Tuesday 18 December 2018

Brexit – cast your mind back 212 years to Napoleon and the continental system

According to today's Times newspaper:

2½ years late, as they say in the accompanying article, "Colin Clark, a Scottish Conservative MP, has said contingency planning should have started immediately after the vote in 2016", but better late than never.

Mr Clark is not alone in his views, several respectable people believe that is and always has been the obvious approach ...

... but the Chancellor of the Exchequer, Philip Hammond, is quoted elsewhere as saying that "what they were doing must be seen as a precaution, not a policy challenge. He warned that the idea of a managed no deal was a ‘unicorn’ ...".

Who's right?

The respectable people or the Chancellor?

Cast your mind back 212 years and you be the judge.

According to Andrew Roberts’s 2014 Napoleon the Great, starting around p.427, 212 years ago in 1806 Napoleon instituted the “continental system”, which included these articles among others:
1. The British Isles are in a state of blockade.
2. All trade and all correspondence with the British Isles is forbidden.
3. Every British subject, of whatever state or condition he may be … will be made a prisoner of war.
4. All warehouses, all merchandise, all property, of whatever nature it might be, belonging to a subject of England will be declared a valid prize …
7. No ship coming directly from England or the English colonies, or having been there since the publication of the present decree, will be received in any port.
Napoleon reckoned that would soon settle our hash ...
Since one-third of Britain’s direct exports and three-quarters of her re-exports went to continental Europe, Napoleon intended the decrees to put huge political pressure on the British government to restart the peace negotiations broken off in August …
... but, according to Mr Roberts:
Although Napoleon believed that the Berlin Decrees would be popular with French businessmen, who he hoped would pick up the trade that previously went to Britain, he was soon disabused by the reports from his own chambers of commerce. As early as December that of Bordeaux reported a dangerous downturn of business … By March 1807 he had to authorize special industrial loans from the reserve funds to offset the crises that were resulting …
Plus ça change, the regional prefect of the area that includes Calais is already demanding extra funds to ensure that UK business is not lost to dastardly Belgian and Dutch ports.

… the British government managed to ride out domestic criticism. By contrast, the Continental System damaged precisely those people who had done well from Napoleon’s regime and had hitherto been his strongest supporters: the middle classes, tradesmen, merchants and better-off peasantry … ‘Shopkeepers of all countries were complaining about the state of affairs,’ recalled the treasury minister Mollien, but Napoleon was in no mood to listen, let alone compromise.
Plus ça change, President Macron, convinced that he is actually Jupiter, and not merely Napoleon, won't compromise. Just like he didn't compromise the other day with the gilets jaunes.

Plus ça change, "domestic criticism", in the person of Anna Soubry and the BBC and the unicorn expert, Philip Hammond, has duly reappeared:
  • They want us to stay linked to a collapsing financial system, the Euro, which beggars Greece and Spain and Portugal in order to underwrite German exports and which caused years of hardship to Ireland after its asset price bubble burst.
  • They want us to stay in the friendly partnership which sees Italy at loggerheads with Brussels ...
  • ... not to mention the friendly partnership between Hungary and Brussels.
  • They want us to have our tax rates harmonised.
  • They want our armed forces to come under President Juncker's control.
  • They want to keep charging huge protectionist tariffs on poor countries trying to export sugar to us.
  • They want our legislature to be dictated to by the European Court of Justice ...
For some reason the "domestic critics" find this imperial prospect attractive. Your highest ambition may not be for the UK to become a colony. You may hope that the government once again "rides it out".

The huge volume of our exports to the EU is a problem for them as well as us:
One major problem with the Continental System was that it could not be imposed universally. In 1807, for example, because Hamburg and the Hanseatic towns such as Lübeck, Lüneburg, Rostock, Stralsund and Bremen couldn’t manufacture the 200,000 pairs of shoes, 50,000 greatcoats, 37,000 vests and so on that the Grande Armée required, their governors were forced to buy them from British manufacturers under special licences allowing them through the blockade. Many of Napoleon’s soldiers in the coming battles of the Polish campaign wore uniforms made in Halifax and Leeds ...
Fluctuations in the exchange rate? Financial innovation in the City? Expanding into new markets? They've all happened before. And pace the miserable remainers, they could all happen again:
When French customs officials did capture contraband a proportion of it was often returnable for a bribe, and in due course it became possible to take out insurance against seizures at Lloyd’s of London. Meanwhile, French imperial customs revenues collapsed from 51 million francs in 1806 to 11.5 million in 1809, when Napoleon allowed the export of grain to the British at high price when their harvest was weak – some 74 per cent of all British imported wheat came from France that year – in order to deplete British bullion reserves. The Continental System failed to work because merchants continued to accept British bills-of-exchange, so London continued to see net capital inflows. Much to Napoleon’s frustration, the British currency depreciated against European currencies by 15 per cent between 1808 and 1810, making British exports cheaper. The Continental System also forced British merchants to become more flexible and to diversify, investing in Asia, Africa, the Near East and Latin America much more than before, so exports that had been running at an average of £25.4 million per annum between 1800 and 1809 rose to £35 million between 1810 and 1819. By contrast, imports fell significantly, so Britain’s balance of trade was positive, which it hadn’t been since 1780.

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