It was contraband that allowed the British economy to survive Napoleon's assaults.

In the North Sea,

Heligoland, occupied by the British in September 1 807, became from the following April the centre of a
connived-at trade with Germany which exchanged manufactures and continental produce for food and
grain. In one seven-day period in 1 809, £3oo,ooo worth of goods was shipped out for European
destinations, and by April 1813 2.5 million pounds of sugar and coffee was going to German ports. In the
Baltic trade went on as normal under flags of convenience, either Swedish or Danish as circumstances
dictated. In the Mediterranean, Trieste, Gibraltar, Salonika, Sicily and, above all, Malta, were the centres
of contraband. The British followed a shrewd Mediterranean policy: after the abandonment of the ill-
considered Egyptian expedition in 1 807 to keep Turkey out of the French camp, they limited their
ambitions to holding the islands of Malta and Sicily and threatening eastern Spain from there.
Nevertheless, it would be a mistake to write as some jingoistic British historians have done and insinuate
the idea that the Royal Navy's triumph was cost-free. To maintain supremacy on the high seas often
means literally that: to battle against the high seas themselves. Out of shipping losses of 317 in the
period 1 803-15, 223 were wrecked or foundered because of calamitous seas or freak waves. The worst
storms took a frightful toll: in March 1810 winds of near-hurricane strength sank five Spanish and
Portuguese ships of the line and twenty other craft; in December 1 805 eight transports carrying troops
to Germany went down in high seas, with the loss of 664 drowned and 1 ,552 others who were washed
on to the French coast and made prisoner. Three Royal Navy ships lost in a storm in the North Sea in
December 181 1 accounted for more than 2,ooo dead, more than the total losses in dead and wounded
( 1 ,690) sustained by the British at Trafalgar. Among the factors over which France had little or no
control were levels of corruption, levels of local resistance by allies and local populations and the impact
of war on neutrals. Holland was a sore point with Napoleon while Louis was King, as he curried favour
with his subjects by conniving at contraband with England. The smuggling trade between Britain and
Holland was worth £4.5 millions in 1 807-09, but when the Emperor ousted Louis and applied stricter
controls, the trade 484 slumped badly, being estimated at just £r million for the years r8ro--r2. If Louis's
complaisant policies in Holland played into British hands, Canning's aggressive foreign policy in r 8o7
gave the economic advantage to Napoleon, for the trade with Norway and Denmark before Britain
seized their fleet was £5 million, but a year later had plummeted to just £z r,ooo. Because of the
heterogeneous nature of local economies within the Napoleonic Empire, a given economic policy could
produce skewed results. Among the unintended consequences of the protectionism of the Continental
System were that German, Prussian and Austrian goods began to compete seriously with French ones in
certain spheres. On the other hand, a state like Berg was particularly vulnerable to French protective
tariffs, as its economy was like England's, concentrating on textiles; since the duties on these were
threefold, the bankrupt Berg was soon reduced to appealing for absorption in metropolitan France to
avoid them. Another problem was that Napoleon kept changing the rules of his own system. Bavaria was
initially a beneficiary from the blockade of Britain and its products - sugar-beet, tobacco, optical glass,
textiles, calicoes, ceramics, pins and needles - were in high demand, but this advantage diminished once
Bonaparte extended his Continental System to Italy. In short, the blockade distorted the normal flow of
trade, diminished economic levels throughout Europe, diverted capital from industrial investment to
trade and smuggling and jeopardized relations between France and her satellites. The customs barrier
along the coast and the inland frontiers stretched French policing resources, tempted her into
highhanded and illegal actions, and further harmed relations with the allied countries. Particular
resentment was caused by the growing army of imperial customs officers, their arbitrary powers and
their body searches; there had been rz,ooo such officials in 1 791 but by r8ro there were 3 5,000 of
them. The ultimate absurdity was that this growing band of excise men was chasing a declining revenue
from customs duties, at the very time Napoleon needed the funds to pay for the war in Spain which,
unprecedentedly, was failing to pay for itself. Yet the most telling reason for Napoleon's failure to
blockade Britain effectively was that Napoleon's military interests did not square with the interests of
consumers and entrepreneurs within his empire. All those who resented the lack of coffee, tea, sugar,
cocoa and spices, the rises in the cost of leather and cotton, the high price of wool, linen and coffee, the
official inspections of goods and the corruption of customs officers were bound together informally by a
spirit of resistance to the System. It 485 seemed absurd that England was crammed with surplus
products while France languished through shortage of the selfsame products, especially raw materials
and colonial produce, and could not work out an efficient method of import substitution. Whereas corn,
fruit, wool, wood and wine had been sold to England before r8o6, the peasants could not now export
the surplus; this hit them particularly badly after the bumper harvest of r 8o8. With industrialists,
agriculturalists, shipowners, peasants and consumers all suffering from the blockade, it was not
surprising that human nature asserted itself. Speculation in coffee, sugar and cotton led to high prices,
inflated profits, stock exchange gambling mania and hence generalized corruption and cynicism. The
blockade was evaded even by Napoleon's most senior lieutenants. Junior aides took bribes and traded
on the black market, while the Bonapartist grandees indulged in corruption at a flagrant level. Massena
sold unofficial licences to trade with England to Italian merchants, thus swelling his already vast fortune.
Bourrienne, French Minister at Hamburg in r 8o6-o7, was ordered to find so,ooo greatcoats and cloaks
for the Grande Armee for the winter campaign against Russia. He secretly purchased cloth and leather
from England, claiming that the Army would have died of cold if the Continental System had been
observed. In fact the inflow of British manufactures continued at such a rate that in the r8rz campaign
soldiers in the Grand Army wore boots made in Northampton and greatcoats made from Lancashire and
Yorkshire cloth. But undoubtedly the great growth industry during the heyday of the Continental System
was contraband, which was made easy by a combination of local demand, corrupt offici;1ls, lax
surveillance and support from the British. Under Napoleon there were really only three ways to make a
vast fortune if you were not a marshal: by supplying the Army, by speculation in national property, and
by smuggling. With opportunities in the first two areas rapidly drying up, contraband beckoned as the
future road to El Dorado. It is hard to overestimate the rich pickings that could be made from smuggling.
The Rothschilds, now coming to prominence after the pioneering labours of the dynasty's founder
Meyer Amschel, made vast sums by financing illegal trading and made even more after r8ro by
manipulating the British and French licensing systems simultaneously. One lace merchant, a certain M.
Gaudoit of Caen, imported illicit British goods worth 750,ooo francs between r 8or-o8, using the
roundabout route London-Amsterdam-Frankfurt-Paris-Bordeaux. On the Rhine it was reckoned that a
smuggler could earn r 2-r4 francs a night, when the 486 daily wage for an agricultural labourer was I-I:i
francs; in the Pyrenees the respective rates were ten francs and three francs. In Hamburg it was
estimated that 6-Io,ooo people a day smuggled coffee, sugar and other comestibles, of which an
absolute maximum of 5% was confiscated. Napoleon hit back with occasional exemplary punishments.
In the Rothschilds' native city of Frankfurt, a sanctions-busting centre, French troops publicly burned £
I,20o,ooo worth of contraband goods in November I8Io. But such scenes were rare: even when French
viceroys and governors found out about contraband they could usually be bribed to remain silent or
simply go through the motions. In the light of all this, the surprise is that the Continental Blockade
worried the British as much as it did. The impact of the System on the British economy has been much
disputed, and some indices seem to show an almost nil effect. Britain's merchant fleet rose from I 3,446
ships in I 8o2 to I 7,346; the rise in unemployment can be explained as a function of population growth
in the U.K. from I 5,846,ooo in I 8oi to I 8,o44,000 in I8rr; the modest profits of industry can be
interpreted as systematic tax evasion. But there are other figures that tell a different story, particularly
in the early period of the blockade until I 8o8. Exports, which reached a peak in I 809 (£50.3 million)
were only £9 million up on the peacetime figure for I 8o2. Continental trade, worth £22.5 million in I 8o2
fell to half that in I 8o8. The value of Britain's re-export trade in colonial produce declined from
£I4,4I9,ooo in I 8o2 to £7,862,000 in I 8o8 and was still only at £8,278,ooo in I8I I; sugar, which sold for
73 shillings per hundredweight in I 798 fell to 32 shillings by I 807 and did not rise above 50 shillings until
I8I3. The stagnation of colonial produce on the market was matched by the crisis of British
manufacturers; industrialists in Manchester could not liquidate their stocks of cotton; the price of flax
rose; there was a grave crisis in the wool industry. Matters were at an acute pass in early I 8o8. There
was a serious drop in exports in the last six months of I 807 and the first six of I 8o8; exports to Europe
sank to £I5 million as compared to £r9� million in the twelve months before. The combination of
Jefferson's embargo and Napoleon's blockade began to bite, and there were serious riots in Lancashire
and Yorkshire in May and June I 8o8. Ex-Prime Minister Grenville was one of those in England who
began to panic. It was precisely at that moment that Napoleon made his disastrous and self-destructive
intervention in Spain. Ostensibly, he moved in to shut a door still open to British produce, but at a stroke
he ruined the prospect of Spain as a market for French manufacturers and opened the trade of Latin
America to the British. With justifiable irony the economist d'Ivernois remarked that the 487 Emperor's
blockade would have been more effective if, at the same time as he was taking violent steps to close
European markets to the British, he was not also taking even more violent ones to open South America
to them. The Spanish ulcer not only drained France of blood and treasure but saved the British
economy. After 1 809 the ports of Spain and, more importantly, of Latin America were open to them.
When the Grande Armee was progressively switched from Germany to Spain in r8o9-1 r, making
contraband in northern Europe easier, British recovery was rapid. In r 8o9, at £50.3 million, British
exports reached their peak during the Napoleonic years. Even though they declined again during the
years of 'general crisis' from r8ro-r2, they never again descended to r 8o7-o8 levels. When the North Sea
became extremely difficult for the Royal Navy in r8ro-12, the British switched the main thrust of their
contraband efforts to the Balkans, Adriatic and Illyria; the Danube replaced the Rhine as the conduit for
colonial goods.