The Continental System: An Economic Interpretation

PART III, CHAPTER III.

SMUGGLING AND CORRUPTION; FISCALISM AND LICENSING

THE tendencies described in the last chapter made it increasingly clear to Napoleon during the year 1810 that he must find new expedients if he was ever to succeed in making the Continental self-blockade effective; and he also had another reason for reshaping his policy, in the great inconveniences which had revealed themselves both in his finances and in French economic life. In order to form a clear idea of this second phase of the history of the Continental System, however, we must consider in a little more detail the smuggling and the system of bribery.
*28

SMUGGLING

Concerning the prevalence of smuggling under the Continental System lengthy books might be written, for it flourished throughout Europe to an extent of which the world since then, and perhaps even before then, has rarely seen the like. Coercive measures in the sphere of commercial policy have at all times found a palliative in smuggling. But that palliative was used to an infinitely larger extent now that coercion acquired a range previously undreamt of; and at the same time it was felt to be unendurable in a quite different way than
formerly, owing both to the increased importance of international intercourse and to the fact that outside the limits of France proper it represented a foreign dominion and lacked moral support in all classes of the community. The purely external forms of the smuggling are of relatively subordinate importance in this connexion. The examples that have been mentioned in the preceding pages, and that will be mentioned in the following pages, may here be supplemented by a couple of contemporary descriptions. One of these by Bourrienne refers to the year 1809 and has a more or less anecdotal character.

Bourrienne’s Anecdote

In the region between Hamburg and Altona, on the right bank of the Elbe, there is a little suburb inhabited by sailors, dock-labourers, and a very large number of house-owners, whose burial ground is in the churchyard of Hamburg. One now saw more often than usual hearses with their adornments and decorations, processions, burial hymns and the usual ceremonies. Amazed at the enormous and sudden mortality among the inhabitants of Hamburgerberg, the customs house officials at length ventured to examine one of the deceased at close quarters and discovered sugar, coffee, vanilla, indigo, &c. This, accordingly, was another expedient which had to be abandoned; but others remained.

Rist’s Description of Hamburg Smuggling

With this may be compared the more informative and certainly quite trustworthy account given by Rist, the representative of Denmark, of the position at Hamburg a year after the period with which we are chiefly concerned here, namely, at the beginning of 1811.
*29

For some time there had developed a peculiar and flourishing contraband traffic which was carried on from Hamburgerberg with varying success in full daylight and under the eyes of the customs officers. About this I wish to speak, because it was not only peculiar in its kind, but also not without influence upon the manners of the people and later events, and even became the subject of a genuinely humorous popular poetry.

The abundance of cheap colonial goods in Altona, which could not be prevented by any prohibitions or other measures from this side of the frontier, and the similarly unpreventable connection with Hamburgerberg, made this last-named place a regular emporium for contraband goods. Speculators in that line of business had at that time hit upon the idea of entrusting to all kinds of low-class people, chiefly women, boys and girls of the rabble, the task of carrying the forbidden goods in small quantities through the customs guard stationed at the town gates. The attempt had been successful and was soon continued on a large scale. The city gate was thronged with all kinds of
canaille coming in and going out in a steady stream. Behind some wooden sheds near the city gate one saw the arsenal of this curious army and its equipment, which was at once disgusting and laughable. There women turned up their dresses in order to shake coffee beans down in their stockings and to fasten little bags of coffee everywhere under their clothes; there boys filled their ragged trousers with pepper in the sight of everybody; others poured syrup in their broad boots; some even claimed to have seen women conceal powdered sugar under their caps in their black tangled hair. With these burdens they at once started off, and afterward delivered over their goods in certain warehouses located near the city gate and received their pay. In this way immense quantities of goods were brought in; and agreements with these petty dealers, based solely on good faith, seem seldom to have been broken on either side.

This trickery could not long remain concealed from the customs officers; and there is no doubt but that they could soon have checked it. But this does not seem to have been the intention at all. This ‘filtration’—that
was the technical term—was regarded as a happy hunting-ground, which was preserved as a means of enabling officers always to cover their requirements from it. If the officials seized every third or fourth ‘bearer’ (
Träger)—that was the people’s technical term—and kept his or her load, they derived a fine income from it; but the traffic was not at all disturbed by this, for losses were part of the business, and the customs officials had simply to hold out their hands to get all that they needed. Many of them were also well bribed by the principal participators in the traffic. If an unknown face appeared on duty, recourse was had to strategical measures: a dense column was formed, some heavily armed persons in the van were sacrificed, and the others burst through like a whirlwind, to the great joy of the spectators. The manifold incidents and perils which surrounded this
Schuckeln or
Tragen, the spirit of good-fellowship with which the trade was carried on, and the gallows humour that it created, inspired a poet, and by no means contemptible poet of his kind, from this or some neighbouring department to indite some ‘
Schuckeln ditties’, which for some time were in everybody’s mouth and were highly characteristic. It is certain that this business was for several years in succession a source of good earnings for the poorest elements of the population and considerably diminished mendicity. When the poor law officials asked parents receiving support about their children’s means of livelihood, their answer as a rule was: ‘Hee [or see] drigt’ (he—or she—bears). This offscum of society had suddenly appeared as if sprung out of the soil, and in the same way it afterwards vanished.

All this was by no means peculiar to Hamburg, although the fact that Hamburgerberg and country residences and places of amusement lay on the Holstein side rendered control very difficult and led to the rudest and most repulsive corporeal searchings of both women and men in the middle of the open road. Rist says that it was an especially difficult time for the corpulent, just as seems to have been the case during the recent World War on the shores on the Sound. On the North Sea coast the smuggling was still more systematic in Bremen, which, according to Max Schäfer, the latest describer of its fortunes under the Continental System, was a ‘smuggling metropolis’. It derived special advantage from what Vandal has called the amphibious nature of the coast, in that, thanks to
Die Watten (the numerous islands lying flush with the water), goods could be smuggled in direct from the British. From English sources we learn how raw sugar was sent when refined sugar was
prohibited, and
eau sucrée when raw sugar was prohibited; how coffee went in as horse-beans, sugar as starch; and how the names of pepper were legion. The same system flourished, however, from Gothenburg in the northwest around all the coasts of Europe to Saloniki in the southeast, without any great variation in the methods. Probably the most primitive expedients were resorted to on the Balkan peninsula. Here sugar was packed in small boxes weighing at the most 200 kilograms, so that they could be transported on horses and asses; in this way it was conveyed by armed bands through Bosnia, Serbia and Hungary to Vienna. France proper was undoubtedly the most closely guarded country, but even there, according to both English and French witnesses, smuggling flourished to a very large extent. At the very same time when the Berlin decree was flung out, when the new prohibitive customs ordinance was enforced for France herself, the English
Monthly Magazine, following the statements of experts, described how British goods of different kinds were exported on French orders to France everywhere along the frontiers and could easily be insured up to the place of their destination, and how immediately after their arrival they were stamped as of French manufacture and made to serve as evidence of the high level attained by French industry. A well-informed and intelligent French-American traveller, Louis Simond, who visited Great Britain in 1810-11, relates how the English goods ‘are packed in small packages, fit to be carried by hand, and made to imitate the manufactures of the country to which they are sent, even to the very paper and outward wrapper, and the names of the foreign manufacturers marked on the goods.’ On pieces of broadcloth in Leeds, for instance, he observed the mark of Journaux Frères of Sedan.

On the sea the smuggling is said to have started principally from Cowes, in the Isle of Wight. Here the goods were packed into hermetically sealed chests, which were afterward thrown into the water, chained to little buoys, like fishing nets, and safely hauled ashore on the French side by the inhabitants under the very eyes of the patrolling vessels. If we may credit an active French customs officer at the time, Boucher de Perthes,
the use of British textile goods came very close to the Emperor’s person. According to him, Napoleon learned, in the course of a journey with Josephine, that her trunks were crammed with the forbidden goods, and made the customs authorities mercilessly seize them all.

Normality of Smuggling

Through this all-pervading system smuggling acquired a stamp of normality, which was of great importance, especially for Napoleon’s subsequent policy, and which forms yet another significant example of the general contrast between appearance and reality by which the policies were dominated. On both sides the smugglers were used as ordinary means of commercial intercourse in cases where it was not desired to recognize a traffic which could not be done away with. In this case the French made use of the English word in the slightly corrupted form of ‘smoggler’. Boucher de Perthes, who was sub-inspector of customs at Boulogne in 1811 and 1812, in a letter from there defines them as ‘contrabandists of their (the British) nation, who are attached to our police and who at the same time carry on a traffic in prisoners of war and guineas, people of the sack and the rope, capable of everything except what is good’. In another letter he relates how they smuggled French brandy into Great Britain, as well as guineas out of that country, besides acting as spies for both sides. Two or three letters from Napoleon are particularly striking as to the normality of these transactions. In a warning that has already been mentioned,
*30 one of the many received by King Louis of Holland, the Emperor writes (April 3, 1808): ‘If you need to sell your gin, the English need to buy it. Settle the points where the English smugglers are to come and fetch it, and make them pay in money but never in commodities.’ In a letter two years later (May 29, 1810) to Gaudin, his minister of finance, he develops in the following way the trade which is carried on with the help of the ‘smogglers’: ‘My intention is to favour the export of foodstuffs from France and the import of money from abroad.
At the same time it should be possible to impose a pretty stiff fee, which should be fairly profitable… For that matter I should be very much inclined to let the smugglers in only at Dunkirk, unless current practice required that they should also be received at Flushing.’ Thus the whole line of thought as it appears in this letter is almost grotesque; the influx of money is to be effected by smugglers, who are to be treated with such consideration that even their habits are respected. This last is especially striking when compared with Chaptal’s account of Napoleon’s behaviour toward the legitimate trade, how he wished to command it like a battalion and ruthlessly directed it now here, now there. But the smugglers were necessary for the prosperity of Dunkirk and made that town exempt from the general crippling of economic life in the ports; it was therefore a serious matter for the town to see the smugglers moved from there, as Napoleon threatened to do in 1811.
*31

Naturally enough, this good-will toward the smugglers was displayed only when they served the interests of the government policy; apart from this there prevailed a war to the knife. On the other hand, the normality was not limited to these cases, but held good over the whole line; and the governments maintained an unequal struggle against the smugglers. In one passage Mollien speaks of the futility of the efforts of 20,000 customs officials, whose posts were known, to guard a frontier threatened by more than 100,000 smugglers, who were supposed to have good connexions in Paris and were favoured by the population besides.
*32 According to Bourrienne’s statement, there were no fewer than 6,000 smugglers in Hamburg
alone, a figure, of course, which can make no higher claims than those of Mollien to express anything more than a general notion of the enormous scope of the smuggling.

Commercial Organization of Smuggling

But there was a marked difference with regard to the ease with which the different kinds of goods could be smuggled.
British industrial products, it is true, came in on a large scale, though, to judge by a statement from Leipzig, principally yarn; but their entrance was resisted by the different governments even in most of the vassal states of France, because they wished to exclude British manufactures on protectionist grounds. The situation was quite different with regard to colonial goods. In this respect all people, from the crowned ruler down to the day labourer, were of one mind and thought in their desire to break the iron band of the Continental System; and the smuggling of these goods accordingly met with nothing but assistance and support.

OFFICIAL CORRUPTION

In part the system of bribery in earlier times undeniably formed simply a kind of pay for the servants of the state, although of the most objectionable kind possible; and the line between perquisites and bribes was often as fine as a hair. With regard to Bremen, for instance, we are told how the constant exactions of money for commandants, war commissaries and consuls—for non-dutiable goods, certificates of origin, and all kinds of lawful intercourse—took the form of fixed fees with definite names; thus the fees for certificates of origin, for instance, increased tenfold during the first six quarters after the issue of the Berlin decree. There was scarcely a place in the territories occupied by France or under French control where similar tactics were not employed. In the autumn of 1810 Napoleon wrote to Marshal Davout instructing him not to let the commander at Danzig, General Rapp, tolerate any corruption, although ‘everybody takes bribes’. Hamburg seems to have been especially exposed to people of this type. Marshal Brune, Consul Lachevardière, and almost more than anybody else, Bourrienne, were perfect
virtuosi in this respect. As
regards Bourrienne, Napoleon is alleged to have said that he (Bourrienne) would have been able to find a silver mine in the garden of the Tuileries if he had been left alone there; and at the beginning of 1811 the Emperor calculated that his former secretary had made seven or eight million francs at Hamburg. The Emperor’s letters are full of embittered outbursts against his corruption, which seems to have been carried on quite systematically with the connivance of sub-agents of different sorts, and which finally led, first to his being prohibited to sign certificates of origin, and then to his being removed from office. But these are only isolated examples of things that occurred everywhere.
*33

Rist, who, like the purely Hamburgian writers, fully confirms the French statements as to the corruptibility of Bourrienne and his associates, does not represent the conduct of his Holstein compatriots in any better light. Moreover, passing to another country, we are informed that in Geneva eighty customs officials had to be dismissed in seven months for complicity in malversation; and from the Rhine frontier we have further information that the director of customs and his relations directly helped the illicit trade in the smuggling centre of Strassburg, and that the customs lieutenants on the Rhine lived on bribes when they had no British pension.

However oppressive a corrupt administration may be to the population, yet the bribery system would scarcely have led Napoleon to change his policy, if the whole thing had been limited to exactions above those allowed by laws and ordinances. From the standpoint of the Continental System, however, the unfortunate thing was that at least as much, and probably more, could be gained by facilitating or actually encouraging—always for a consideration—precisely the traffic which the Continental System aimed to annihilate by every possible means. For such illegalities on the part of the officials the people were willing to pay munificently, and they were, if
anything, somewhat more amiably disposed than before toward their foreign rulers. One of the very few persons who from the beginning to the end really made the resolute execution of the Continental System the lodestar of all his conduct, namely, Marshal Davout, Prince of Eckmühl, the last French Governor-General of Hamburg—an ever reliable sword in the Emperor’s hand, and, as far as one can see, a man of the same type as the German generals who during the recent war governed occupied territories—for that very reason brought upon himself perhaps a stronger hate than any of Napoleon’s other tools; and among the inhabitants of Hamburg he passed under the name of Marshal ‘Wuth’ (Fury).

FISCALISM

But it was not enough that the Continental System was rendered illusory by the ever-present smuggling, which was constantly assisted
sub rosa by the corruptibility of the officials. That smuggling involved another disadvantage in that Napoleon at the same time lost for himself and for France the benefits which an openly conducted traffic of the same scope would have brought with it. This was primarily a matter which concerned the finances of the state; and such a development could not fail to irritate the Emperor, who, of course, always had difficulties in obtaining sufficient revenue, especially as he would not openly have recourse to loans. The customs receipts which a system of imports that were allowed, but made subject to duties, would have yielded, and even, under the former and milder régime, had actually yielded, now fell into the hands of the smugglers and dishonest officials. The customs receipts of France herself, which in 1806 had been 51,200,000 francs and in 1807 had even risen to 60,600,000 francs, declined in 1808 to less than one-third of that amount, or 18,600,000 francs; and in 1809 they declined still further to the insignificant sum of 11,600,000 francs. The powerful head of the French customs system, Collin de Sussy, and also Montalivet, who was somewhat later home secretary, then conceived the characteristic idea that the state might be able to enter into what was literally
a competition with the smugglers. This was to be arranged in such a way that in some form or other the importation of the hitherto forbidden goods was to be permitted, but only on payment of a duty that exactly corresponded to an amount which, as we have seen, the smuggling business had previously cost. In that case no more goods would come into the country than had been the case beforehand, but the profit would fall to the state instead of to the smugglers.
*34

Such a device could not fail to appeal to Napoleon with his cynical sense of reality for everything that had to do with means; but what he shut his eyes to till the last was the great extent to which this means damaged his great end. As a matter of fact, this meant that fiscalism had definitively gotten the upper hand over the Continental System, at least in one-half of its range. The object was no longer to exclude goods, but to make an income by receiving them instead; and no sophistry in the world could make the latter compatible with the former. But we cannot maintain that Napoleon in this respect consciously acted in opposition to his objects. His line of thought was as inconsistent as that which is still constantly found outside the circle of professional economists, in which the fact is ignored that the more prohibitive or protectionistic a customs tariff, the less it brings in, and consequently that that part of a customs duty which keeps goods out brings in no money to the treasury. This duality of conception in Napoleon finds a very typical expression in a letter addressed to his brother Jerome, King of Westphalia, on October 3, 1810, in which he first points out how advantageous the new system would be for this young prodigal by bringing him in a larger income; and after that he goes on to say: ‘It will also be a great advantage in other respects, since the continental customers of the English merchants will not be able to pay for them (the goods), and the consumption of colonial goods, which will be rendered dear in this way, will be diminished. They will thus be exposed to
attack and at the same time driven out of the continent.’ The representatives of Napoleon used the same language in dependent countries.
*35 So far, therefore, the reshaping of the Continental System aimed at no real increase in its efficacy, but rather at the reverse, inasmuch as Napoleon acquired a direct interest in the admission of goods into the country.

On paper, however, no departure from the principles of the Continental System was ever acknowledged, inasmuch as the Berlin and Milan decrees were retained unchanged to the last; and Napoleon zealously impressed on his stepson Eugene, the Viceroy of Italy, the necessity of not letting the goods in ‘to the detriment of the blockade’. But in his inexhaustible supply of expedients Napoleon found a simple means of circumventing his own system in fact, namely, by granting exceptions from the prohibition on import in the matter of captured goods.

Prize Decree (January 12, 1810)

By a law issued at the very beginning of the year 1810 (January 12), it was laid down that goods the importation of which was forbidden (with the exception of certain kinds of cotton fabrics and hosiery) might be introduced into the country on payment of a customs duty of 40 per cent. when they came from prizes captured from the enemy by war vessels or licensed privateers. This was called ‘permitted origin’ (
origines permises). But the exception here established with regard to cotton goods was developed still further in the course of the year; and in this process Napoleon skilfully took advantage of the different feeling that prevailed on the Continent with regard to colonial goods and English industrial products. In accordance with this, the new system involved a relentless prohibition of British goods, but made concessions with regard to colonial goods, which were admitted on payment of huge duties. So far as the system in this form could be enforced, Napoleon contrived at least not to favour British industry, but only British trade. That the exception was in form
restricted to prize goods was in reality of no importance. It is true that Napoleon declared, in a letter to Eugene, that all colonial goods which had not been captured or seized should remain excluded; but according to Thiers, express orders were given in the correspondence of the Customs Department that this should not be strictly observed—and there can be no doubt about the practical extension of the concession to all colonial goods.
*36

As regards the customs rates, the principle, as has been said already, was that they should correspond to the costs of smuggling. When Holland was incorporated with France on July 9, 1810, it was laid down, in approximate conformity with the above-mentioned law of January, that the large stocks of colonial goods in that country should be admitted to the empire on payment of a duty which in the decree of incorporation was fixed at 50 per cent. of the value, but which, according to a somewhat later declaration, was to be 40 or 50 per cent., according to the time of the declaration. This principle was applied not only to France, but also to all the vassal states, which now became the object of the same merciless pressure with regard to the new system as they had formerly been with regard to the Continental decrees and which, as a rule, formally submitted at least as obediently as then. But to make assurance doubly sure, every stock of colonial goods which was as much as four days’ journey from the French frontier was to be regarded as intended to injure France, and was therefore to be subjected to examination by French troops; in fact, French troops were actually employed for the purpose. In order that the right degree of pressure should be attained, it was the intention that the new order should be carried through simultaneously over the whole Continent, so that there would be no country to which the goods could fly in order to escape these heavy burdens; consequently Eugene at least received orders to keep the new instructions secret for the present. Principally
out of regard for the captors, but not exclusively in their favour, it was conceded that the duty might be paid in kind, that is to say, by means of a corresponding part of the goods which were to come in, and also in promissory notes; and without this concession it is certain that in many cases such large amounts could not have been gathered in. Every holder of colonial goods was bound to declare them, so that, as Thiers expresses it, the whole was taken in any attempt at barratry and half in case of honest declaration.

Trianon Tariff (August 5, 1810)

The whole of this arrangement has taken its name from the Trianon tariff of August 5, 1810, which is one of the fundamental laws of the new system. This does not provide for customs duties based on a percentage of the values, but laid down specific duties by weight (per 100 kilograms) on the different kinds of colonial goods. Duties of 40 and 50 per cent. still seem to have been applied, however, for prize goods and goods imported by licence, respectively. How high these rates were may perhaps be more clearly set forth by comparing with the highest rates of duty, namely, those on goods from nonFrench colonies, in the tariff of 1806, to which reference has already been made; and yet the 1806 duties had already formed the corner-stone of a whole series of rises in customs duties. The duties at different dates are tabulated in appendix ii, which will perhaps afford the clearest view of the amount of the increase. The most violent was the rate on raw cotton, which as late as 1804 was assessed at only one franc per 100 kilograms. In 1806 this rate was raised to not less than sixty francs, notwithstanding that raw cotton had become the foundation of a main department in the new industrial development which began under the Empire. These rates, however, dwindle into insignificance when compared with what was now enacted. According to the Trianon tariff, South American and long-stapled Georgia cotton had to pay 800 francs; Levantine cotton, if imported by sea, 400 francs, and
if passing through the custom-houses on the Rhine, 200 francs; other cotton, except Neapolitan, 600 francs. This classification was evidently intended to hit hardest the goods which were most dependent on English imports. We have already mentioned the fact that all goods from French (Dutch) colonies, with the corresponding vessels, were free, and that the direct imports by American vessels only paid one quarter of the amount, a matter which in reality meant nothing, as the British blockade prevented all such direct imports. Indigo was raised from 15 francs (1803) to 900 francs, after which (in January, 1813) there followed a new rise to 1,100 francs; cloves from 3 francs (1806) to 600 francs; tea from 3 francs (besides, in certain cases, 10 per cent. of the value) to 600 francs for green tea and 150 francs for other kinds; coffee and cocoa from 150 francs and 200 francs, respectively (1806), to 400 francs and 1,000 francs; while fine cinnamon, cochineal and nutmeg, which had not been specified in the older tariffs, all paid 2,000 francs per 100 kilograms. Some thirty new headings were added to the tariff by a supplementary schedule of September 27 of the same year.

Fontainebleau Decree (October 18, 1810)

But as a new road was now in reality opened for the legitimate importation of colonial goods, it was important for Napoleon not only to strike still harder at the illicit importation of those goods, but also to make the sale of British industrial products impossible. It is this idea which lies at the bottom of the immense increase in the rigour of the customs laws which is marked by the Fontainebleau decree of October 18, 1810, the last of the great laws in this department. Both the penalties now introduced and the treatment of the goods themselves involved a reversion to the most violent methods of the prohibitive system. First as regards the prohibited goods, that is to say, manufactured products, the smuggling leaders of different grades were punished with ten years’ penal servitude and branding, while the lower-grade tools might under extenuating circumstances get off with a milder kind of punishment
(
peines correctionnelles) and 5 to 10 years’ police supervision. The smuggling of the goods specified on the tariff, that is to say, colonial goods, involved as much as four years’ penal servitude, while ‘simple smuggling,’ that is, smuggling ‘without any agreement or obligation of a kind to form an undertaking or insurance,’ did not lead to penal servitude.

The regulations as regards the treatment of the goods were carried to still greater lengths than the punishment for smugglers. As regards colonial goods the penalty was limited, as before, to confiscation, the goods to be sold by auction every six months; but with regard to prohibited goods Napoleon now went to the extreme and ordered that they should be publicly burned or otherwise destroyed after a list had been made of them with prices attached. Here Napoleon was following precedents which were to be found in English legislation of the seventeenth century, and which was repeated as late as the beginning of the reign of George III.
*37 For the whole of this draconic legislation there were erected special customs courts (
cours prévôtales des douanes), the operations of which have stood out to later generations as the culmination of the oppression involved in the Continental System.
*38

Napoleon’s Complicity

The system of corruption created by Napoleon’s tools under the old order of things could not, however, be abolished simply by the fact that the Emperor himself introduced fiscalism
instead of the complete blockade. On the contrary, we find proportionally a still larger number of examples of bribery and embezzlement after the Trianon and Fontainebleau decrees than before. But Napoleon, on his side, had to a great extent changed his treatment of them, in accordance with his new fiscalist tendencies. His method became simply to demand a share of the bribes of the dishonest officials, and in that way convert them into sponges with which to soak up revenue from the illicit trade. The resemblance to the Trianon system is thus striking. Two or three cases from the beginning of 1811 are particularly characteristic in this connexion. One of the most fully compromised officials was the French consul at Königsberg, Clérembault, who released fourteen British ships in the Baltic, belonging to a large flotilla which Napoleon had pursued the whole autumn—of which more anon—with a cargo worth 2,800,000 francs, and was stated to have obtained the magnificent sum of 800,000 francs on this affair alone and 1,500,000-1,600,000 francs altogether. At the same time the malversations of Bourrienne and Consul Lachevardière still went on in Hamburg. With reference to this Napoleon wrote to his foreign minister, Champagny, a highly characteristic New Year’s letter to the effect that Clérembault was to hand over to the Foreign Office all that he had received; and he also declared his intention to compel Bourrienne to pay in 2,000,000 francs in the same fashion, while Lachevardière was to pay 500,000 francs to the sinking-fund of the French government. His intention was that the first two amounts should be employed for the erection of a residence for the foreign minister; and the letter ends: ‘You will see that I shall get the money for a really handsome palace which will cost me nothing.’
*39 This was not a mere idle fancy; on the contrary, it turned out that Clérembault had already anticipated matters by paying of his own accord 500,000 francs to the Emperor’s privy purse (
caisse de l’extraordinaire), and that he had still earlier paid
200,000 francs into the cash box of the Foreign Office. In this manner the Continental System was perverted into a gigantic system of extortion, for naturally this was no way to cut off the Continent from the supply of goods.

LICENSING SYSTEM

Great Britain

In Great Britain, in fact, the licensing system had acquired an immense range, culminating in 1810 with the granting of over 18,000 licences in a twelvemonth; and, according to almost unanimous information, it was carried through to such an extent that the greater part, not only of British foreign trade, but also of the maritime trade of the whole world, was carried on with British licences. But this did not prevent the Heligoland merchants, for instance, from feeling their operations restricted by not getting so many licences as they wished. The licence system placed practically the whole power over foreign trade
in the hands of the British government, more particularly in the hands of the president of the Board of Trade. This very fact was enough to provoke incessant attacks on the whole system on the part of the opposition; and it also aroused great dislike on the part of the business world, which had already begun to regard as almost an axiom the incapacity of the state to judge commercial questions. It is true that on two different occasions, in 1805 and 1807, certain general exceptions had been granted from the current regulations, especially for importing foodstuffs and raw materials into Great Britain. But evidently the merchants considered—probably on the ground of dearly bought experience—that the commanding officers of the warships and privateers did not refrain from seizing other vessels than those which had licences in due form, and therefore continued to take out such licences even when, from a strictly legal point of view, that was superfluous.

In the opinion of the opposition, this state of affairs could not cease until the laws had been repealed from which the licences granted freedom in individual cases. Thus the opposition regarded the licensing system as a further inconvenience of the Orders in Council and as subject to the same condemnation as they. In the House of Commons the chief speakers of the opposition in economic questions, especially Alexander Baring, the junior partner in the famous firm of Baring Brothers &Co., Henry Brougham, the barrister, and Francis Horner, the originator and chairman of the famous Bullion Committee of 1810, were therefore indefatigable in their attacks on the licensing system. The first two named, together with the lawyer J. Phillimore, author of a pamphlet entitled
Reflections on the Nature and Extent of the License Trade (1811), carried on the campaign outside Parliament too—Baring especially, by his pamphlet entitled
An Inquiry into the Causes and Consequences of the Orders in Council (1808). The attacks of the opposition, however, were met by the government with the assertion that licences would be quite as necessary, even if the Orders in Council and the blockade were entirely revoked, to serve as a form of dispensation from the prohibition of
trading with the enemy. In 1812, for instance, Lord Castlereagh, then foreign secretary, declared that not a fifth of the licences were due to the Orders in Council; and as it was generally considered to be equally self-evident that this trade with the enemy should be forbidden by law and encouraged in reality, the government so far had the better of the argument.

On the other side, the licences formed a manifest advantage, not merely for the British government but also for British external policy in general, by permitting a regulation of foreign trade according to circumstances, without the proclamation of
more or less disputable principles of international law; and so far they accorded pretty well with the general attitude of horror displayed in British public life toward all doctrines and declarations of principle. It was really the licensing system that rendered possible the formal concession with regard to the original Orders in Council which was effected by the new Order in Council of April 26, 1809, in that the old regulations could in reality be maintained without being put on paper, simply by being made the condition for the granting of licences. This found quite open expression, for instance, in the letter which the Marquis of Wellesley, as foreign secretary, wrote to the new British Minister at Washington, Foster, in 1811, and in which, among other things, he says: ‘You will perceive that the object of our system was not to crush the trade with the Continent, but to counteract an attempt to crush the British trade. Thus we have endeavoured to permit the Continent to receive as large a portion of commerce as might be practicable through Great Britain’—of which there is not a word in the only Order in Council of 1809 then in force—’and that all our subsequent regulations, and every modification of the system by new orders or modes of granting or withholding licences, have been calculated for the purpose of encouraging the trade of neutrals through Great Britain.’

The licences were thus, in the first place, a flexible means of carrying through the policy that had been marked out once for all. It is true that this did not prevent them, as we have seen, from coming to serve quite other purposes through the inefficiency and laxity of the officials; but these abuses did not imply that the British government had altogether lost its control over the licensing system. Thus, for instance, the ease with which the Norwegians obtained licences in 1809-11, despite the fact that the Dano-Norwegian monarchy was at war with Great Britain, was due to the British need of Norwegian timber. Later on, when pressure was regarded as desirable for political reasons—it was just at the time when Norway was suffering immensely from shortage of foodstuffs—the granting of licences in effect ceased entirely, although under the form of a claim
for security to amounts which it was not possible to achieve (£3,000-4,000 per licence).

Even in its consistent form, however, the licence system led to embittered resistance in many quarters of Great Britain, especially in the seaports. In 1812 Hull, Sunderland, South Shields, Scarborough, Aberdeen, &c., overwhelmed Parliament with petitions against the licensing system, largely for reasons opposite to those usually alleged by the opposition. Here the attitude adopted was that the neutrals, with the object of maintaining connexion with the self-blockaded ports of the mainland, were admitted to too large a share in trade and shipping, and further that British subjects, contrary to the Navigation Act, were allowed to ship cargoes in neutral vessels. In this way these, petitions alleged, it was unintentionally made possible for Napoleon himself and his allies, under a neutral flag and with British licences, to take part in trade with impunity. Thus one example was cited when thirty-seven vessels were allowed, in 1810, to go without hindrance from Archangel to Holland; but this was due evidently to the usual carelessness in the application of the system. With regard to admitting foreign vessels and sailors, on the other hand, the government could point to the insufficiency of the British shipping for all purposes and to the advantage of penetrating to the markets of the Continent under a neutral flag when it could not be done under a British flag. This last was an idea which was strongly confirmed by Napoleon’s view of the matter. On the whole, the British licences, despite their luxuriance of growth, remained, at least in principle, what they had been from the beginning, namely, a means of combining the formal British blockade of the Continent with the real mercantilist aims of the policy, as has been described in part I of this book. This found expression, among other things, in regulations which really placed a premium on exports, namely, in the form that the granting of a licence to import was made dependent on making exports to the same value, either in general or for certain goods;
e.g., the granting of licence for the importation of wine in return for an engagement to export colonial goods. And although
licences were often sold for high sums on the Continent (700 Rigsdaler in Norway, it is said, and 500 florins in Amsterdam) and in Great Britain itself were supplied by the state at such a considerable price as £13 or £14 apiece for individual licences, with the addition of a guinea for each licence when a large number were in question—on some occasions, however, higher charges did occur—yet the opposition, so far as I know, despite its repudiation of the whole system on constitutional grounds, never insinuated that the state was influenced by fiscal points of view, but only alleged abuses in favour of individuals. Even if one accepts the highest number of licences for a twelvemonth, about 18,000 for the year 1810, and the highest conceivable average amount per licence (
i.e., £14, which is assuredly too high an estimate), the highest annual amount would only be about £250,000 or 6,250,000 francs.

FALSE SHIPS’ PAPERS (BROUGHAM’S DESCRIPTION)

But the licences in Great Britain had also another object which, from the standpoint of the Continental System, was more important than all the matters we have just dealt with—namely, that of providing trade and shipping with an opportunity of circumventing Napoleon’s commercial prohibitions without thereby being exposed to capture by British ships, which undoubtedly would have been the consequence if the formal British regulations had been applied. What had to be done was to avoid both Scylla and Charybdis; and on both sides the regulations had been brought to such a pitch that this was absolutely impossible without a dispensation. What the licences rendered possible, in this particular, was a completely systematic and commercially organized traffic with false ships’ papers designed to show the continental authorities both the non-British origin of the goods and the departure of the vessels from non-British ports—a parallel to the case of smuggling. The best and most graphic description of the whole business is perhaps contained in a speech made by Brougham in the House of Commons on March 3, 1812, the relevant part of which may
therefore be quoted
in extenso. It will hardly be thought necessary to draw special attention to the priceless business letter in the forgery line which concludes this account.
*40

But the last and most deplorable consequence of this licensing system, is the effect which it is producing on the morals of the trading part of the community of this country. Here I implore the attention of the House, and the attention of the hon. gentlemen opposite (would to God I could appeal to them in a more effectual manner), and intreat them to consider the consequences of giving continuance to a traffic which has so often been described as ‘a system of simulation and dissimulation from beginning to end’. These are the words of the respectable Judge who presides in our Courts of Admiralty [Sir William Scott], who as he owes in that capacity allegiance to no particular sovereign, is bound to mete out justice equally to the subjects of all nations who come before him. This is the language of the right hon. and learned gentleman alluded to, but in my opinion, it would be still more accurate to say that it is a system which begins with forgery, is continued by perjury, and ends in enormous frauds. I will read a clause from the first license that comes to my hand—for it is in them all—in 18,000 licenses a year—and it is a clause which demands the most serious attention of the House. What are we to say when we find that the government of the country lends the sanction of its authority to such expressions as the following, in the licenses from port to port: ‘The vessel shall be allowed to proceed, notwithstanding all the documents which accompany the ship and cargo may represent the same to be destined to any neutral or hostile port, or to whomsoever such property may appear to belong.’ Notwithstanding, says his Majesty in Council—at least his Majesty is made to use such language—notwithstanding,
says this paper, which is countersigned by his Majesty’s Secretary of State 18,000 times in a year, this trade is carried on by fraud and perjury, we will sanction that foulness, and we will give orders that these ships shall be enabled to pass through the British fleets. Perhaps the full import of this clause is not known to the House. It is proper they should be informed that papers are put on board stating the actual place from which the ship cleared out, signed in the proper and usual manner, with letters from the ship-owner to the proper persons; and that these real documents form what is called the ship’s papers. By this license the captain is enabled to take on board another set of papers, which are a forgery from beginning to end, and in case his vessel happens to be overhauled by our cruizers, he escapes detention. If the ship happen to clear from London, it is perhaps said to clear from Rotterdam, and the proper description is made out, as nearly as possible, in the hand-writing of the Custom-house officer at Rotterdam, and if it be necessary that the paper should be signed by a minister of state, as is the case in Holland, his handwriting must be forged, frequently that of the duke of Cadore [Champagny], or perhaps, as I happened to see the other day, that of Napoleon himself. Not only are the names forged, but the seal is also forged, and the wax imitated. But this is not enough. A regular set of letters is also forged, containing a good deal of fictitious private anecdote, and a good deal of such news from Rotterdam as might be supposed to be interesting to mercantile people, and a letter from a merchant in Rotterdam to the ship-owner. Thus provided, the vessel sails, and the object of the clause in the license which I have just read, is to prevent her from being seized by any of our cruizers who may intercept her. This is what is meant by the general expression of—’Notwithstanding all the documents which accompany the ship and cargo may represent the same, &c. &c.’ So much for the system of forgery on which this license trade rests; but all this is not enough. All this must be done with the privity of the merchant here, and of his clerks. That most respectable branch of society, and these young men, whom they are initiating into trade, are no longer at liberty to follow the system, by which our Childs and our Barings have risen to such respectability and eminence; but from their very outset in life, are now to be initiated in the humiliating mysteries of this fraudulent commerce. All these forgeries, too, are confirmed by the solemn oaths of the captain and crew when they arrive at their destined port. They are obliged to swear in words, as awful as it is possible to conceive, that all these documents and letters are genuine. Every sort of interrogatory is put to the captain and the whole crew, which is calculated to discover what is the real port from which the vessel sailed, and to the truth of the answers to all these interrogatories the captain and the whole crew are obliged to swear. They are obliged to declare from what quarter
the wind blew when they left Rotterdam (although they were never near the place) when they took a pilot on board, and a number of other particulars, which they are obliged to asseverate on the most solemn oath which it is possible to conceive; knowing at the same time that they sailed from London and not from Rotterdam, that they took no pilot on board, and that their other statements are utterly false. So that, under this system, the whole crew and captain are under the necessity of perjuring themselves, if they wish to act up to their instructions. In confirmation of these statements, I will read to the House a letter of a most curious description which has been put into my hands, written to an American merchant, of the highest respectability, the contents of which would be extremely ludicrous, if the contemplation of them were not accompanied by a feeling of disgust at the moral depravity it displays. It is written by a professional man, not that he is either a lawyer, a physician, or a divine, for he would be a disgrace to any of these honourable occupations; but he is a man who has made the forgery of ships’ papers a regular and organized profession. I shall omit the names of any of the parties, because I should be sorry to injure individuals, whose only connection with the writer has been, that he has dared to send them this most atrocious circular. It is as follows:

France

That part of this which made an impression upon Napoleon must above all have been the last-mentioned side of the licence system, for it evidently enabled the British to evade his
blockading decrees with success. But the whole fashion of saying one thing, and meaning and doing another, accorded exquisitely with his general bent and created a possibility, which was particularly welcome under the then prevailing circumstances, of altering his régime in fact without formally repealing ‘the fundamental law of the Empire’ before the English had given way. It was only natural, therefore, that the licensing system on the British side should encourage imitation on the side of Napoleon. Accordingly, the Continental System during its last years developed into a huge system of jugglery on both sides, when neither side honestly applied its own regulations, but both broke them with a capriciousness that to some extent increased the sufferings of the already more than sufficiently harassed peoples.

Sometimes this fact finds very open expression in Napoleon’s copious explanations of the licensing system, alternating with highly confusing and obscure accounts of its significance. ‘In this place it is necessary to tell you again what you already
understand,’ runs an unusually explicatory letter to Eugene, Viceroy of Italy (September 19, 1810), ‘namely, what is meant by a licence. A licence is a permission, accorded to a vessel that fulfils the conditions exacted by the said licence, to import or export a certain kind of merchandise specified in that licence. For those vessels the Berlin and Milan decrees are null and void.’

LICENCE DECREE JULY (25, 1810)

What an almost all-embracing range this suspension of the Continental decrees attained is shown by an express order, the so-called ‘Licence decree,’ of July 25, 1810, and also by a number of confirmatory measures adopted by Napoleon during the subsequent period. Thus it was laid down in the licence decree that beginning on August 1, 1810, no vessel bound for a foreign port might leave French ports without a licence signed by Napoleon’s own hand. If the vessel was bound for any of the ports of the Empire, or was engaged in coasting traffic in the Mediterranean, a more general permit (
acquit-à-caution) was required, but also a written bond which was not annulled until evidence could be furnished of the vessel’s arrival at the French port. All vessels that were devoted to
le grand commerce or la grande navigation were therefore obliged to have a licence; and for this procedure there was given the highly significant justification that no such traffic was possible without calling at a British port or at least being examined by the British—which, according to the Milan decree, involved ‘denationalization’ and confiscation. Despite the fact that both the Berlin and Milan decrees strictly forbade all intercourse with England and all calling at English ports, Napoleon now went so far as to make it a point of honour that French vessels should visit English waters, and go to London, even though they were under a neutral flag. ‘Under this disguise England receives them, and I make laws for her owing to her pressing need of commercial intercourse.’ It was not surprising that such a change of front, which in 1812, for instance, led to a licence for the importation of rice from London, befogged many people completely.

OBLIGATION TO EXPORT

But further the licences were intended to serve Napoleon’s aims in the sphere of trade policy. In this connexion the main thing was to encourage the exportation of French, and to some extent also Italian, industrial products and, in good years, foodstuffs from both countries, as well as from Danzig and other granaries. In exchange for this there was granted, as a rule, the importation of colonial goods, which was simultaneously regulated by the Trianon policy, either generally or with special reference to Levantine and American products. But there were also stricter rules where nothing was to be brought back to France except ship-building materials or precious metals, and specie, which were in constant request, and which Napoleon, in consonance with his well-known views, was always seeking to draw from England. Thus from 1809 on there was a long series of varying types of licence, which differed widely in detail, but do not offer many points of interest. One of the most significant types is the combined one which permitted vessels to take corn from German ports in Napoleon’s empire to Dunkirk and thence to England, provided the corn was discharged in England and naval stores were taken as return freight to Dunkirk, where French wine, silks, and manufactures had to be taken on board and conveyed
to Hamburg. One of the most stringent conditions for licences was that imports into France, and to some extent also into Italy, of whatever kind they might be—apart from foodstuffs during years of famine, as in 1812—required from the importing vessel a return cargo of French goods from France or Italian goods from Italy of at least the same value. Such return freight was particularly silk and other French textiles, but also wine and brandy, and, in good years, natural produce, especially from Italy. All this was to be in proportions which varied a great deal from time to time, but were usually determined in great detail. This very far-reaching system, which also had something, though on a smaller scale, corresponding to it on the British side, as has already been mentioned,
*41 had developed from a regulation introduced into the French customs ordinance of 1803 as a kind of punishment for vessels whose papers were not above suspicion in respect of the innocent origin of their cargo. This even applied to incorporated territories, such as the Hanse Towns, when importing to ‘the old departments’.

It may be said at once that this attempt on the part of Napoleon to transform the Continental System from a gigantic plan of blockade against Great Britain to an in itself less note-worthy method of augmenting the exports of France, led to an almost complete fiasco. The goods were taken on board, of course, but as their importation was prohibited in England, and as, moreover, they were not in a position to compete with British manufactures, there could be no sale. And it is in the very nature of things that the method of circumventing such export ordinances must be still more varied than in regard to obstacles in the way of imports, and the dodges invented were all the more numerous. On the whole, it may be regarded as a general rule that purely coercive laws in the sphere of economics have far fewer possibilities of being made effective in a positive direction than in a negative one. In most cases, in fact, it is almost impossible that the positive law can effect anything more than the external forms of economic transaction, while the negative regulation or prohibition can much sooner
make the transaction impossible both in substance and in form. Of course, goods were exported when their exportation was ordered; but as it was difficult to fix the quality of the goods in the law, the consequence was that people bought up every conceivable kind of rubbish—articles long since out of fashion or useless from the very start—in the French idiom ‘nightingales’ (
rossignols), which sing only by night,—which could be purchased for a song and then priced at any figure whatever. Under these circumstances, of course, there was less chance than ever of effecting any real imports of goods into England, and it was stated openly, for instance, in the French Council of Commerce and Industry in 1812, and was for that matter generally known, that the goods were simply thrown into the sea. All this held good of that part of Napoleon’s policy which to some degree stood in connexion with the Continental System, namely, the trade with England. With regard to the countries incorporated or allied with the empire, the possibilities were probably greater, inasmuch as the vessels could be controlled on their arrival with the French goods; but obviously all this was valueless as a weapon in the struggle with the enemy.

FRENCH SHIPPING MONOPOLY

Finally, also, the licensing system was elaborated into a purely protectionist measure with regard to French shipping. In his letter to Decrès, the naval minister, written on the same day as the issue of the Milan decree, Napoleon had already prescribed that all non-French vessels should be detained in his ports; and now the licensing system was adopted to the end of creating a practically complete monopoly for the French mercantile marine. Especially openhearted in this matter is the Emperor’s commentary on the licence decree of July 25, contained in a letter to his lieutenant in Holland after the incorporation of that country, the arch-treasurer Prince Lebrun (August 20, 1810). After observing that no vessel, according to the first article of the decree, could depart to a foreign port without licence, he goes on to say: ‘The article ‘applies to
all kinds of vessels, French, neutral or foreign; that is to say, with the exception [
sic] that I do not grant licences to other than French vessels. In two words, I will not hear of any neutral vessel, and as a matter of fact there is in reality no such thing; for they are all vessels which violate the blockade and pay tribute to England. As to the word foreign, that means foreign to France. Thus foreign vessels cannot trade with France or leave our ports, because there are no neutrals.’ According to a previously cited letter to Eugene, of September 19,
*42 Napoleon develops still further the idea, in that, with the sole exception of naturalized captured vessels, he requires that the vessels shall even be built in France. It is true that all this did not apply without exception, for in some individual cases licences were granted to vessels of allied or neutral states. Likewise the Hanse Towns, which belonged to Napoleon, Danzig, and towns in Italy, received licences, though only upon payment of unusually high fees; as a rule, however, allies were excluded as rigorously as neutrals. Especially hard did the system strike against France’s most faithful ally, Denmark, who saw all her vessels in the ports of Napoleon seized and detained, despite endless negotiations and the support of Davout; and when the vessels were finally released, in the spring of 1812, at which time there were still eighty left, their release was conditioned upon exportation of huge quantities of French silks, which was an absolute impossibility. We obtain the right background for these tactics when we take into consideration the fact that Denmark had also to submit to supplying other vessels for the transport of corn to Holland and at the same time to place officers and sailors at Napoleon’s disposal for the naval expedition that he was then equipping on the Scheldt against England.
*43

Thus there can be no doubt that the Continental System had missed its mark in several decisive respects. Instead of hitting the enemy, it had partly shot past him and become a means of promoting the interests of France—correctly or incorrectly conceived—at the expense of her own helpers in the struggle against Great Britain. The customs policy proper had had this tendency from the very beginning; and its later development, which continued along the same lines, will be described in connexion with the effects of the system on the Continent, in part IV of this book. To what extent all this had driven Napoleon into the very course that the British in reality aimed at from start to finish, is shown with unusual clearness by a statement made in the autumn of 1811 by General Walterstorff, the Danish minister in Paris at the time, to the effect that France had no other trade except with England and, of course, wished to keep that for herself. Here we find the position described in words almost the same as those employed by the British ministers with regard to the object of their policy.
*44 So far the success of the system was almost incontestable—for Great Britain.