptal, De l'industrie françoise, vols. I-II; Levasseur, Histoire des classes ouvrières, &c., de 1789 à 1870, vol. I, especially bk. II, chs. v-vi, and bk. III, chs. ii-iii; Darmstädter, Studien zur napoleonischen Wirtschaftspolitik, loc. cit., vol. II; Tarle, Kontinental'naja blokada, vol. I (devoted almost exclusively to the trade and industry of France); Ballot, Les prêts aux manufactures, loc. cit., vol. II; Schmidt, Jean-Baptiste Say et le blocus continental, in Revue d'histoire des doctrines économiques et sociales (1911), vol. IV, pp. 148 et seq.; also, Les débuts de l'industrie cotonnière en France, 1760-1806, ibid. (1914-19), vol. VII, pp. 26 et seq.; Ballot, Philippe de Girard et l'invention de la filature mécanique du lin, ibid. (1914-19), vol. VII, pp. 135 et seq.; also, La révolution technique et les débuts de la grande exploitation dans la métallurgie française, ibid. (1912), vol. v, pp. 29 et seq. For the incorporated territories, cf. Varlez, Les salaires dans l'industrie gantoise (Brussels, 1901), vol. I, pp. 9-36, and apps. III and IV; vol. II (1904), pp. 24-32; Herkner, Die oberelsässische Baumwollindustrie und ihre Arbeiter (Strassburg, 1887), pp. 35-93; T. Geering, Die Entwicklung des Zeugdrucks im Abendland seit dem XVII. Jahrhundert, in Vierteljahrschrift für Social- und Wirtschaftsgeschichte (1903), vol. I (founded principally upon the great work of A. Jenny-Trümpy, Handel und Industrie des Kantons Glarus, und in Parallele dazu: Skizze der allgemeinen Geschichte der Textilindustrien mit besonderer Berücksichtigung der schweizerischen Zeugdruckerei; Glarus, 1899-1902); Darmstädter, Die Verwaltung des Unter-Elsass, &c., loc. cit., vol. XIX (1904), pp. 631-72; Zeyss, Die Entstehung der Handelskammern, &c., pp. 62-90, 103-29. For comparison with England, cf. especially Mantoux, La révolution industrielle au XVIII siècle. Essai sur les commencements de la grande industrie moderne en Angleterre (Paris, 1906), and Baines, History of the Cotton Manufacture of Great Britain.

[4.][4] Cf. a pronouncement of the leading man in the clothing industry, Ternaux, sen., in Conseil général des manufactures, immediately after the Restoration; printed in Levasseur, Histoire des classes ouvrières, &c., de 1789 à 1870, vol. I, p. 732, app. A.

[5.][5] Report to the home secretary, June 15, 1808, printed in Tarle, Kontinental'-naja blokada, vol. I, 720-1.

[6.][6] Rambaud, Naples sous Joseph Bonaparte, p. 437.

[7.][7] The weight of spun yarn in 1812 was 13,470,000 kgs., which with the addition of one-twelfth for loss of weight corresponds to 14,590,000 kgs. of cotton. In comparison with this the supply of Italian and Spanish cotton was 3,000,000-4,000,000 livres (French pounds), or an average of 1,750,000 kgs. Chaptal. op. cit., vol. II, pp. 7, 15.

[8.][8] Quoted by Tarle, Kontinental'naja blokada, vol. I, p. 513.

[9.][9] Mollien, Mémoires, &c., vol. III, pp. 12, 22 et seq.

[10.][10] Varlez, op. cit., vol. I, app. III. The reports of the home secretary are printed in Tarle, op. cit., vol. I, pp. 735 et seq. The Report of the Committee of the Council of Manufactures in 1814 is printed in Levasseur, Histoire des classes ouvrières, &c., de 1789 à 1870, vol. I, pp. 726-7, app. A.

[11.][11] Loi relative aux douanes,Dec. 17,1814. Bulletin des lois,&c.,5th ser., bull. 62, no. 529. Cf. Levasseur, Histoire des classes ouvrières, &c.,de 1789 à 1870, vol. I,pp.562 et seq.

[12.][12] Besides the above-named works, cf. a petition presented by Cort's son in 1812 (Hansard, vol. XXI, pp. 329 et seq.); Beck, Geschichte des Eisens (Braunschweig, 1897), vol. III, pp. 692 et seq., 1089 et seq.; vol. IV (1899), pp. 165 et seq. Cf. also Allgemeine Deutsche Biographie, s.v. J. C. Fischer.

[13.][13] Cf. the brilliant sketch by Professor Arthur Binz, Ursprung und Entwickelung der chemischen Industrie (a lecture delivered at the Berliner Handelshochschule in 1910). His statement as to the development of artificial soda (p. 7 note 2) cannot, however, be brought into accord with the facts; and the use of chlorine bleaching is older than one might infer from his words (p. 10 note 7).

[14.][14] Figures given in König, op. cit., p.224.

[15.][15] Besides the works mentioned at the beginning of this chapter, cf. also de Cérenville, Le système continental, &c., pp. 306 et seq.; Vogel, Die Hansestädte, &c., loc. cit., p. 35; Rubin, 1807-1814, &c., p. 436.

[16.][16] Calculated from figures given in König, op. cit., p. 225. See also Levasseur, Histoire des classes ouvrières, &c., de 1789 à 1870, vol. I, p. 475; Tooke, op. cit., vol. II, p. 414.

[17.][17] The best general survey is contained in Darmstädter, Studien zur napoleonischen Wirtschaftspolitik, loc. cit. (1905), vol. III, pp. 113 et seq. French commercial statistics are given in the earlier section, vol. II, p. 566 note 1. Cf. also Schmidt, Le Grand-duché de Berg, pp. 342, 413 et seq., 420, app. C (Champagny's report of Aug. 5, 1807); Tarle, Deutsch-französische Wirtschaftsbeziehungen, loc. cit., pp. 699 et seq., 725; Tarle, Kontinental'naja blokada, vol. I, 119, 570, app. XIV (reports of French spies), app. XIX (petition from Leyden); de Cérenville, op. cit., pp. 141-2, 155, 174 et seq., 255 et seq.; Rambaud, op. cit., p. 440 note 3; König, op. cit., pp. 267, 289; Kiewning, Lippe und Napoleons Kontinentalsperre gegen den britischen Handel, in Mitteilungen aus der Lippischen Geschichte und Landeskunde (Detmold, 1908), vol. VI, pp. 161 et seq.; Letters to Fouché and Eugene (Correspondance de Napoléon Ier, nos. 15,874, 16,824). The North Sea coast from a customs point of view: Bulletin des lois, &c., 4th ser., bull. 299, no. 5724; bull. 397, no. 7340; Zeyss, op. cit., pp. 129-30, 261 et seq. (Report of the Krefeld Chamber of Commerce); Vogel, op. cit., pp. 47-8; Schäfer, Bremen und die Kontinentalsperre, loc. cit., vol. xx (1914), p. 428.

[18.][18] See ante, p. 53.

[19.][19] See ante, p. 86.

[20.][20] See ante, pp. 274, 276.

[21.][21] De Cérenville, Le système continental, &c.; Chapuisat, Le commerce et l'industrie à Genève, &c.; Geering, op. cit.; Gothein, Wirtschaftsgeschichte des Schwarzwaldes und der angrenzenden Landschaften (Strassburg, 1892), vol. I, pp. 767 et seq., 800, 866.

[22.][22] See ante, p. 183.

[23.][23] See ante, p. 84.

[24.][24] Zeyss, op. cit., p. 367; The different petitions are printed in Schmidt, Le Grand-duché de Berg, app. E, and Zeyss, ibid., Anhang VIII. The actual material for the account in the text is taken substantially from Schmidt's model work.

[25.][25] Rubin, op. cit., pp. 436-7, 510.

[26.][26] Oddy, in his contemporary description of the commercial conditions of the time, unhesitatingly explains the state of the Russian exchange in this way. Cf. Oddy, European Commerce (London, 1805), p. 197.

[27.][27] See ante, p. 173.

[28.][28] Vandal, Napoleon et Alexandre Ier, vol. I, pp. 140, 324, 513 (Napoleon's instructions to Caulaincourt, Nov. 12, 1807); Oddy, European Commerce, bk. I, especially pp. 130 et seq., pp. 197-8 (computations by the present writer); Tarle, Kontinental'naja blokada, vol. I, pp. 477, 482, 486; Darmstadter, Studien, &c., vol. II, p. 610; Rose, in the English Historical Review, vol. XVIII, pp. 122 et seq.

[29.][29] See ante, p. 262.

[30.][30] Hoeniger, Die Kontinentalsperre und ihre Einwirkungen auf Deutschland, in Volkswirtschaftliche Zeitfragen (Berlin, 1905), no. 211, p. 26; Schäfer, op. cit., table IX; Stuhr, Die napoleonische Kontinentalsperre in Mecklenburg, 1806-1813, in Jahrbuch des Vereins fur Mecklenburgische Geschichte und Altertumskunde, 1906, vol. LXXI, tables on pp. 361 et seq.

[31.][31] Worm-Müller, Norge gjennem nødsaarene, &c., pp. 82 et seq.

[32.][32] The calculation has been made on the basis of the figures given on p. 245,and like those figures, it applies to Great Britain alone (excluding Ireland). But a change has been made in the fact that the trade with Ireland, the Channel Islands, and the Isle of Man has not here been taken into account.

[33.][33] 'Erst die Kontinentalsperre zwang England, zum Ersatz für den Entgang des kontinentalen Marktes andere überseeische Absatzgebiete aufzusuchen. Das waren die Levanteländer.' Jenny-Trümpy, op. cit., vol. II, pp. 370-71, quoted in Geering, Entwickelung des Zeugdrucks, &c., p. 422.

[34.][34] The figures for 1913 are calculated on the basis of the Statistical Abstract for the United Kingdom.

[35.][35] The figures have been collected on the basis of the table in Porter, Progress of the Nation, pp. 275-6. The other statistical data in this section have been taken, where nothing to the contrary is stated, from the same work.

[36.][36] See ante, p. 242.

[37.][37] Hansard, vol. XXI, p. 330.

[38.][38] Miss Cunningham, British Credit, &c., pp. 76-7.

[39.][39] It may be allowable to point out how well this result, which was reached early in 1918, is in accordance with later German developments.

[40.][40] For this and the following paragraph, cf. the references given above (p. 239, note).

[41.][41] 'Britain's Food Supply in the Napoleonic War,' in the Monthly Review (1902), reprinted in Napoleonic Studies, pp. 204 et seq. The later statement by Dr. Rose in his chapter on 'The Continental System', in the Cambridge Modern History, vol. IX, p. 371, is in far better accord with the sources as I read them.

[42.][42] Cf. also, Porter, op. cit.; Tooke, op. cit.; Smart, op. cit.; Oddy, op. cit., bk. III; McCulloch, Dictionary, Practical, Theoretical, and Historical, of Commerce and Commercial Navigation (new ed., London, 1852), article on 'Corn Laws and Corn Trade'; Cunningham, Growth of English Industry and Commerce, 3d ed., vol. II, pp. 703 et seq. The British figures corresponding to volume (quarters of 8 bushels) have been recalculated according to weight, 1 bushel being taken as equal to 28.2 kgs.

[43.][43] Cp. Ricardo, Principles of Political Economy and Taxation (London, 1817), ch. XIX; Malthus, Principles of Political Economy (London, 1820), ch. III, sec. IX.

[44.][44] Computed on the basis of Oddy's figures, op. cit., pp. 234-52; passim.

[45.][45] Letters to Archchancellor Cambacérès, Apr. 5 and 25, 1807; to Eugene, Aug. 6 and 31, Sept. 24, 1810; various 'notes' (imperial dictated addresses) dated Jan. 13, Feb. 8, Mar. 11, 1812 (Correspondance, nos. 12,297; 12,470; 16,767; 16,855; 16,946; 18,431; 18,485; 18,568);. Letters to the Italian minister of finance, Mar. 22, 1813 (Lettres inédites de Napoléon Ier, no. 972); Pasquier, Histoire de mon temps: Mémoires (Paris, 1893), vol. 1, ch. XXI; Chaptal, Souvenirs, &c., pp. 291-2; Levasseur, Histoire des classes ouvrières, &c., de 1789 à 1870, vol. 1, pp. 341, 477 note 5; Vandal, op. cit., vol. III, pp. 339, 459.

[46.][46] Correspondance, nos. 16,224, 16,508; Lettres inédites, nos. 491, 652 (to Montalivet, July 16, 1810); Hansard, vol. XV, pp. 396-7; Fisher, Studies, &c., p. 344; Stuhr, op. cit., p. 355; Rambaud, op. cit., pp. 426-7; Tarle, Kontinental'naja blokada, vol. I, pp. 486, 494-5.

[47.][47] Cf. Worm-Müller, op. cit., the greater part of which is devoted to this subject. For the later years, cf. Rubin, op. cit., ch. X, and Holm, Danmark-Norges Historie, &c., vol. VII: 2; passim. The utterance of Foster may be found in Grade, Sverige och Tilsit-Alliansen, pp. 438-9.

[48.][48] Miss Cunningham, British Credit, &c., pp. 4 et seq., pp. 71 et seq.

[49.][49] Report of the Select Committee on the High Price of Bullion (1810: House of Commons, 349, table 73).

[50.][50] The figures are based on the tables in Porter, op. cit., p. 507, and Tooke, op. cit., vol. I, pp. 352.

[51.][51] Memoirs of Sir Thomas Fowell Buxton (3d ed., London, 1849), ch. XXI, pp. 288 et seq.; Ehrenberg, Grosse Vermögen, ihre Entstehung und ihre Bedeutung (Jena, 1903), vol. I, pp. 58 et seq.

[52.][52] Report of the Bullion Committee, with examination of witnesses. Hansard. vol. XVII, pp. ccii et seq. The appendices, however, are printed only in the official separate edition (see ante, p. 352 note). Ricardo, Works (McCulloch ed., London, 1852), pp. 267 et seq., 269 et seq., 292 et seq.;Three Letters on the Price of Gold, A Reprint of Economic Tracts (Hollander ed., Baltimore, 1903); Letters to Thomas Robert Malthus, 1810-1823 (Bonar ed., Oxford, 1887), pp. 1, 15 et seq., 19, 20 et seq.; Anonymous [Malthus], in Edinburgh Review (Feb., 1811), pp. 342 et seq., 361 et seq.; Hawtrey, The Bank Restriction of 1797, loc. cit. (1918), vol. XXVIII, p. 64; Tooke, op. cit., vol. I, pp. 157 et seq., 207 et seq., 352 et seq., 375 et seq.; also, A History of Prices from 1839 to 1847, inclusive (London, 1848), pp. 100 et seq.

[53.][53] The figures for the exports of precious metal follow tables 69 and 79 in the appendices to the Report of the Bullion Committee, reduced, when necessary, to pounds sterling.