Chapter I.: Commercial Policy, Beginning of Anglo-french Commercial War (1660-1786)

To begin with, however, it seems expedient to trace in some detail the evolution of commercial policy during the century before the Continental System, with special reference to the development of that sphere of activity to which the great trade blockade was especially to be applied, namely, the commercial relations between Great Britain and France.

England and France, as is well known, had been adversaries, with certain more or less lengthy intervals, from the early Middle Ages; and after mercantilism had become firmly established in both countries, it was inevitable that the commercial policy of both should come to be marked by the efforts and tendencies to which we have just referred. To go back no further than the middle of the seventeenth century, we find evidences of antagonism in the customs regulations at least from 1660 on; and after 1678, when the two countries were on the verge of actual war, we may regard commercial war and mutual embargo simply as the normal state of relations between them. After the deposition of the House of Stuart and the outbreak of war between England and France in 1689, there was a further intensification of the antagonism; and with the outbreak of the War of the Spanish Succession, in 1701, the commercial war may be said to have assumed its definitive form. In connexion with the Peace of Utrecht, in 1713, a famous attempt was made to settle the commercial conflict, as well as the political differences, by means of a commercial treaty; and good-will was not wholly lacking either on the French side or on the side of the Tory government then established in Great Britain. But in other British circles, especially among merchants and manufacturers, the opposition was too strong, and the treaty was consequently deprived of the two clauses which gave it its importance, that is, the clause concerning mutual treatment as the most favoured nation and the clause concerning the mutual abolition of all prohibitions and customs restrictions introduced since 1664, or, in certain cases, since 1699. The result was that the embargo was maintained on both sides, without any noteworthy interruptions, throughout the greater part of the eighteenth century, or for a period of more than a hundred years.

An elucidation of the nature of this hundred years' commercial war between France and Great Britain is essential to a correct understanding of the origin and development of the Continental System. In England, for instance, all importation of French wine, vinegar, brandy, linen, cloth, silk, salt, and paper, and also of all manufactures containing French silk, thread, wool, hair, gold, silver, or leather, was prohibited in 1678. The law itself condemned importation from France, in principle, as 'a common nuisance', and provided that the French goods were to be destroyed and not allowed to enter, even if they had been captured by English war-ships or privateers. After 1685, however, when this direct persecution of French goods was abandoned and replaced by the establishment of a large number of additional customs duties, a number of severe measures followed on the part of France. Accordingly, when war actually broke out, in 1689, England returned to the principles of 1678. In due form she introduced a general prohibition on the importation of French goods and ordered that all liquid goods that were captured should be poured into the rivers or the sea, or be 'staved, spilt, and destroyed' at the place where they were stored; also that all cloths, paper, salt, &c., should be publicly burned.

It is unnecessary to dwell upon the protectionist nature of these measures, the main object of which was to prevent French products from competing with domestic products in the English market. Later on, France, which as a rule seems to have been somewhat slower to act, proceeded to adopt similar measures, especially after the outbreak of the new war in 1701. Thus when Adam Smith, who among other things was a Scottish commissioner of customs, entered into a detailed discussion of Anglo-French trade policy in the third edition of his famous work more than eighty years afterwards, he felt justified in stating that, quite apart from the multitude of import prohibitions, especially on all kinds of textiles, the majority of the French imports before the outbreak of the new war in 1778, were assessed by the British customs to the extent of at least 75 per cent. of the value of the goods involved, and that, as a rule, this was equivalent to a formal prohibition.