A method of economic warfare in the early 1800s in Europe during the Napoleonic Wars that forced the United States to fight Great Britain for its economic independence.
The Continental System emerged from Napoleon’s 1806 Berlin Decrees, which declared Britain under blockade, forbade all commerce with Britain, and ordered the seizure of British goods and all vessels trading with the British Empire. Britain responded with the Orders in Council, which declared a blockade of the Continent and required neutral vessels to obtain licenses to trade with France. France countered with the 1807 Milan Decrees, which ordained confiscation of all ships and goods complying with the Orders in Council. In sum, Britain and France hoped to use economic pressure to bankrupt each other, to force other powers into conflict with their opponent, and to transfer some of the financial burdens of war from themselves to the rest of the world.
The Continental System permitted France to exploit Europe economically and politically. French ministers dictated foreign and trade policies, and even the laws, of subject countries, and forced them to open their markets to French goods while maintaining French trade barriers. European trade and maritime industries suffered serious losses, especially in northern Germany, and prices and shortages of various consumer goods increased. However, the Continental System promoted European industrialization and construction of nonmaritime infrastructure.
Extensive smuggling undermined the system, which France never enforced effectively. In 1810, to generate revenue, Napoleon even permitted French trade with Britain. Although denied access to the Continent, Britain expanded into new markets, especially in South America after France occupied Spain in 1807. Most significantly, the Continental System created considerable friction between France and other powers. Russia defected from the system in 1810 and increased duties on French imports. Franco-Russian relations quickly deteriorated, leading to war in 1812. War led to the collapse of the system in 1813 and the fall of Napoleon in 1814. In short, from 1807 to 1813, Britain’s credit and financial system proved superior to France’s, and thus the Continental System as a method of economic warfare proved a failure.
