The Continental System: An Economic Interpretation

Heckscher, Eli F.
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Harald Westergaard, ed. C. S. Fearenside, trans.
First Pub. Date
Oxford: Clarendon Press
Pub. Date
25 of 30




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 object*18 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.



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.



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.



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 above*22 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:

But it may be said that the great majority of the inhabitants of the French empire cannot but gain by the incorporation of so industrious a region as Berg. We reply to this that the object can be attained without the incorporation of the Grand-Duchy. As soon as Your Majesty has declared that no such incorporation should take place, the manufacturers of the Grand-Duchy, excluded from the markets of France, Italy, and North Germany, will find themselves reduced to the pressing necessity of moving their works to the left bank of the Rhine. All the cotton, wool, and silk factories of Berg will be restored to their mother country, and Berg will have left only the factories that belong to its soil, namely, the iron and steel industry, which will continue to exist.*24


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.



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.



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



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.



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.

Notes for this chapter

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.
See ante, p. 53.
See ante, p. 86.
See ante, pp. 274, 276.
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.
See ante, p. 183.
See ante, p. 84.
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.
Rubin, op. cit., pp. 436-7, 510.
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.
See ante, p. 173.
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.
See ante, p. 262.
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.
Worm-Müller, Norge gjennem nødsaarene, &c., pp. 82 et seq.

Part IV, Chapter IV

End of Notes

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