Continental System, 1806-1814
Late in 1806, still having his ports blockaded by the British, Napoleon responded with the Berlin Decree which established the Continental System or Continental Blockade. By this time he either controlled or had an alliance with most of the rest of Europe. This decree banned all French allies, occupied and satellite states from trading with Britain; they were not supposed even to deal with any mail coming from Britain.
It was more a concept than a real embargo because the British had control of the seas, many of his ‘subjects’ still traded with them. Britain was in the midst of its Industrial Revolution and as a result had become the leading European manufacturer/exporter.
Over the next few years it did have an impact on British trade dropping it by a quarter to a half of its previous levels. The shortfall was swiftly taken up by businesses in NE France, Belgium and Switzerland.
But southern France went in to a decline from the drop in trade. Holland too was badly hit by the decree. Worse the cost of foodstuffs rose right across Europe because of the embargo. Resistance to the System was furthered when Napoleon introduced internal tariffs that favoured French produce and products. This prompted a surge in smuggling.
Trafalgar had led to an economic crisis in Spain, without a navy it couldn’t ply its trade or maintain control of its colonies and this soon led to food shortages in the peninsula. Portugal had enjoyed a long relationship with Britain and refused to join the Continental System.
Britain responded in 1807 by prohibiting its trading partners from any trade with France, it threatened to sink any ship that was respecting the Continental System. The USA was badly affected by this as its ships were regularly taken by European navies. It responded in turn by issuing its Embargo Act of 1807 which blocked its own trade with both Britain and France. The effect was to damage their own merchants and led to the subsequent 1812 war between the USA and Britain.
Sweden had refused to comply with Napoleon’s decree. In 1808 the Russian’s, by now allied with France, used the Swedes’ truculence as an excuse to invade and seized the eastern part of its territory. They renamed it as the Duchy of Finland, a Russian dependency.
However by 1810 the Russians were finding the Continental System was damaging their interests and reopened trade with Britain. This would prove to be the final straw for Napoleon to invade them.
Napoleon would also later rout the Fifth Coalition at the battle of Wagram in 1809. This succession of victories gave the French army a belief in its own invulnerability.
This then was the status of Europe as the Peninsular War broke out.