On Friday, November 21, 1806, Andrew Roberts explains (in Napoleon: A Life), Napoleon signed into law the Berlin Decrees:
These were designed to force Great Britain to the negotiating table, but instead were to lead — once he tried to impose them by force on Portugal, Spain and Russia — to his own downfall. The ‘Continental System’ created by the Berlin Decrees (and their successors the Milan and Fontainebleau Decrees of 1807 and 1810) was what Napoleon called ‘a retaliation’ against the British Order-in-Council of May 16, 1806, which had imposed a blockade of the European coast from Brest to the Elbe.
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Since one-third of Britain’s direct exports and three-quarters of her re-exports went to continental Europe, Napoleon intended the decrees to put huge political pressure on the British government to restart the peace negotiations broken off in August.
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International trade simply wasn’t the zero-sum game that, with his crude Colbertism, Napoleon assumed it to be
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The Continental System damaged precisely those people who had done well from Napoleon’s regime and had hitherto been his strongest supporters: the middle classes, tradesmen, merchants and better-off peasantry, the acquirers of biens nationaux property he had always sought to help.
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All American trade with France was therefore blocked unless the United States’ ships bought a licence in a British port for a substantial fee. Along with the British practice of ‘impressing’ (i.e. kidnapping) thousands of Americans for service in the Royal Navy, the November 1807 Orders-in-Council were the primary cause of the War of 1812 between Britain and the United States.
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One major problem with the Continental System was that it could not be imposed universally. In 1807, for example, because Hamburg and the Hanseatic towns such as Lübeck, Lüneburg, Rostock, Stralsund and Bremen couldn’t manufacture the 200,000 pairs of shoes, 50,000 greatcoats, 37,000 vests and so on that the Grande Armée required, their governors were forced to buy them from British manufacturers under special licences allowing them through the blockade. Many of Napoleon’s soldiers in the coming battles of the Polish campaign wore uniforms made in Halifax and Leeds, and British ministers boasted in the House of Commons that Napoleon couldn’t even provide the insignia stitched onto his officers’ uniforms except by resort to British manufacturers.
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By 1811 there were 840 vessels plying their often night-time trade between Malta and southern Mediterranean ports. Once landed, coffee and sugar were smuggled across borders despite the penalty of ten years’ penal servitude and branding, and after 1808 the death penalty on occasion for repeat offenders.
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(Britain had imposed the death penalty for smuggling in 1736, which was regularly enforced.)
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When French customs officials did capture contraband a proportion of it was often returnable for a bribe, and in due course it became possible to take out insurance against seizures at Lloyd’s of London.
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Meanwhile, French imperial customs revenues collapsed from 51 million francs in 1806 to 11.5 million in 1809, when Napoleon allowed the export of grain to the British at high price when their harvest was weak – some 74 per cent of all British imported wheat came from France that year – in order to deplete British bullion reserves.
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The Continental System failed to work because merchants continued to accept British bills-of-exchange, so London continued to see net capital inflows.
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Much to Napoleon’s frustration, the British currency depreciated against European currencies by 15 per cent between 1808 and 1810, making British exports cheaper.
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The Continental System also forced British merchants to become more flexible and to diversify, investing in Asia, Africa, the Near East and Latin America much more than before, so exports that had been running at an average of £25.4 million per annum between 1800 and 1809 rose to £35 million between 1810 and 1819.
Bills of exchange are essentially checks. Strictly speaking, a check is a bill of exchange drawn on a bank. At some point, the associations of U.S. high priests decided to call them “drafts”. I would be interested to know what about alien merchants’ acceptance of British drafts caused net capital inflows to the City of London.
Objection: smug mind-reading from the grave.
When was the last (until WWII) case of the Brits (plus the choir) not saying something like this about any instance of protectionism abroad? Yet somehow the poor damaged classes quite often remained its strong supporters.
Jim, I believe that in British business, one business honoring another business’ checks is a strong sign that both firms are pretty close to being partners.
No idea about net capital inflows or outflows. I think every business in Europe in the Napoleonic wars was hiding capital from the government shakedowns to pay for war.
Yours Truly:
My standard of linguistic precision here was unmet. Please see:
Bruce:
Do you mean anything other than that one British business is taking another British business’s checks for ultimate deposit with a bank?
Jim, I think I mean something more than just ultimately depositing the checks in a bank. Some form of bookkeeping barter. Always big money sloshing around off the any outside books.
Bruce, I agree that corporations very often and for various reasons employ clever bookkeeping. In the context of checks — and broadly of negotiable instruments — “honor” and “dishonor” are technical terms referring to the conduct of the drawee bank on a check when it is presented for payment. If check or non-check negotiable instruments are floating around between British businesses for reasons other than payment — and I have no knowledge that they are or aren’t — the operative word would probably be “acceptance”. I could use a crash course on creative corporate bookkeeping. Do you know what I should read?
Jim, no, I’m actually getting this from a glancing reference in an old Michael Gilbert detective story.
Oh… lol.