Coming to power through the coup d'état of 18 Brumaire, Year VIII (9 November 1799), First Consul Bonaparte, himself a mercantilist, became heir to French commercial traditions and current practices. He also inherited an unpalatable oceanic situation in which the French merchant marine had been driven from the high seas and the fighting navy had been destroyed or remained in port, fearful of the British navy. Bonaparte soon turned his enormous energies toward remedying these situations, but he wished for a period of internal consolidation before proceeding with his larger plans. Fortunately for him, the Second Coalition of 1799 soon dissolved. Russia, coming to fear British power in the eastern Mediterranean more than French ambitions, in effect withdrew from the coalition. When Austria was forced to sign the Peace of Lunéville in 1801, the Second Coalition disappeared. In March 1802, peace was concluded with Great Britain at Amiens. For the first time since 1792 no great European power warred with another.
Peace proved to be only an interlude. Britain viewed with great anxiety Napoleon's activities during the months of peace: reorganizing the Cisalpine Republic with himself named president and reorganizing the Helvetic Republic as the Confederation of Switzerland with himself as mediator. Bonaparte also supervised the reorganization of Germany, resulting in consolidated and enlarged German states that now relied on Bonaparte to maintain their position. Britain proved unwilling to countenance this continuing expansion of French influence. Picking a fight over Malta, Britain declared war in May 1803 and began the search for coalition partners. After Austria signed an alliance with Britain in 1805, Alexander I brought Russia into the alliance, completing the Third Coalition.
Britain did not wait for the Third Coalition to coalesce before inaugurating its own measures in response to Napoleon's. In June and July of 1803, Britain declared that the mouths of the Elbe and Weser rivers were under blockade, thus cutting off the entire trade of Hamburg and Bremen. On 9 August 1804 Britain also declared all French ports on the English Channel and the North Sea under blockade. In the spring of 1805 Britain placed major restrictions on the carrying trade of the United States (in the Essex decision), a response to increasing American attempts to trade directly between the Continent and the enemy's colonies. In June 1805 and July 1806, Britain also took additional measures that underlined its determination to see American trade with enemy colonies carried on only in ways supportive of British interests.
Between 1803 and 1805 Napoleon expended enormous energy in planning means to gain temporary naval superiority in the English Channel and thus be able to ferry a formidable army to the British Isles. Warships and troop-carrying barges were certainly being built in numbers sufficient to alarm Britain. After two years of frustration and lost hopes, Napoleon temporarily abandoned his invasion plans in August 1805 in order to meet the continental challenge of the Third Coalition. As part of his strategy, he ordered the Cádiz squadron to attack Naples. Admiral Pierre de Villeneuve, under a cloud and fearful that he was going to be recalled in disgrace, put to sea on 19 October with a combined Franco-Spanish fleet of thirty-three vessels. Two days later the blockading force of twenty-seven British ships, commanded by Horatio Nelson, engaged the French fleet off Cape Trafalgar. When the battle of Trafalgar had ended, only one third of the Franco-Spanish squadron regained harbor whereas Britain did not lose a single ship. Any lingering hopes of Napoleon that England could be invaded and subdued by land armies had now to be abandoned. More indirect, subtle methods had to be devised to erode and eventually to destroy British power.
As Napoleon analyzed England, he perceived certain weaknesses that, if shrewdly exploited, could serve to disrupt its economy, provoke social unrest, and bring England to the conference table in a compliant mood. Napoleon believed the British economy vulnerable because he thought its prosperity was founded primarily on trade, rather than on its productive agriculture and industry. He also believed that by disrupting British export trade to the Continent and by forcing England into trade channels on disadvantageous terms, there would be a drain on Britain's bullion reserves. Dislocation of industry, banking, and the mercantile communities must occur as well as destruction of its overextended credit system. Strikes and other forms of social unrest must surely follow, placing the British government in a significantly weakened position. Since his own measures could be framed in such a way that French industry and agriculture would be protected, Napoleon felt certain of domestic support in pursuing a regulated blockade. Napoleon gradually persuaded himself that only a coordinated, Continent-wide refusal to accept British goods could produce the intended effects.
Napoleon was also propelled toward a trade war by Britain's blockading measures and by a series of his own military victories. While the British actions infuriated and challenged him, victories at Ulm and Austerlitz (October and December 1805) and the crushing defeat of Prussia at Jena (October 1806) led him to believe that he could compel, if not persuade, other continental nations to support him in enforcing anti-British trade measures. Napoleon himself later pointed to Jena as the antecedent to inauguration of the continental system, for that battle placed him in control of the Weser, Elbe, Trave, and Oder Rivers, and the northern coastline as far as the Vistula.
On 21 November 1806, some three weeks after his triumphal entry into Berlin, Napoleon issued his Berlin Decree. Announcing the decree as a measure of retaliation against Great Britain's blockade declaration of 16 May (Fox's blockade), Napoleon proclaimed the British Isles to be blockaded and all trade or communication with them prohibited. He likewise declared war on all British goods, prohibiting trade in British goods and all goods coming from Britain or its colonies. Further, every port on the Continent had orders to refuse entrance to every vessel sailing directly from any port of Britain or its colonies. A peculiarly brutal provision declared all British citizens in territory occupied by France to be prisoners of war and their property to be confiscated.
Contemporaries and some historians questioned the effectiveness of the Berlin Decree because Napoleon had no ships to blockade the British Isles or Britain's colonies. Ineffective (paper) blockades were declared by both powers, of course, but Napoleon believed France would stand on firmer legal ground in dealing harshly with foreign merchantmen, both neutrals and allies, if he could demonstrate they had violated his duly proclaimed blockade.
Others, following the arguments of the naval historian Alfred T. Mahan, have expressed surprise that the Berlin Decree, and subsequent decrees designed to strengthen the system, fell so harshly upon neutrals like the United States. Since France and its colonies were dependent on the merchant carriers of neutral nations to supply their needs, Napoleon, some claimed, should have wooed neutral trade rather than have treated it in a preemptive, cynical fashion. Such an argument does not properly weigh several factors in Napoleon's thinking. He reasoned that since Britain's navy controlled the high seas, neutral commerce could only come to the Continent on its terms. As Napoleon saw it, neutral trade was therefore ultimately British trade. Also, Napoleon was anxious to encourage hostility between Britain and the neutrals, hoping that the neutrals would, as his foreign minister said in 1810, "cause their rights to be respected." Neutrals who refused to trade with Britain must inevitably become part of France's continental system. Last, Napoleon believed the continental economy much more self-sufficient than Britain's. While the Continent might suffer some losses through denying itself neutral or British goods, the vulnerable British economy must experience catastrophe and ruin. If the French colonies suffered because of neutral trade denied them, one must remember that they survived only through British tolerance.
Napoleon's Berlin Decree gave Britain the excuse it needed to strengthen those measures designed to force neutral, that is, primarily American, trade into British ports. England had already blockaded all French ports on the English Channel and the North Sea. By a series of orders in council in 1807, the most significant being that of 11 November, England prohibited intercourse between enemy colonies and the northern countries. Further, England forbade direct trade between enemy ports and other ports except when those "other ports" were either European British ports (such as Malta) or ports of the vessel's own nation. Thus, trade was prohibited between enemy and neutral ports other than in the ports native to the neutral ships. Britain planned to enforce these regulations by compelling neutral vessels into British ports for inspection, by demanding payment of customs duties, and by issuing licenses authorizing the vessel's journey. Finally, mere possession of the required French "certificate of origin," showing that the vessel's goods were of non-British origin, brought British confiscation of ship and cargo.
Napoleon retaliated in his two Milan decrees (23 November and 17 December 1807) by announcing that vessels submitting to any of the three basic British regulations (examination of cargo and papers, call at a British port, or payment of duty on the cargo) was thereby denationalized, becoming a proper lawful prize. French privateers became the chief enforcers of these decrees. Napoleon again demonstrated his cavalier attitude toward neutral trade some four months later when in the Bayonne Decree (17 April 1808) he ordered confiscation of all ships flying the American flag and entering the ports of France, Holland, Italy, and the Hanse towns. Since the United States had declared an embargo, Napoleon reasoned, ships flying the American flag must be British vessels in disguise. Under the Rambouillet Decree of March 1810, he seized scores of American ships and imprisoned hundreds of the captured crewmen.