Two hundred fifty-six years ago, one of history’s most consequential figures was born. Napoleon Bonaparte—Emperor of the French, master of Europe, and the Little Corporal—rose from being an obscure Corsican boy to redrawing the map of an entire continent, and leaving behind a legacy that continues to reverberate through the ages and shapes our world today. There are many names and titles we can give the late military genius, but astute economic strategist is not one of them. Amongst the many blunders that defined Napoleon’s eventual downfall, few were as ambitious and catastrophic as the Continental System—a trade embargo designed to cripple Britain’s economy. What followed was one of history’s most comprehensive lessons on why trade sanctions fail and inevitably harm ordinary people more than their intended targets.
By November 1806, Napoleon had conquered or allied with every major power on the European continent, with remarkable victories against the Austrians, Prussians, and Russians in the Wars of the Third and Fourth Coalitions. Great Britain—Napoleon’s most steadfast enemy—was his only remaining opponent. After British Admiral Nelson’s stunning victory over the Franco-Spanish navy at the Battle of Trafalgar, which confirmed British mastery of the seas, Napoleon realized that an invasion of Great Britain was an impossibility. Rather than defeat the British on land, Napoleon—following a pattern repeated by governments throughout history—turned to economic warfare.
Hoping to starve his irreconcilable enemy into surrender, Napoleon instituted the Continental System with the Berlin Decree of 1806, which proclaimed that “all British Isles are declared to be in a state of blockade,” forbidding France or any of its allies from importing British goods into Europe. Napoleon escalated the embargo with the Milan Decree of 1807 by ordering the seizure of any vessel trading with or sailing from any British port, even if the vessel belonged to a neutral country. Napoleon, in short, sought to criminalize commerce with Great Britain across all of mainland Europe.
In theory, Napoleon’s trade war seemed logical. Great Britain depended heavily on trade to sustain its position as a global superpower. A policy of exclusion, removing the British from the European market where 37.8 percent of its domestic goods and 78.7 percent of its re-exports were sold, would have devastated its economy. By cutting off British commerce with its vital trade partners––Russia, Sweden, Portugal, Hamburg, and the Netherlands––Napoleon also hoped to use the trade vacuum to bolster French industry by redirecting demand into a tightly-controlled imperial trade bloc in which France was the primary producer and beneficiary. With the bulk of Western and Central Europe under his control following the Treaty of Tilsit, if anyone could orchestrate such a sweeping embargo, it was the master of Europe himself.
Yet the reality was far different, and the trade war ultimately devastated France and its allies through strained supply chains, widespread smuggling, unenforceable blockades, and ruinous wars.
From the outset, British naval superiority rendered the Continental System largely ineffective due to Napoleon’s inability to enforce the embargo or stop British ships from reaching European ports. British government members literally laughed off Napoleon’s policy, declaring that he might as well have blockaded the moon since France had scarcely a ship on the ocean to enforce his order, following its defeat at Trafalgar.
While the British could effectively blockade French ports with their fleet, Napoleon’s coercive and exploitative land-based enforcement measures faced the impossible task of monitoring thousands of miles of European coastlines with customs enforcers. Without a way to enforce the blockade at sea, the system proved extremely porous, and illicit commerce via smuggling and black markets thrived. Europeans liked British goods, thus giving smugglers the incentive to evade the restrictions through places like Spain, Portugal, Denmark, and ports across the Adriatic and Mediterranean coastlines. In short, the Continental System was little more than a paper blockade that starved Napoleon’s empire far more than his British adversary.
France, meanwhile, was faced with a critical cotton shortage as most of its manufacturers closed their mills. French industries reliant on overseas trade collapsed, with 80 percent of the sugar refineries in Bordeaux and more than 65 percent of the 1700 textile enterprises in Paris shutting down by 1809, while shipbuilding and sugar refining industries in Nantes and Amsterdam never fully recovered. Customs receipts fell from 60.6 million francs in 1807 to 11.9 million in 1809. Inflation soared across the continent as staple goods like sugar, coffee, tobacco, silk, and cotton faced chronic shortages.
The economic turmoil brought about by the Continental System was so great that, when France and its allies started shirking the system, local populations didn’t merely tolerate it—they celebrated it. Smuggling was even seen as a useful trade and honorable occupation, inasmuch as it prevented the ruin of the state. Napoleon himself eventually acknowledged the system’s failure in 1811, when the St. Cloud Decree opened the southwest of France and the Spanish frontier to British trade, which itself was a tacit admission that the blockade hurt the French economy more than the British.
In the years following the Berlin Decree, Holland, Heligoland, Trieste, Gibraltar, Salonika, Sicily, and Malta became centers of contraband trading and smuggling. Within months of the Berlin Decree, 1,475 ships arrived in Hamburg without impediment, carrying cargoes with British goods estimated at 590,000 tons. Illicit trade between Britain and Holland was worth more than £4.5 million from 1807 to 1809, with British trade ships avoiding the sanctions by flying under false flags. By 1809, Britain exported £10 million worth of goods into Southern Europe through smuggling. By 1811, more than 800 smuggling vessels were operating in the Mediterranean alone. In short, by preventing official trade, which could have at least been taxed, Napoleon only succeeded in spurring the emergence of black markets.
All of this smuggling coincided with the hypocritical actions of French political elites, including the Empress Josephine, who continued purchasing the very same British luxuries forbidden to ordinary citizens. Customs agents proved remarkably susceptible to bribes, and some of Napoleon’s marshals reaped the benefits of black market smuggling; Marshal Massena made three million francs from contraband while stationed in Italy; Marshal Murat—appointed King of Naples—regularly turned a blind eye to smuggling operations; Marshal Bernadotte—appointed Crown Prince of Sweden—openly defied the Continental System in 1812 by opening trade with Russia. Even Napoleon’s own brother—the newly-christened King of Holland, Louis Bonaparte—stopped enforcing the blockade because he saw how damaging the blockade was to the livelihoods of his subjects. Napoleon went on to annex Holland after the debacle, and later annexed Hamburg over similar problems. In trade wars like the Continental System, the people always lose while the architects of such policies find ways to escape the consequences of their own making.
Because Napoleon had no way to enforce the blockade, non-compliance by allied and neutral nations further eroded the system and forced Napoleon to fight a series of escalating military interventions that ultimately destroyed his empire. When Portugal refused to join the system, Napoleon launched a ruinous campaign in the Iberian Peninsula that—after a subsequent war in Spain—killed over 200,000 French soldiers over six years and sapped France of valuable men, armaments, and resources. In 1810, Russia—having enjoyed decades of mutually profitable trade with France—started to defy the Continental System. This led to Napoleon’s disastrous invasion of Russia in 1812, which claimed over 500,000 casualties, crippled the Grande Armée, and led to incalculable suffering for the civilian population across Eastern and Central Europe, who were made to endure brutal campaigns across Eastern Europe and Germany.
The Continental System was far less harmful to Great Britain than it was to France and its allies, which suffered terribly from the blockade. While Napoleon’s counter-measures caused a stagnation in British trade with the continent, Britain compensated for the loss by diversifying its international networks, opening new markets in other parts of the world. British exports even rose from £37.5 million in 1804-06 to £44.4 million in 1814-16, and, despite Napoleon’s efforts, Great Britain’s GNP rose every year under the sanctions while industries on the mainland suffered due to the lack of materials formerly provided by British merchants.
No government can police commerce across vast territories when local populations depend on trade for survival. At a basic level, Napoleon could not enforce the blockade, and, more importantly, local populations did not want to enforce it. Napoleon needed every allied, annexed, or client state to entirely cease trade with Great Britain, while the conventional British naval blockade was sufficient for achieving its own ends. Although the Continental System was designed to isolate and paralyze British economic power and strengthen France’s hegemony, it failed to achieve either and proved far more damaging to the French than the British, and left the ordinary citizens of both parties worse off than the others.
The Continental System stands as history’s most comprehensive experiment in economic warfare—and its most definitive failure. As contemporary leaders continue to grapple with trade disputes, the Continental System’s disaster illustrates that trade wars are often unenforceable, strategically counterproductive, and invariably punish the vulnerable more than anyone else. To avoid repeating history’s mistakes, leaders should prioritize cooperation over confrontation, minimizing the human cost of economic warfare.
