An attempt conceived by Napoléon Bonaparte to crush Britain by engaging it in an economic as well as a military war.
The Napoleonic Wars with England began in 1803 and with it the unofficial inauguration of the plan. Officially, it began with the decrees of Berlin (1806) and Milan (1807). The plan was intended as a way to counteract Great Britain’s naval superiority. The Continental System was to act as any blockade but in reverse. Britain was not to be starved of goods but rather allowed to import as much as it could. However, its exports to the French-controlled Continent and the colonies were to be stopped.
For the Continental System to work, it required extensive government interference. This interference, which was to enrich France and impoverish Great Britain, required one set of measures designed to encourage exports and another set to discourage imports: or more explicitly, to increase France’s export of manufactured foods and the provision of imported raw materials, and to discourage the import of British-manufactured goods.
Napoléon believed that by saturating Britain with goods from the Continent the British economy would be in a shambles: the outflow of precious metals would push the whole British credit system to the brink of financial ruin as it tried to pay for the imports. In the end, he hoped that labor disturbances arising from the economic chaos he envisioned would prove as harmful to Britain as a battlefield defeat.
The Continental System proved unworkable, however. Even though Napoléon had unrivaled political power, he could not extinguish the widespread continental demand for British (and their colonies’) produced goods. This extreme protectionism was made untenable by the obvious corruption, particularly in countries not under Napoléon’s direct rule. The sector that benefited most from the Continental System was the well-ordered smuggling trade.
In retaliation, Napoléon, through the Trianon and Fontainebleau policy of 1810, set up a complicated system of licenses for such trade as was officially prohibited. To compete with the smugglers, colonial goods were to be admitted on the payment of duties calculated to be just less than the prices the smugglers were charging. The system failed, and the use of fake papers and licenses (more than 18,000 were issued by Great Britain alone) broke through the French self-blockade and totally undermined the system Napoléon hoped to establish.
The Trianon policy was a huge producer of revenue but a failure from the standpoint of waging an economic war on Britain. When Napoléon fell, the Continental System was terminated.
The economic outcome of the plan was that it provided France with a protectionist regime that checked the supply of raw materials to industries it wanted to help (particularly cotton). Disrupted by blockade and destruction, the center of European Atlantic commerce swung to Britain.
Robert Koehn
See also: War of 1812.
Heckscher, Eli F. The Continental System. New York: H. Milford, 1922.