The Rise and Fall of the Great Powers. Paul Kennedy

but after several battles they, too, were badly hurt at the battle of Friedland (June 1807). At the peace treaties of Tilsit, Prussia was turned into a virtual satellite and Russia, while escaping lightly, agreed to ban British trade and promised eventually to join a French alliance. With southern and much of western Germany merged into the Confederation of the Rhine, with western Poland turned into the grand duchy of Warsaw, with Spain, Italy, and the Low Countries subservient, with the Holy Roman Empire at an end, there was no independent state – and no ally for the British – between Portugal and Sweden. This, in its turn, gave Napoleon his opportunity to ruin the ‘nation of shopkeepers’ in the most telling fashion: by banning their exports to Europe and hurting their economy, while accumulating for his own purposes the timber, masts, and other shipbuilding resources now denied to the Royal Navy. Indirectly, the British would be weakened before a further direct assault was mounted. Given Britain’s dependence upon European markets for its export industries and upon Baltic masts and Dalmatian oak for its fleet, the threat was immense. Finally, reduced earnings from exports would deny London the currency needed to pay subsidies to any allies and to purchase goods for its own expeditionary armies.

      More than ever before, in this war, economic factors inter-meshed with strategy. At this central stage in the Anglo-French duel for supremacy, between Napoleon’s Berlin/Milan decrees banning trade with Britain (1806–7) and the French retreat from Moscow in 1812, the relative merits of the two opposing systems deserve further analysis. With each seeking to ruin the other economically, any significant weakness would sooner or later emerge – and have dire power-political consequences.

      There is no doubt that Britain’s unusually large dependence upon foreign commerce by this time made it very vulnerable to the trading ban imposed under Napoleon’s ‘Continental System’.⁸⁰ In 1808, and again in 1811–12, the commercial warfare waged by the French and their more compliant satellites (e.g. the Danes) was producing a crisis in British export trades. Vast stocks of manufactures were piled in warehouses, and the London docks were full to overflowing with colonial produce. Unemployment in the towns and unrest in the counties increased businessmen’s fears and caused many economists to call for peace; so, too, did the staggering rise in the national debt. When relations with the United States worsened and exports to that important market tumbled after 1811, the economic pressures seemed almost unbearable.

      And yet, in fact, those pressures were borne, chiefly because they were never applied long or consistently enough to take full effect. The revolution in Spain against French hegemony eased the 1808 economic crisis in Britain, just as Russia’s break with Napoleon brought relief to the 1811–12 slump, allowing British goods to pour into the Baltic and northern Europe. Moreover, throughout the entire period large amounts of British manufactures and colonial re-exports were smuggled into the continent, at vast profits and usually with the connivance of bribed local officials; from Heligoland to Salonika, the banned produce travelled in circuitous ways to its eager customers – as it later travelled between Canada and New England during the Anglo-American War of 1812. Finally, the British export economy could also be sustained by the great rise in trade with regions untouched by the Continental System or the American ‘nonintercourse’ policy: Asia, Africa, the West Indies, Latin America (despite all the efforts of local Spanish governors), and the Near East. For all these reasons, and despite serious disruption to British trade in some markets for some of the time, the overall trend was clear: total exports of British produce rose from £21.7 million (1794–6) to £37.5 million (1804–6) to £44.4 million (1814–16).

      The other main reason that the British economy did not crumble in the face of external pressures was that, unfortunately for Napoleon, it was now well into the Industrial Revolution. That these two major historical events interacted with each other in many singular ways is clear: government orders for armaments stimulated the iron, steel, coal, and timber trades, the enormous state spending (estimated at 29 per cent of gross national product) affected financial practices, and new export markets boosted production of some factories just as the French ‘counterblockade’ depressed it. Exactly how the Revolutionary and Napoleonic wars affected the growth of the British economy as a whole is a complex and controversial topic, still being investigated by historians, many of whom now feel that the earlier notions of the swift pace of British industrialization in these decades are exaggerated. What is clear, however, is that the economy grew throughout this period. Pig-iron output, a mere 68,000 tons in 1788, had already soared to 244,000 tons in 1806 and rose further to 325,000 tons in 1811. Cotton, virtually a new industry before the war, expanded stupendously in the next two decades, absorbing ever more machinery, steam power, coal, and labour; by 1815, cotton goods had become Britain’s greatest export by far. A vast array of new docks and, inland, new canals, turnpikes, and iron rail tracks improved communications and stimulated further production. Regardless of whether this ‘boom’ would have been even greater without the military and naval struggle against France, the fact remains that British productivity and wealth were still rising fast – and could help to bear the burdens which Pitt and his successors imposed in order to pay for the war. Customs and excise receipts, for example, jumped from £13.5 million (1793) to £44.8 million (1815), while the yield from the new income and property taxes rose from £1.67 million in 1799 to £14.6 million in the final year of the war. In fact, between 1793 and 1815 the British government secured the staggering sum of £1.217 billion from direct and indirect taxes, and proceeded to raise a further £440 million in loans from the money markets without exhausting its credit – to the amazement of the more fiscally conservative Napoleon. In the critical final few years of the war, the government was borrowing more than £25 million annually, giving itself that decisive extra margin.⁸¹ To be sure, the British were taxed way beyond the limits conceived of by eighteenth-century bureaucrats, and the national debt almost trebled; but the new wealth made such burdens easier to bear – and permitted them, despite their smaller size and population, to endure the costs of war better than the imposing Napoleonic Empire.

      The story of France’s economy between 1789 and 1815, and of its capacity to sustain large-scale war, is an even more complicated one for historians to unravel.⁸² The collapse of the ancien régime and the turmoil which followed undoubtedly caused a reduction in French economic activity for a while. On the other hand, the outpouring of public enthusiasm for the Revolution and the mobilization of national resources to meet foreign enemies led to a staggering increase in the output of cannon, small arms, and other military equipment, which in turn stimulated the iron and textile trades. In addition, some of the economic obstacles of the old order such as internal tariffs were swept away, and Napoleon’s own legal and administrative reforms aided the prospects for modernization. Even if the coming of the Consulate and the Empire led to the return of many of the features of the monarchical regime (e.g. reliance upon private bankers), this did not check a steady economic growth fuelled naturally by population increases, the stimulus of state spending, enhanced tariff protection, and the introduction of certain new technologies.

      Nevertheless, there seems no doubt that the rate of growth in the French economy was much slower than in Britain’s. The most profound reason for this was that the agricultural sector, the largest by far, changed very little: for the replacement of the seigneur by his peasants was not, of itself, an agricultural revolution; and such widely proclaimed policies as the development of sugar beets (in substitution for British colonial cane sugar) had limited results. Poor communications meant that farmers were still tied to local markets, and little stimulus existed for radical innovations. This conservative frame of mind could also be seen in the nascent industrial sector, where new machinery and large-scale enterprises in, say, iron production were the exception rather than the rule. Significant advances were made, of course, but many of them were under the distorting influence of the war and the British naval blockade. Thus, the cotton industry benefited from the Continental System to the extent that it was protected from superior British competition (not to mention the competition from neutral