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
15 of 30




THE policy of the United States during the period of the Continental System is an example of the type which, in the course of an economic war to the knife, seeks to maintain neutrality to the uttermost and to take all the consequences of that attitude, without, it is true, the support of either external military power or an efficient internal administration.*46 Down to the close of 1807 this policy brought with it a unique development of American shipping and foreign trade, especially the carrying trade. But when the commercial war became more intense in 1807, it made a complete right-about-face and led to the second great self-blockade caused by the Continental System; and finally, when this became quite untenable, it drove the American Union into the very war which its leading men had done everything in their power to avert.


The desire of the American statesmen for neutrality scarcely calls for any detailed explanation. The sympathies of the population were strongly divided between the combatants. Anglophiles predominated among the Federalists, who later developed into the Republican Party, while Francophiles pre-dominated among the opposite party, the Republicans, later known as Democrats. The Federalists dominated the commercial and sea-faring states of New England, while the main support of their antagonists lay in the agricultural states of the South. The latter party tended to get the upper hand, strongly supported, as it was, by President Jefferson in 1801-9, and again by President Madison in 1809-17, partly because of political tradition dating from the time when France co-operated in the American War of Independence, and partly because the conflicts of a neutral sea-faring nation must always be keenest with that combatant who commands the sea. The remarkable thing about the situation is that it was precisely those economic interests and those parts of the country for the defence of which the campaign of neutrality was carried to extremes, that were its most zealous opponents and did their utmost to prevent its efficacy. Nor did they hesitate to follow the same tactics even during the war to which the policy of neutrality led, just because the measures of neutrality had necessarily to be directed against the few remnants of international intercourse that the belligerents had left undisturbed. Both in this respect and in other respects the neutrals of our day have had something to learn from American developments.


The increased severity in the British treatment of neutrals, as we know, went back especially to the new interpretation of 'broken voyages' in the Essex case in the summer of 1805, and in April, 1806, it had occasioned the American counter-measure in the form of the Non-importation Act,*47 which prohibited the importation, both from England and from other countries, of most of the main groups of British industrial products, excluding, however, cotton goods. But the American law did not enter into force until November 15, and was suspended at the close of the year, so that it turned out to be nothing more than a threat. The Berlin decree of November 21, 1806, immediately led the American envoy in Paris to address an inquiry to the French minister of the marine, Vice Admiral Decrès, as to the interpretation of the new law at sea. In the absence of the Emperor the answer was favourable,*48 and consequently there was no immediate occasion for uneasiness on the part of America. On the contrary, there were complaints in England that the Americans were making common cause with Napoleon in order to supply France with the industrial products that she was otherwise wont to obtain from England. Nor was any great alteration made in this respect by the first British Order in Council of January, 1807, owing to its restricted range. Accordingly, during the greater part of the year 1807 American trade and shipping continued not merely to flourish, but even to grow, as is shown by the table previously printed.*49 In reality, the year 1807 marked the high-water mark of the trade and navigation of the United States for a very long time to come.


But the turning-point was to be reached before the close of the year. The beginning was made with the authentic interpretation of the law which Napoleon, as the sole final authority, gave to his Berlin decree, whereby it came to apply also to the sea. Then followed the new British Orders in Council of November and Napoleon's Milan decree of December.



All this set going the great American series of counter-measures, which also, so far as they concerned Great Britain, were affected by the latest act of aggression, the so-called 'Chesapeake Affair' of June, 1807. A British man-of-war requested to be allowed to search the American frigate Chesapeake with the object of recapturing some alleged deserters from the British navy; and when the request was refused, as a matter of course, the British vessel opened fire, captured the American man-of-war, and took away four of the crew. To this was added the American annoyance at the British practice of impressing for naval service sailors on American trading vessels on the pretext that, having been born before the American states became independent, they were British subjects; and this, combined with the Chesapeake Affair, gave rise to a very pretty diplomatic conflict.


But what gave the principal impulse to the American commercial, or rather anti-commercial, intervention was not the measures of Great Britain, but rather those of France, that is to say, the new adaptation of the Berlin decree, which brought it about that a stranded American vessel, the Horizon, had that part of its cargo which was of British origin declared fair prize. However, the new Orders in Council were known in the United States (in fact, though not officially) when on December 22, 1807, Congress and the President enacted the Embargo Act,*50 which is one of the most interesting legislative products of the period. As has already been indicated, it was a self-blockade of the purest water, but, unlike Napoleon's, an open and direct one. An embargo was laid on all vessels lying in American ports and bound for foreign ports. The only exceptions were foreign vessels, which were allowed to depart after being informed of the enactment of the law; and vessels in the American coasting trade were to give security that the cargo should be discharged in an American port. Almost at the same time the Non-importation Act, passed in the previous year against British goods, was put into force and excluded importation in foreign bottoms from the only power that was in a position to carry on trade by sea. Under the pressure of the unreasonable procedure of both the combatants, the American government thus sought to cut off at a blow the abnormally large trade and shipping that the United States had until then enjoyed. In principle the policy was impartial, inasmuch as it was intended, on the one hand, to deprive Great Britain of American cotton and grain, as well of sales on the American markets, and, on the other hand, to put an end to the colonial trade from which France and Spain and their colonies derived equal advantages, and also to the importation of the industrial products of the European Continent into America. Although the measure was thus indisputably two-sided, the simultaneous enforcement of the one-sided Non-importation Act gave the policy the appearance of being directed distinctly against Great Britain. That country, indeed, had touched on a particularly tender point by imposing duties on the goods which compulsorily passed through its territories, inasmuch as both the United States and the British opposition put it on a level with the taxation of American trade which in the preceding generation had given the final impulse to the Declaration of Independence by 'the old thirteen'.*51


President Jefferson's motive seems to have been partly the bias of the plantation owners, emphasized by his physiocratic tendency toward regarding agriculture as the highest work of man and his grave distrust of everything which departed from agriculture. To begin with, at least, he undoubtedly considered, as the American historian, Channing, says, 'that to put an end to, let us say, three quarters of the commerce of the United States would be a blessing, albeit somewhat in disguise'.*52 But evidently this, like most of the measures of the different powers in the commercial war, was also a measure of reprisal, an endeavour to compel the embittered belligerents to be reasonable. In fact, unlike the majority of their own measures, it was a sincere attempt in that direction. It seems also as if the Embargo Act was a means of saving the great American merchant fleet, the largest next to that of Great Britain, from the extinction which must otherwise have been the almost necessary consequence of the Berlin and Milan decrees and of the Orders in Council. Thus, for instance, a large ship-owner in Maryland stated that of fifteen vessels which he had dispatched during the bare four months between September 1 and the enactment of the Embargo Act, only three had arrived at their destination, while two had been captured by the French and the Spaniards, one had been seized at Hamburg, and nine had been taken to England.


However, it is rather an academic question what the effect of the Embargo Act would have been had it been obeyed, for nothing was further from reality. It makes an almost moving impression to see how one supplementary law after another, each more detailed and more draconic than the other, seeks to stop up the holes in the original law, which was very summary; but it has seldom been shown more distinctly that a constant succession of new laws on the same subject means a constant disobedience to the provisions of the law. As early as January 9, 1808, special enactments were made as to the security that coasting and fishing vessels would have to give, and it was declared that the exceptions made in the Embargo Act in favour of public armed vessels did not apply to privateers (chapter 8). On March 12, in the same year, foreign vessels also were required to give security to the extent of four times the value of vessel and cargo, or twice as much as for native vessels, that they would not sail to foreign ports; and for fishing vessels, a declaration was imposed under oath as to whether any of the catch had been sold during the trip. At the same time, however, the President was authorized, very imprudently, to grant vessels the right to go in ballast to foreign ports in order to fetch from there the property of American citizens, on giving a pledge to return with that property, and not to carry on any other trade, etc. (chapter 33). Still more forceful was the intervention a month and a half later by a law of April 25, which both forbade all loading of vessels except under the control of the authorities, and also in general terms forbade any vessel to depart, without the special permission of the President, to any United States port or district which was adjacent to foreign territory; and the customs staff was charged to take under their care any suspiciously large stocks of goods in such border regions. Further, the law gave to naval and customs vessels the right of search and authorized the customs staff, pending the President's decision, to detain vessels suspected of intending to break the law, and so on (chapter 66). Finally, on January 9, 1809, there was passed an Enforcement Act,*53 which summoned all the weak public powers of the Union to compel obedience to the law. Thus the President was authorized to employ the fighting forces of the United States by land and sea and to hire the imposing number of thirty vessels for the purpose. At the same time all the previous laws were made more severe. Vehicles were also subjected to the embargo, in order to prevent the law from being circumvented by land routes; permission had to be obtained for the loading of vessels; and the right of the customs officials to refuse permission was extended to the right of ordering the discharge, in suspected cases, of goods already loaded, and also to take goods from vessels into their custody; and the surety deposited was raised to six times the value of the goods. Finally, the right to sail to foreign countries for American property was annulled.


These convulsive regulations give a kind of negative to the actual circumstances, which would seem to have been characterized by even more systematic transgressions of the law than generally occurred during that exceptionally lawless period. In Passamaquoddy Bay, on the borders of British North America, and on the St. Mary's River, which formed the boundary toward the still Spanish Florida, there were collected whole flotillas of American vessels, which, under the pretence of sea damage, put in with flour and fish at the ports of Nova Scotia and of the West Indian Islands, and gave the skippers' need of money to pay for repairs as an excuse that the cargoes had been sold there. This transfer of trade outside the territories of the Union went to the north, west, and south. Northward seven hundred sledges went back and forth between Montreal in Canada and the boundary of the State of Vermont; and at the same time great quantities of potash were imported into Quebec. That city and Halifax in Nova Scotia had halcyon days, the former having more shipping than the whole of the United States; and the British governor of Nova Scotia declared that the Embargo Act was 'well calculated to promote the true interests of His Majesty's American colonies', which, to say the least, was not its intention. In the West Indies, it is true, there appeared at first a serious shortage of foodstuffs and timber, accompanied by a great rise in prices; and the French islands never regained their former prosperity. But many circumstances contributed to this; and in the British West Indies the prices of grain sank again rapidly, and a number of American vessels went there, as also to Havana, where on one occasion, in 1808, there lay nearly a hundred at one time. On the cotton market at Charleston, where the law had evidently been effective in 1808, an agent stated that it had been broken every week since December of that year and January of 1809. Of course the right to sail for American property abroad was particularly abused, and was therefore finally cancelled. Five hundred and ninety vessels are said to have left under this pretext, and as a rule they stayed away, like the American tonnage which happened to be outside the limits of the United States when the law was passed, and which took very good care not to come again under their jurisdiction. On the other hand, of course, those vessels which remained at home in obedience to the law remained largely without employment. Admiral Mahan supposes that those that remained in the states were in the majority, although, on the other hand, the complaints about the sufferings that the law was alleged to cause gained in volume from the desire to make party capital out of the matter. That part of the trade which, as far as one can judge, was hit hardest was the export of raw materials to Europe, especially the export of raw cotton from the Southern States to England. Thus Liverpool received only 25,426 bags in 1808 as compared with 143,756 bags, or nearly six times as much, in 1807. Even that part of the British importation of raw materials which was not directly dependent on American supplies showed a great decline in 1808. This was presumably due to the general shortage of shipping that was a consequence of the withdrawal from traffic of a fairly large part of the second largest mercantile fleet in the world.*54


In spite of the immense extent to which the law was disregarded, therefore, it would be an exaggeration to call the Embargo Act ineffective as a means of giving trouble to the belligerents. During the years 1808 and 1809 the British opposition never wearied of holding up to the government the disastrous consequences that its Orders in Council had had by giving rise to the Embargo Act, which had cut off both the supply of raw materials from the United States and, above all, the possibility of sales there. In accordance with the good old British parliamentary custom, they made the government responsible for all the maladies of the body politic, while the government, also in the usual stereotyped fashion, pictured the situation in as favourable a light as possible and ascribed the undeniable difficulties to other causes. Any inquiry of scientific value, however, must consider the course of economic development as a whole, and for this reason the question of the effects of the Continental System on the belligerents has been held over for separate treatment in the fourth part of this work. In any case, the difficulties accruing to Great Britain in consequence of the Embargo Act were not of such consequence as to lead its government in 1808 either to rescind the Orders in Council or even in the least degree to modify their application. On the contrary, Canning, as foreign secretary, conducted the almost continuous exchange of notes with an ironic superiority and a diplomatic skill which were calculated to irritate more and more the American government with its clumsier methods.*55



The American law had, if possible, still less effect, in the direction intended, on Napoleon's measures. Decrès's original uncertainty as to the scope of the Berlin decree had inspired the American government with what it somewhat vaguely called an assurance that the measures would not be applied against the United States; and this curious position was maintained by the Americans in the exchange of notes with Great Britain even after the Milan decree and its application should have definitely dissipated all such hopes. Like Great Britain, France was constantly capturing American vessels; and in so doing she behaved, if possible, in a still more violent manner than her adversary, especially by confiscating vessels simply and solely because they had been subjected to examination by British cruisers, a thing which they could not possibly have escaped. This interpretation was carried to such an extent, and with such disregard of actual conditions, that in 1808, for instance, an American brig was declared lawful prize because of the British examination, despite the fact that, immediately after the examination, it had endeavoured to flee from the British cruiser into the port of Bilbao, which belonged to Napoleon's ally, Spain, and had thus done its best to show its desire to stand well with the continental powers. As a matter of fact, Napoleon was so little inclined to except the United States from his proposition that neutrals did not exist, that with his usual ability to draw unexpected logical conclusions he managed to find in this very Embargo Act a justification for seizing all American vessels that arrived at French or 'allied' ports. In a letter addressed to his minister of finance, Gaudin, on April 17, 1808, he declared, in fact, that, as the government of the United States had laid an embargo on its vessels and resolved not to carry on foreign trade during the war, 'it is evident that all the vessels that say they come from America really come from England and that their papers are fictitious'; and consequently all American vessels that came to the ports of France, Holland, the Hanse Towns or Italy were to be seized.*56 This was the Bayonne decree, and was all that the United States got out of France by the Embargo Act.



The hopelessness of the struggle against the disregard of the law by the Americans themselves finally led the President and Congress to give it up, and that, too, shortly after the passing of the Enforcement Act in January, 1809. The fact is that this law gave rise to disturbances and to a still greater feeling of irritation in the shipping states, so much the more so as the insurrection in Spain in the late summer of 1808 seemed to open up new and bright prospects to American trade. The result was a new and famous law, the Non-intercourse Act, passed on March 1, 1809.*57 That law repealed the Embargo Act as a complete all-round self-blockade, and limited the embargo so as to make it apply only to the two sets of belligerents, Great Britain and France; but by way of compensation it was made, if possible, still more strict against them. Over and above the prohibition of American trade and shipping contained in the Embargo Act, which remained in force with regard to those two countries, all British and French vessels, all goods shipped from Great Britain and France, and all goods produced there, were now forbidden to enter American ports as from May 20, 1809. The substitution of the two-sided prohibition for the one-sided Non-importation Act, which was exclusively directed against Great Britain, gave a really consistent expression to an impartial policy of reprisals. The intention was to provide an outlet for American trade which could make the measure feasible without blunting the edge of its task as a measure of reprisal; and it was thus, practically speaking, a rationalization of the Embargo Act. But it was obvious beforehand that any control of its observance must be more difficult than ever when once American vessels obtained the right to sail to Europe. The character of the law as a means of exerting pressure was further marked by the fact that the President was authorized to announce by proclamation when either of the two belligerents revoked or amended its laws to such an extent that they no longer violated the trade of the United States; after which event commercial intercourse with the country of that belligerent was to be renewed.


The natural result was a considerable recovery in American foreign trade, in the first place with the more or less neutral places, such as the Hanse Towns, Altona, and especially Tönning in Schleswig and probably Gothenburg. The trade with England continued to go chiefly to Canada and Nova Scotia, and also, especially for cotton, via Amelia Island in the St. Mary's River and thence to Europe in British bottoms, which could not be regarded as attractive from an American standpoint. Cotton went also via Lisbon, Cadiz, the Azores or other permitted ports, while persons who had no reputation to lose made shipments direct to Liverpool. But the need of the goods was so small, comparatively, in Great Britain, that the increased prices which were a consequence of the roundabout journey and the difficulties of transportation lowered profits for the American exporters.*58


But while the economic effects continued to arouse discord, the political effects seemed, though somewhat late, to promise the results expected from a policy of reprisals. Madison, who had succeeded Jefferson as President three days after the passing of the Non-intercourse Act, was rejoiced to receive an English proposal for a settlement, which rapidly attained an apparent result. In reality, to be sure, Canning's conditions for an agreement were entirely unacceptable by the American government. But the British minister at Washington, Erskine, son of the Lord Chancellor in the 'All the Talents' ministry, went in his zeal for a settlement quite beyond his instructions and promised on behalf of his government the rescinding of the Orders in Council as against the United States from June 10, 1809. On this, Madison, in accordance with the authority given him in the Non-intercourse Act, announced this concession on the part of Great Britain in a proclamation which suspended the American act from the same day. An immense movement immediately began in all American ports, where six hundred vessels lay ready to sail on the appointed day; and during the week June 16-23, Liverpool received more American cotton than it had received throughout the entire year of 1807. At this point, however, it was found that the British government disavowed its minister, and the President was compelled to revoke his proclamation. The new British envoy who succeeded Erskine came immediately into sharp conflict with the American government and was recalled; after which all prospects of an immediate settlement in this quarter were again blighted.



The Non-intercourse Act now also had to be dropped. Its place was taken on May 1, 1810, by a third law,*59 which was intended to give the belligerents a period of grace within which they might amend their ways, but at the same time to play out the one who did so against his still obdurate antagonist. It was laid down that, if either of the two countries, Great Britain and France, rescinded her regulations before March 3, 1811, but the other country did not follow the example within three months, the President might by proclamation put into force against the latter country the principal provisions of the Non-intercourse Act. For the moment, therefore, trade was free with all countries and consequently grew apace during the year 1810. However, this did not hold good of the colonial carrying trade, which had largely dropped out of American hands, not only, or perhaps not even principally, because of the Continental decrees and the Orders in Council, but also in consequence of the military events themselves, in that at first the insurrection in Spain in 1808 and afterwards the capture of the French colonies in 1809-10, put the British themselves in a position to take over the trade in almost anything that could be called colonial goods. The trade that did grow apace, therefore, was especially imports and also all trade in the products of the United States, chiefly the sale of raw cotton to Great Britain and of grain to the combatants in the Iberian peninsula; but this is of comparatively little interest from our present point of view.



These two American laws of 1809 and 1810 gave Napoleon an opportunity for a diplomatic game of hide and seek, the like of which has seldom been seen, and which completely fogged the Americans and finally led to the attainment of his object by making inevitable a breach between Great Britain and the United States. At first he took no notice of the Non-intercourse Act and pretended that he did not know of it, although a note to his minister of the interior, dated December 21, 1809, speaks of it in plain terms; and three weeks later a letter to his foreign secretary, Champagny, shows that he desired a settlement with America. But about a year after the American law was passed he suddenly proceeded to a measure of reprisal, the Rambouillet decree, dated March 23, 1810, but not published until about the middle of May. The least remarkable thing about this decree is that, on the ground of the Non-intercourse Act, it was ordered that all American vessels should be seized and sold for the benefit of Napoleon's caisse d'amortissement, although this was going a good deal farther than his earlier measures, which had not explicitly involved confiscation. What made this particular measure especially ruthless, was another feature, that it was given retroactive force as far back as the date on which the American law came into force, May 20, 1809. Thus it made Napoleon master of a number of vessels and cargoes (according to an American estimate, 100 vessels with cargoes representing a value of $10,00,000), which, suspecting no evil, had gone to the ports of France or her allies. But shortly afterwards, when the Emperor learned of the American law of 1810, he immediately saw in it a possibility for a most bewildering diplomatic action, namely, by means of an apparent concession concerning the Continental decrees, to drive the United States into putting the law into force against Great Britain. In a more than usually characteristic letter to Champagny (July 31, 1810) he rejects the idea of rescinding the Berlin and Milan decrees—which, he says, 'would cause disturbance and not fulfil my object,'—and simply charges Champagny to inform the American envoy in a diplomatic note that he might feel assured that the decrees would not be enforced after November 1, and that he should regard them as revoked. 'This method,' he says with calm effrontery, 'seems to me to be more in accordance with my dignity and with the seriousness of the case.' Two days later Napoleon sent a draft for such a note, which Champagny forwarded practically unaltered to the representative of the United States (August 5). The foreign secretary there says that he is authorized to declare that the Berlin and Milan decrees are revoked and that they cease to be enforced after November 1, 'it being understood, of course, that in consequence of this declaration the English must rescind their Orders in Council and renounce the new blockade principles that they had wished to establish, or else that the United States, in accordance with the law of which you have informed me, should make their rights respected by the English'. This note was inserted in Le Moniteur a few days later, and toward the end of the year it was followed by a letter from the minister of finance to the director general of customs, written by the Emperor's order, to the effect that the decrees should not be applied to American vessels; and this, too, was inserted in the official newspaper of France.*60


One can not be surprised, it is true, that the American statesmen and diplomats were at the first blush highly delighted with the French declaration of August and, on the strength of it, immediately requested a corresponding concession on the part of Great Britain. Nevertheless, the very form in which the 'fundamental principle' of the French Empire—the laws around which the whole of European politics had revolved for well-nigh four years—was revoked was so far peculiar that it might reasonably be expected to superinduce scepticism. And it proved almost immediately that the Continental decrees were applied just the same as before, not only in general, but also against American vessels. When this was pointed out to him, Napoleon declared that it was really due to the fact that the vessels had disobeyed his port regulations and not the international rules contained in the Berlin and Milan decrees. But in reality the fact of the matter was that the only vessels which were liberated were those which had not disobeyed the Continental decrees; and with regard to those which had disobeyed them, no change took place except that they were not, it is true, condemned to confiscation but were nevertheless detained by the French authorities. None the less, Napoleon did accord a limited amount of consideration to the trade and shipping of the United States in the autumn of 1810, inasmuch as he issued a number of licences to American vessels that wished to import into France certain American colonial goods, with French consular certificates written in cipher in order to provide security that the British should not appear in the guise of Americans. He also reduced to one quarter the enormous customs dues that the Trianon tariff of August 5, 1810, had imposed upon colonial goods when the importation had been directly effected by American vessels. A contributory motive behind this measure was the necessity of being able to appeal to the support of the United States in the pressure which Napoleon was now bringing to bear, though in vain, on Emperor Alexander of Russia in order to keep that country within the Continental System. But none of these things altered the fact that the system itself remained unchanged.*61


However, the American statesmen had already bound themselves to regard Champagny's August note as a genuine and already effective revocation and therefore were placed in an extremely awkward position when compelled to maintain this standpoint in their negotiations with the British. For they were at the same time exerting all their powers of persuasion to induce the French to make the revocation a reality. As the putting into force of the American law of 1810 was made dependent on the willingness of the one or the other of the belligerents to rescind his laws, there consequently arose a difficulty in applying the law against Great Britain, which had not taken any conciliatory steps; and it was therefore considered necessary, on March 2, 1811, to pass a new law which, irrespective of this question of interpretation, put the previously mentioned parts of the Non-intercourse Act into force again as against Great Britain. This was the Non-importation Act of 1811.*62 Curiously enough, this law seems to have been very effective, so that the old methods of evading the prohibition on trade by shipping cargo via Amelia Island in Canada were but little used. Cotton accumulated more and more in Charleston in the course of 1811; and in the autumn no quotations could be published because there were no buyers. The whole situation was very peculiar from a commercial point of view, inasmuch as the claims of the cotton exporters on England could not be satisfied directly, in the natural manner, by the importation of British goods, since all such imports were now forbidden. Probably the triangular trade through other countries also offered great difficulties, for we find the cotton broker in Charleston whose reports Mr. Daniels has edited complaining of the fact that drafts on England were unsaleable, thanks to the new Non-importation Act; and similar complaints were registered on the British side in a petition from the cotton importing town of Liverpool.*63


However, it now became more necessary than ever for the Americans to convince the British of the genuineness of the French revocation; and this offered greater and greater difficulties, especially in the face of Napoleon's own utterances. In two great speeches delivered in March, 1811, one to deputies from the Hanse Towns and another to deputies from the French Chambers of Commerce (the second of which was not published officially, but was circulated in different versions), he repeated his old phrase about the Berlin and Milan decrees as the fundamental laws of the Empire, whose validity was coextensive with that of the Orders in Council. In the second of the speeches, it is true, he declared himself prepared to receive the Americans in French ports, on condition that they should uphold the same principles as he did; and if they could not compel England to respect them, that they should declare war on that country. But manifestly this implied something quite different from the idea that the decrees had been abolished as far back as the November of the previous year. Napoleon expressed himself in a still more unqualified manner in an unpublished message to his Conseil d'administration du commerce (April 29, 1811), after the passing of the American law of 1811. Inasmuch as that law forbade American vessels to go to England, it followed, he thought, in accordance with his old way of thinking, that a vessel which nevertheless went there was not American at all but English; and on this hypothesis one could quite well say that the Berlin and Milan decrees were revoked, at least so far as the United States were concerned!*64



Meanwhile, the British government remained undecided and awaited developments. But after Napoleon had caused to be published a report by Maret, Champagny's successor as foreign minister, on March 10, 1812, in which the blessings of the Continental decrees were once more asserted, the British Prince Regent replied by a proclamation, dated April 21, to the effect that, as soon as the Berlin and Milan decrees had been expressly and unreservedly revoked, the Orders in Council should also be regarded, without further ado, as having lapsed. This at last placed in the hands of the American diplomats a weapon against France which bore fruit. Maret allowed himself to be induced by it to bring forward the last of this series of strange documents, namely, a decree of April 28, 1811, which, according to its date, was more than a year old, but which was never published and was quite unknown until that time. This decree declared that the Berlin and Milan decrees had ceased to hold good for American vessels from November 1, 1810, more than six months earlier, in accordance with the original declaration. When this document was laid before the British government, the British statesmen were not a little confounded, for which one can hardly blame them; but after some delay they considered that they ought to declare that, though the decree did not contain the general revocation that had been stipulated in the Prince Regent's proclamation of April 21, nevertheless the Orders in Council should be rescinded as regards American vessels. Accordingly, with the enthusiastic approval of the British opposition, the Orders in Council were revoked on June 23, 1812, so far as American vessels with American cargoes were concerned. This revocation was to take effect as from August 1, though only under the condition that the American government revoked its prohibition of commercial intercourse with Great Britain. It is evident that many factors contributed to this result: dearth and disturbances in England itself, for which the opposition laid all the blame on the Orders in Council; the desire to disarm the war party, which had grown stronger and stronger in the United States; and the need of American supplies of grain for the greatly impoverished Iberian peninsula.*65


When the British government had at last made its decision, however, Napoleon had already attained his object, although neither he nor anybody else had been able to foresee the order in which the events were to take place. On June 19, in fact, that is, four days before the rescinding of the Orders in Council, the United States had declared war on Great Britain, partly because of the disputes which have here been described and partly because of the impressment of seamen and various other things. In Great Britain it was generally expected, especially by the opposition, that the declaration of war would be recalled when the conciliatory decision of Great Britain became known. But this was not the case; and the war went on for two and a half years, until Christmas Eve 1814. It came too late, however, to exert any noteworthy influence on the course of events in Europe, which was now entirely determined by Napoleon's Russian campaign; and so far one may say that Great Britain's great adversary, owing to the delay in the outbreak of the conflict, failed to attain his object. In any case, American events now disappear from the horizon of the Continental System.



A summary—only very partial and sketchy, it is true, but readily comprehensible—of this peculiar development of events as regards America can be found in the following commercial statistics of the United States from 1807 to 1817. These form a continuation to the table printed on page 103:*66

Year Domestic goods Foreign goods Total For home consumption Total

1807 $48,700,000 $59,640,000 $108,340,000 $78,860,000 $138,500,000
1808 9,430,000 13,000,000 22,430,000 43,990,000 56,990,000
1809 31,410,000 20,800,000 52,200,000 38,600,000 59,400,000
1810 42,370,000 24,390,000 66,760,000 61,010,000 85,400,000
1811 45,290,000 16,020,000 61,320,000 37,380,000 53,400,000
1812 30,030,000 8,500,000 38,530,000 68,540,000 77,030,000
1813 25,010,000 2,850,000 27,860,000 19,160,000 22,010,000
1814 6,780,000 150,000 6,930,000 12,820,000 12,970,000
1815 45,970,000 6,580,000 52,560,000 106,460,000 113,040,000
1816 64,780,000 17,140,000 81,920,000 129,960,000 147,100,000
1817 68,310,000 19,360,000 87,670,000 79,890,000 99,250,000


It is true that these figures have one great weakness, namely, that they seem not to pay any regard to smuggling. The enormous decline in exports and the very pronounced decline in imports shown in the year 1808, therefore, undoubtedly give an exaggerated notion of the effect of the Embargo Act, but picture quite correctly the almost complete disappearance of legitimate exports. Professor Channing's calculation that, as a whole, the exports diminished by 75 per cent. and the imports by 50 per cent., is probably too high, especially with regard to exports.*67 For consonant with the facts as it may be, that the figures show a stronger decline for exports than for imports, the decrease of exports can hardly be as great as this hypothetical figure would seem to indicate. True, it was against American exports that both the Continental decrees, the Orders in Council, and the Embargo Act directed their blows with practical unanimity; but, on the other hand, it is to be observed that smuggling also directed its successful counter-action to the same point. The subsequent Non-intercourse Act marks a powerful improvement, as appears from the figures for 1809; and the law of 1810 makes the imports and exports for that year and the exports for 1811 still higher. But, for reasons previously given, the export has changed its character from the colonial carrying trade to the sale of the United States' own products. In 1812 began the war with Great Britain, which gradually led to the almost complete cessation of all American foreign trade, especially of all exports. Finally, the years 1815-17 show the restoration of peace conditions, and thereby provide a suitable background for the alterations of war time. Especially noteworthy, in comparison with the situation in 1807, are the low figures for re-exports, which are only a little higher in 1815-17 than under the Embargo Act of 1808. This brings out very clearly the war-time character of this trade.


It may also be of interest to see the development of one special line of this trade, namely, the imports of American cotton into Liverpool. The figures were as follows:*68

Year No. bags Year No. bags

1806 100,273 1811 97,626
1807 143,756 1812 79,528
1808 25,426 1813 18,640
1809 130,581 1814 40,448
1810 199,220    


As is only natural, 1808, the year of the Embargo Act, stands lowest of the years before the war year 1813, while the Non-importation Act of 1811 also brings with it a heavy decline. The Non-intercourse Act of 1809, on the other hand, has no very strong repellent effect, although, of course, 1810, the only year with full freedom of trade, stands still higher. These figures, which presumably include smuggled goods, as well as lawful exports, thus confirm the preceding statements in all essentials.

Notes for this chapter

The best survey of American developments in this field is to be found in Mahan, Sea Power in its Relations, &c., vol. I, ch. IV. Diplomatic correspondence and other relevant matter is to be found in Hansard, as well as in The Statutes at Large of the United States of America.
United States Statutes at Large, vol. II, p. 379.
See ante, p. 91.
See ante, p. 103.
United States Statutes at Large, vol. II, p. 451.
Cf. Lord Grenville in the House of Lords, Feb. 17, 1809. Hansard, vol. XII, p. 774.
Channing, op. cit., vol. XII, p. 201-2.
United States Statutes at Large, vol. II, p. 506.
Cf. also, Mahan, Sea Power in its Relations, &c.; Channing, op. cit., vol. XII, pp. 216 et seq.; Roloff, op. cit., p. 207; Lord Grenville in the House of Lords, Feb. 17, 1809, and Whitbread in the House of Commons, Mar. 6, 1809 (Hansard, vol. XII, pp. 780, 1167); Tooke, op. cit., vol. II, p. 391 (table); Daniels, American Cotton Trade with Liverpool under the Embargo and Non-intercourse Acts, in American Historical Review (1915-16), vol. XXI, pp. 278, 280; Sears, British Industry and the American Embargo, in Quarterly Journal of Economics, (1919-20), vol. XXXIV, pp. 88 et seq. Cf. also, vol. XXXV, 1920-21, pp. 345 et seq.).
The most important debates on this subject were in the House of Lords on Mar. 8, 1808, and Feb. 17, 1809, and in the House of Commons on Mar. 6, 1809. For the diplomatic correspondence, cf. Hansard, vol. XII, pp. 241 et seq.; vol. XIII, app.; vol. XIV, pp. 881 et seq.; vol. XVII, app.
Correspondance, no. 13,753
United States Statutes at Large, vol. II, p. 528.
Vogel, op. cit., p. 36; Rubin, 1807-1814, Studier til Københavns og Danmarks Historie (Copenhagen, 1892), pp. 381-2; Bergwall, Historisk under ättelse om staden Götheborgs betydligaste varu-utskeppningar (Gothenburg, 1820), p. 9 note; Daniels, loc. cit., p. 281.
United States Statutes at Large, vol. II, p. 605.
Correspondence, nos. 16,080, 16,127, 16,384, 16,736, 16,743; Bulletin des lois, &c., 4th ser., bull. 286, no. 5,402. Memoirs and Correspondence of Lord Wellesley (Pearce ed., London, 1846), vol. III, pp. 116-17, 134 (here, too, can be found the correspondence of 1810-11 between Wellesley, in his capacity as British foreign secretary, and the American minister in London); Le Moniteur, Aug. 9 and Dec. 25, 1810.
Napoleon to Eugene, Viceroy of Italy, Sept. 19, 1810, and to Champagny, Dec. 13, 1810 (Correspondence, nos. 16,930, 17,206); decree of Nov. 1, 1810 (Bulletin des lois, &c., 4th ser., bull. 324, no. 6,067; Martens, Nouveau recueil, &c., vol. I, pp. 527-8).
United States Statutes at Large, vol. II, p. 651.
House of Commons, Apr. 27, 1812 (Hansard, vol. XXII, p. 1061).
Correspondance, nos. 17,482 and 17,669. For the speech to the deputies of the Chamber of Commerce, of. Thiers, Histoire du Consulat et de l'Empire (Paris, 1856), vol. XIII, pp. 27 et seq.
For the documents issued by Maret and the British Prince Regent, of. Martens, Nouveau recueil, &c., vol. I, pp. 530 et seq,, 542 et seq. For the revocation of the Orders in Council, cf. Hansard, vol. XXII, pp. 853 et seq. (under an incorrect date), and vol. XXIII, pp. 716 et seq. For the debates on the subject in the House of Commons on May 22, 25, 26, and June 16, 19, 23, and in the House of Lords on June 18, 1812, cf. Hansard, vol. XXIII, pp. 286 et seq., 295 et seq., 486 et seq., 496-7, 587 et seq., 600 et seq., 715 et seq. See also Mahan, Sea Power in its Relations, &c., vol. I, pp. 266-76.
[The text of this footnote, on p. 146 of the 1922 edition, is missing.—Econlib Editor]
Channing, op. cit., p. 228.
Daniels, op. cit., p. 278.

Part II, Chapter V

End of Notes

15 of 30

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