Continental System

The Continental System or Continental Blockade (known in French as Blocus continental) was the foreign policy of Napoleon I of France in his struggle against the United Kingdom of Great Britain and Ireland during the Napoleonic Wars. As a response to the naval blockade of the French coasts enacted by the British government on the 16 May 1806, Napoleon issued the Berlin Decree on the 21 November 1806, which brought into effect a large-scale embargo against British trade. This embargo ended on April 11, 1814 after Napoleon's first abdication.

Background
The United Kingdom was an important force in encouraging and financing alliances against Napoleonic France. In addition, the British government enacted a naval blockade of the French and French-allied coasts, on the 16 May 1806.

Napoleon didn't have the resources to attempt an invasion of the United Kingdom or to decisively defeat the Royal Navy at sea. Napoleon resorted instead to economic warfare. As a result of the Industrial Revolution, Great Britain was emerging as Europe's manufacturing and industrial centre, and Napoleon believed it would be easy to take advantage of an embargo on trade with the European nations under his control, causing inflation and great debt.

The Plan
In November 1806, having recently conquered or allied with every major power on the European continent, Napoleon issued the Berlin Decree forbidding his allies and conquests from trading with the British. The UK responded with the Orders in Council of 1807 issued 11 November 1807. These forbade French trade with the UK, its allies or neutrals, and instructed the Royal Navy to blockade French and allied ports. Napoleon retaliated with the Milan Decree of 1807, which declared that all neutral shipping using British ports or paying British tariffs were to be regarded as British and seized.

Napoleon's plan to defeat Britain was to destroy its ability to trade. As an island nation, trade was the most vital lifeline. Napoleon believed that if he could isolate Britain economically, he would be able to invade the nation after the economic collapse. Napoleon decreed that all commerce ships wishing to do business in Europe must first stop at a French port in order to ensure that there could be no trade with Britain. He also ordered all European nations and French allies to stop trading with Britain, and he threatened Russia with an invasion if they did not comply as well.

Effects of the System
The System had a significant effect on British trade, with British exports falling between 25% to 55% compared to pre-1806 levels.

Belgium and Switzerland benefited the most - particularly the industrialized north and east of France, and south of Belgium, which saw significantly increased profits due to the lack of competition from British goods (particularly textiles, which were produced at a much cheaper cost in Britain).

Southern France, especially the port cities of Marseille, Bordeaux and La Rochelle, suffered from the reduction in trade. Moreover, the prices of staple foods rose for most of continental Europe.

The Dutch economy suffered greatly by the strong reduction of the overseas trading, even though the king Louis Napoleon, brother of emperor Napoleon Bonaparte, only half-heartedly supported the blockade.

The embargo encouraged British merchants to seek out new markets aggressively and to engage in smuggling with continental Europe. Napoleon's exclusively land-based customs enforcers could not stop British smugglers, especially as these operated with the connivance of Napoleon's chosen rulers of Spain, Westphalia and other German states.

Britain, by Orders in Council (1807), prohibited its trade partners from trading with France. The British were able to counter the plan by threatening to sink any ship that did not come to a British port or chose to comply with France. This double threat created a difficult time for neutral nations like the United States of America. In response to this prohibition, compounded by the Chesapeake Incident, the U.S. Congress passed the Embargo Act of 1807 and eventually Macon's Bill No. 2. This embargo contributed to the general ill will between the two countries (Britain and the U.S.), and together with the issue of the impressment of foreign seamen, eventually led to armed conflict between the U.S. and the UK in the War of 1812.

The embargo also had an effect on France itself. Ship building, and its trades such as rope-making declined, as did many other industries that relied on overseas markets, e.g. the linen industries. With few exports and a loss of profits, many industries were closed down.

Portugal openly refused to join the Continental System. In 1793, after the French declaration of war against the United Kingdom, Portugal signed with the UK a treaty of mutual help. After the Treaty of Tilsit of July 1807, Napoleon attempted to capture the Portuguese Fleet and the House of Braganza, and to occupy the Portuguese ports. He failed. King John VI of Portugal took his fleet and transferred the Portuguese Court to Brazil with a Royal Navy escort. The Portuguese population rose in revolt against the French invaders, the British Army under Arthur Wellesley, 1st Duke of Wellington intervened, and the Peninsular War began in 1808. Napoleon also forced the Spanish royal family to resign their throne in favor of Napoleon's brother, Joseph.

Sweden, Britain's ally in the Third Coalition, refused to comply with French demands and was invaded by Russia in February 1808.

Also, Russia chafed under the embargo, and in 1810 reopened trade with the UK. Russia's withdrawal from the system was the main incentive for Napoleon to force a decision to invade in 1812, which was the turning point of the war.