The Continental System: An Economic Interpretation

Heckscher, Eli F.
(1879-1952)
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Editor/Trans.
Harald Westergaard, ed. C. S. Fearenside, trans.
First Pub. Date
1918
Publisher/Edition
Oxford: Clarendon Press
Pub. Date
1922
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PART I
Antecedents of the Continental System


PART I
FOREWORD

I.F.1

THE Continental System is a unique measure to which a country resorts for the purpose of crushing a political enemy by economic means and at the same time building up its own commercial and industrial prosperity to an extent previously undreamt of. The will to injure one's enemy and to benefit one's own country is, therefore, a matter to be taken for granted beforehand, and consequently does not require much elucidation. That will is seldom lacking in the life of nations, least of all when they are at war, and was evidently bound to attain an unusual intensity in a statesman of the character of Napoleon, who throughout his career renounced all moral traditions and made self-assertion his loftiest lodestar. What we have here to investigate and elucidate, therefore, is not mainly these simple aims of policy, but rather, if one may put it so, the means to those ends; or, to express it more clearly, what friends and foes conceive to be gain and loss in the sphere of economics, that is, what kind of economic changes they regard as beneficial and as detrimental. These matters are very far from self-evident even at the present time, although they have been the subject of protracted scientific treatment; and they were obviously still less self-evident a hundred years ago. If we wish to understand the nature of the Continental System, therefore, we must first consider the body of ideas whence it proceeded; and if we wish to understand its effects, we must further consider those ideas with reference to their true economic connexions. Only in that way, too, can we form a clear idea of the similarities and dissimilarities of the Continental System with respect to the blockade policy pursued during the recent World War; for the aim to injure the enemy and benefit the home country is to be taken for granted as much in our own time as it was in the time of Napoleon.

I.F.2

In order to form a correct understanding of the antecedent conditions of the Continental System, in the meaning just given, we must point especially to one feature of the mercantilist point of view whence it sprang, namely, to what we may call its static conception of economic life. If, for instance, we refer to one of the most clear-headed and consistent of the mercantilist statesmen, namely, Colbert, we learn from many of his writings that he conceived the industry, trade, shipping, and bullion resources of the world as quantities given once for all, which, therefore, could not be appreciably increased or decreased by human activity. Under such a conception it is obvious that there can be but one conclusion, viz., that the economic prosperity of a country depends on its power to deprive its competitors of their shares of the given quantity, and not on its power to increase the total quantity. That is to say, only at the expense of others can a country be rich.*1

I.F.3

It is not difficult to understand to what kind of economic policy such a conception would naturally lead. It led to the policy of commercial war; and without any great exaggeration we may say with the well-known German economic historian, Professor Schmoller, that the trade policy of former times consisted of an unbroken series of commercial blockades.*2 This, then, was the body of ideas in which the Continental System originated, in so far as commercial wars, in the current view of that time, were bound to seem economically profitable to an extent that can scarcely be appreciated by any tolerably clear-minded person of to-day.

I.F.4

All this, however, does not explain of what the benefit and profit of commercial war, on the one hand, and the injury and loss on the other, were supposed to consist. But on this point, too, the mercantilist conception gave all the guidance necessary. Profit was supposed to consist in the augmentation of exports, in forcing the goods of one's own country on other countries; loss, in allowing other countries to force goods on one's own country. Industry, trade, navigation, that is, economic activity in general, were in a way regarded as ends in themselves. The goods that were their fruits, so to speak, were to be exported so far as possible, if they belonged to one's own country, and to be kept out so far as possible, if they belonged to other countries. The verdict of the balance of trade—including, however, the balance of payments for freightage, &c.—determined the result. Modern economists are far more familiar with this trend of thought than they are with the static conception of things. Even in our own day 'the natural man' reasons in this way; and this reasoning, so far as one can see, is substantially a fruit of the ideas contributed to history during the mercantilist period.*3

I.F.5

All this makes clear, not only the existence, but also the tendency, of commercial wars. Their object was necessarily to force the greatest possible amount of one's own goods into the enemy's country, and, so far as possible, to prevent the enemy from introducing goods into one's own country. Inasmuch as this, precisely because of the conception indicated, was the object of trade policy even in time of peace, the transition from peace to war was very easily effected; and for that reason we undoubtedly meet with a consistency in the trade policy of that time which, strictly speaking, is lacking in our own time. Nowadays, as in the days of mercantilism, most states, guided by the economic perceptions of the average man, labour in time of peace to render difficult the importation of foreign goods, and at the same time to force their own products on the world market, (although in reality this is incompatible with the former aim). In time of war, however, they suddenly swerve around, either to the inverted standpoint of encouraging imports and hampering exports, or, in general terms, of preventing all trade with the enemy. This statement does not, of course, imply any judgment as to which policy has the greater justification; it is merely an assertion of the at least seemingly greater inconsistency of our present procedure.

I.F.6

An important part of what follows will be devoted to the investigation of the question as to whether and to what extent the older procedure may be expected to accomplish its purpose—the crushing of the enemy by economic means. And in that connexion it will be shown that, while the older tendency in war time was in close harmony with commercial policy in peace time, its relation to the generally observed rules and methods of naval warfare was far more inconsistent.


Notes for this chapter


1.
Letters, instructions et mémoires de Colbert (Paris, 1861-73), vol. II, p. cclxvii; vol. VI, pp. 264-5, 269; vol. VII, p. 239; et al. As this side of mercantilist opinion does not appear to be at all generally understood, we may give a somewhat full quotation from Colbert's Dissertation sur la question: quelle des deux alliances, de France ou de Hollande, peut estre plus avantageuse à l' Angleterre (March, 1669), where the point of view is brought out with all the incisive logic of which Colbert was master: 'L'on peut avancer certainement que le commerce de toute l'Europe se fait avec le nombre de 20,000 vaisseaux de toute grandeur; et l'on demeurera facilement d'accord que ce nombre ne peut estre augmenté, d'autant que les peuples sont toujours égaux dans tous les Estats, et que la consommation est pareillement toujours égale.' Finding that one of England's chief considerations in deciding for or against an alliance must be the increase of her shipping, he goes on to say: 'Cette augmentation ne peut provenir que par la découverte de quelque nouveau commerce jusqu'à présent inconnu, ou par la diminution du nombre des vaisseaux de quelqu'une des autres nations. La découverte de quelque nouveau commerce est fort incertaine, et il n'est pas permis de raisonner sur une chose si casuelle, ou, pour mieux dire, si certaine qu'elle n'arrivera pas.... Il faut donc que ce soit par la diminution du nombre des vaisseaux de quelqu'une des autres nations.' Lettres, &c., vol. VI, pp. 264-5. Cf. Sombart, Der moderne Kapitalismus (2nd ed., Munich and Leipzig, 1917), vol. II, p. 918.
2.
Schmoller, Umrisse und Untersuchungen zur Verfassungs., Verwaltungs- und Wirtschaftsgeschichte (Leipzig, 1898), p. 95.
3.
This subject is obviously too comprehensive for incidental treatment in this connexion. What the writer has in mind is the signal reversal from the mediaeval eagerness to keep goods within reach to the opposite eagerness to dispose of goods which has been the predominant trait both of mercantilist and of popular present-day opinion.

Part I, Chapter I

End of Notes


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