By Andy Chen
Recently, I watched Ridley Scott's film Napoleon, which vividly depicts the sweeping life of Napoleon through numerous historical events, especially his impactful military engagements. The Battle of Toulon showcased Napoleon's artillery expertise and marked the beginning of his illustrious military career. The film features a dramatic scene of the French army bombarding the pyramids during the Egyptian campaign, although this event did not occur in actual history. Most significantly, the film highlights three pivotal battles. The first was the 1805 Battle of the Three Emperors, a peak moment in Napoleon's life, where he faced Russian Emperor Alexander I and Austrian Emperor Franz II (also the Holy Roman Emperor) on the battlefield. Against all odds, Napoleon achieved a decisive victory, effectively dismantling the Holy Roman Empire and establishing himself as the dominant force in Europe.
Picture 1, Movie "Napoleon", source: Apple TV+
The second battle was the ill-fated Russian campaign, where Napoleon suffered catastrophic losses due to Russia's scorched earth policy, resulting in the near-total destruction of his army of over 600,000 men. By April 1814, the anti-French coalition reached the outskirts of Paris, leading to Napoleon's abdication and subsequent exile to Elba. His final confrontation was the renowned Battle of Waterloo, where, after his defeat, the anti-French alliance ensured he would not return to France by exiling him to the remote island of Saint Helena in the Atlantic Ocean. He died there six years later at the age of 52. A century later, forensic evidence confirmed that he had been poisoned.
Picture 2, St. Helena Island
What intrigues me most about Napoleon is the dramatic shift from his pinnacle at the Battle of the Three Emperors to the disastrous expedition into Russia. This once-unknown Corsican, propelled by the tide of the French Revolution, demonstrated extraordinary military talent within the army, eventually ascending to the position of Emperor of France on December 2, 1804. After the 1805 victory, he solidified his status as the preeminent power in Europe.
Was it truly Napoleon's hubris that led him to suddenly open a campaign against Russia while contending with his long-standing adversary, England? The outcome of the Russian campaign—where over 600,000 elite French soldiers perished in the harsh winter—seemed to contradict the wisdom of waging war on two fronts. Was this military genius unaware of the grave risks of simultaneously fighting in the west against a Spanish rebellion while provoking war with Russia in the east?
What factors compelled Napoleon to make this fateful military decision that ultimately led to his downfall? To explore this question, I analyzed the circumstances France faced at the time. Firstly, Napoleon was determined to conquer England militarily and eliminate this long-standing rival. In 1798, he launched an expedition to Egypt, aiming to sever British connections to India and weaken their power. However, the French army was trapped by the British navy at the Nile Delta, forcing Napoleon to abandon his troops and flee back to France. The film’s dramatic portrayal of the bombardment of the pyramids serves as a backdrop to this historical context. In 1805, Napoleon allied with Spain to form a fleet intended for a direct assault on British soil, but the fleet was decimated at the Battle of Trafalgar. After these two military failures, Napoleon turned to economic warfare as a strategy to defeat England, initiating the largest trade war in capitalist history—the Continental Blockade. It was this blockade policy that ultimately motivated Napoleon to attack Russia.
01
The Origins and Development of the Continental Blockade
Today, we will not discuss the moral implications of the Hundred Years' War between England and France, nor will we delve into which government's interests each represented. Instead, we will focus on the process and impact of the trade war. On November 21, 1806, Napoleon issued the Berlin Decree: "Blockade the British Isles; prohibit trade and contact with England; declare all British subjects within French and allied territories as prisoners of war; confiscate all property belonging to British subjects; and prohibit any ships that have sailed from or to British territories from docking in European ports." The Berlin Decree marked the commencement of the Continental Blockade policy. Following the 1805 Battle of the Three Emperors, Napoleon decimated the Prussian army in 1806. By the time of the Berlin Decree's issuance, Napoleon had firmly established control over Western Europe.
Picture 3, French territory and its vassal states in 1812
After the Berlin Decree, Western European nations could not engage in trade with England, except for Portugal, which remained a steadfast ally. Consequently, Napoleon invaded Portugal and occupied its capital, Lisbon, on November 30, 1807.
The Berlin Decree failed to define "British goods" explicitly, and in an attempt to secure neutral countries' cooperation, Napoleon announced that the blockade would not be enforced on the high seas. The British seized upon this loophole, leveraging their naval superiority to continue trading with the European continent through neutral vessels. To address this gap, Napoleon issued two Milan Decrees on November 23 and December 17, 1807, which clarified the definition of British goods and stated that any neutral ship used by the British would be considered British property and subject to capture.
As the Continental Blockade tightened, Spain's economy faced devastating repercussions when it could no longer export wool to England. The Spanish economy was hit hard, leading to multiple uprisings between 1806 and 1809, forcing Napoleon to personally intervene in Spain in 1809.
Having subdued Spain, Napoleon then faced the looming collapse of the Russian economy, which heavily relied on exporting grain and timber to England. With the Continental Blockade in effect, these essential exports could not reach the British market, and France’s limited industrial capacity was unable to absorb the surplus raw materials. Russia's export revenue plummeted from 59.2 million rubles to just 10.6 million rubles. In response, on August 12, 1808, the Russian government permitted neutral ships to enter its ports, allowing significant quantities of goods to flow from Russia into Europe.
To close this loophole, Napoleon issued the Fontainebleau Decree on October 18, 1810, which mandated that "any goods must have proof of origin; all neutral vessels that have docked in Britain shall be seized; neutral vessels yielding to British demands will be regarded as having lost their nationality and can be captured."
On October 23, 1810, Napoleon wrote to the Tsar, demanding the seizure of over 600 ships carrying British goods that had fled from the Baltic Sea. The Tsar, however, only symbolically seized two vessels and the goods on eight others. In December 1810, the Tsar announced the opening of Russian ports to neutral countries, effectively tearing a hole in the Continental Blockade. To maintain the integrity of the blockade, Napoleon decided to lead an army of over 600,000 men into Russia, resulting in a catastrophic defeat that led to the collapse of the Continental Blockade.
Napoleon's final battle at Waterloo has long evoked sympathy, but we often overlook a critical point: when Napoleon escaped from Elba with a mere 600 loyal soldiers to reclaim Paris, the French army he reassembled was not the same as it had been before. Many soldiers had been let go due to government cutbacks, resulting in a shortage of horses and insufficient cavalry training. These issues only manifested on the battlefield. At Waterloo, the French army numbered just 72,000, while the combined forces of the British and Dutch, along with 50,000 Prussians, outnumbered the French nearly two to one. At this point, the entire French military comprised only 228,000 troops, whereas the anti-French coalition fielded an army of 777,000 - an unprecedented challenge.
Picture 4, The Seventh Coalition against France
Napoleon was skilled at defeating adversaries in situations where forces were evenly matched, as his military prowess thrived in such conditions. However, in the face of overwhelming strength, skill alone cannot suffice. Even if Napoleon had achieved another victory at Waterloo, could these hastily assembled troops continue to win under a brilliant commander? One cannot overlook the fundamental factors in military actions: resources, logistics, economic power, and population dynamics.
I believe that when 610,000 French troops perished in Russia, the fate of Napoleon's government was already sealed. The accompanying chart shows that the French army had never faced such a catastrophic defeat. It is also essential to recognize that the anti-French coalition had different member countries participating each time, but France remained the constant main character, the only confirmed participant in a 23-year-long war that no nation could sustain.
Form 1: Anti-French alliances and their casualties
02
Reflections on the Failure of the Continental Blockade
First, trade wars thrive on swiftness.
In 1798, Napoleon gifted Malta, which he had recently acquired, to Russia. Dissatisfied with Britain's blockade of the island, the Russian Tsar, alongside Sweden, Denmark, and Prussia, declared a trade embargo against Britain on December 16-18, 1800. The Baltic Sea became the internal waters of these four nations. At that time, Britain imported 72% of its agricultural products from Russia and Prussia. Losing these supplies and ports would lead Britain into famine, let alone the timber and other shipbuilding materials it relied on.
In response to the abrupt cessation of Baltic shipping, panic struck the British grain market. On April 25, 1801, the price of wheat surged from 55 shillings per quarter to 151 shillings. Domestic unrest ensued, and in 1801, Britain exported £14.9 million worth of food to the European continent. The British pound appreciated by 9% against gold and 17% against silver, while Britain's foreign exchange losses in Spain reached 16% and 13% in Hamburg. The Bank of England's cash reserves plummeted from £7 million in 1799 to £4.55 million.
Picture 5, Baltic Sea
By March 1802, under pressure both internally and externally, Britain was forced to sign the Treaty of Amiens with France. The treaty stipulated that, with the exception of Dutch territories, Britain would return colonies occupied in recent years to France and its allies, withdrawing troops from Egypt, Malta, Gibraltar, and the Cape Colony and exiting all ports and islands in the Mediterranean and Adriatic seas. Napoleon effortlessly dismantled the second anti-French coalition that Britain had organized through economic warfare. This decisive blow came swiftly but inflicted significant losses on Britain.
Second, trade wars demand resoluteness.
A small injury is better than a major one. Britain's most significant vulnerability lay in its reliance on the European continent for food supplies. The Continental Blockade severed Britain's supply routes, resulting in domestic shortages and skyrocketing grain prices. Britain could have imported grain from America, relying on its naval supremacy, but the United States severed trade relations with Britain in 1809, halting North American grain exchanges. This was an optimal moment to destroy British confidence and incite domestic unrest, yet Napoleon again displayed ignorance regarding the trade war. He believed that allowing the export of grain to Britain would help him amass gold, thus permitting French vessels to engage in external trade by selling permits, inadvertently alleviating Britain's grain crisis.
The essence of a trade war is not merely to apply pressure but to create volatility that erodes the opponent's confidence, thereby achieving strategic objectives. Napoleon aimed to diminish Britain's gold reserves, unaware that in an open economy, a reduction in gold would lower export prices and raise import prices, leading the market to generate sufficient profit incentives for economic balance. Whether through smuggling or domestic production, this would be a reaction to the pressures exerted. A trade war should amplify the opponent's economic fluctuations through prevailing economic trends. For instance, during the British grain crisis, the U.S. banned trade with Britain, creating a once-in-a-lifetime opportunity for France to tighten its blockade on grain exports, further inflating British grain prices and exacerbating their crisis. Instead of capitalizing on this, Napoleon foolishly chose to export grain actively.
Third, collaboration for mutual benefit among allies is essential.
The Continental Blockade never established a comprehensive unified front. In 1806, when the Berlin Decree was issued, the U.S. and Russia, as neutral countries, were still able to trade with Britain. After Russia joined the Continental Blockade in 1807 under the Treaty of Tilsit, both Portugal and Spain subsequently betrayed the cause. Their defection opened the Latin American market wide to Britain. After a prolonged struggle, the U.S. finally aligned with France in 1810, only for Russia to again open its ports. Regardless of circumstances, Britain consistently found alternative markets, greatly diminishing the blockade's impact on its home front. Rather than seeing a decline, Britain's exports continued to rise. Before the blockade in 1805, Britain's export index stood at 100; it dropped to 91 in 1808 but rose to 125 in 1809 and again to 126 in 1810. Throughout the blockade period, Britain's total revenues continued to increase, from £103 million in 1805 to £131 million in 1811 and £163 million by 1814.
During the blockade, Napoleon adopted a policy of "France above all." While maintaining the prohibition on British goods, he established a hierarchical European market that favored French manufacturing. He aimed for all European markets to open unidirectionally to France, leading to an inherent contradiction between means and objectives in the continental policy. Had Napoleon been less greedy, distributing the benefits of the blockade more equitably among continental nations or allowing France to shoulder a greater share of the policy's costs, the course of history might have been remarkably different.
As Europe lost the vast British market and its supply of inexpensive goods, trade conditions deteriorated significantly. The meager trade protection benefits were monopolized by France, enabling French industrial products to be sold at inflated prices across nations, resulting in widespread non-compliance with the Continental Blockade.
Fourth, trade wars fundamentally represent a contest of economic strength.
In military conflicts, one party's losses can be far less than the other's, and such examples are often celebrated. However, in prolonged trade wars, losses tend to be comparable as trade is inherently mutually beneficial. At that time, France lacked the economic capacity to enforce an effective blockade against Britain.
Britain had already established vast overseas colonies and was undergoing the Industrial Revolution, giving it a significant edge in terms of sustainability in prolonged conflict. Additionally, Britain leveraged a financial network spread across Europe to secure loans, a critical advantage absent from France's arsenal. For instance, British government bond interest rates stood at 3.8%, compared to 7.5% for France; the outstanding British national debt totaled £245 million, while France's was only £162 million.
Form 2, Comparison of economic capabilities between Britain and France in 1788
Statistics from France in 1810 indicated that the Continental Blockade led to "soaring prices across Germany and Italy, with raw cotton selling for 10 to 11 francs per pound, sugar at 6 to 7 francs, coffee at 8 francs, and indigo at 21 francs—averaging about ten times the prices in London at that time." This starkly demonstrates France's lack of industrial capacity! Britain's counter-blockade deprived France of raw materials from the Americas and access to British industrial machinery, severely undermining its overall industrial capabilities. Ultimately, trade wars are a battle of economic power; as Britain grew stronger, France weakened.
Seven years after the end of the Continental Blockade, in 1820, Britain launched the world's first steam ironclad ship. This marked Britain's technological superiority and signaled the beginning of a shift in naval warfare. Britain achieved an unrivaled global position, marking the end of artisanal workshops and ushering in the age of machine-based industry, establishing itself as the first modern industrial nation in history.
The U.S.-China trade war has persisted for six years, with a significant amount of Chinese goods rerouted through Vietnam and Mexico into the United States, echoing Britain's historical smuggling endeavors. One must consider the long-term implications of such "smuggling." During the Continental Blockade, it implied war; what about today?
Form 3, Comparison of economic capabilities between China and the United States in 2023
Comparison of Economic Capacities Between China and the U.S. (Chart 4) Both sides have their strengths and weaknesses. As the U.S.-China trade war evolves into a protracted conflict, will this lead to a resurgence of global inflation? If the U.S. continues to raise taxes, will it foster a new wave of smuggling? Are further conflicts between the two sides unavoidable?
Learning from history reveals the rise and fall of nations. From the lessons of England and France, can we gain insights into the dynamics between the U.S. and China?
翻译自2024年9月26日文章
About the Author:
Andy Chen, graduated from the University of Chicago with a bachelor's degree in Economics and Statistics (Honors), with more than 24 years of experience in global financial industry. He founded DL Securities and DL Family Office successively , and was also the Responsible Officer of the licenses Type 1, 4, and 6 issued by HKSFC. He is now the Chairman of the Board, Executive Director and CEO of DL Holdings Group. Mr. Chen also serves as the vice president of Hong Kong Limited Partnership Fund Association.
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