In spite of small successes, however, England was in the utmost danger. For Napoleon had now started his "Continental System"—an attempt to destroy her by ruining her commerce. He had forbidden the importation into France, or any country allied with her, of any goods from England or her colonies. He had declared all such goods in any country under his control liable to seizure, and all English merchants liable to imprisonment. One Power after another had accepted his System, and shut its ports against English trade. And when England, in her famous "Orders in Council," replied that the coasts of all such Powers were blockaded, i.e. that all neutral ships trading with them might be captured, Napoleon issued Decrees declaring the whole British Isles to be blockaded also, and all ships found trading with them to be the lawful prizes of his navy.

Thus he hoped at last to destroy England's power. He could not invade her, or defeat her navy, but he might perhaps cut off her trade. And then, unable to sell her own manufactures, or the produce of her colonies, she would grow poorer and poorer, and at last, becoming bankrupt, must yield to any terms that he might choose to make.

The results of the Continental System were very various. In the first place, since to be effective it must be universal, Napoleon was compelled, even against his will, to conquer and annex ever more and more, that France might really control all the coasts of Europe. It was largely this that caused the Spanish War, which drained his Empire of both money and men. It was because his brother Louis abdicated rather than force the System on his subjects that Holland was annexed to France. And it was to a great extent because Russia at last rejected the System that Napoleon started, in 1812, on his fatal march to Moscow.

Again, even where the Continental System was nominally accepted, it could never be carried out completely. Every soldier in Napoleon's armies would have had to become a customs officer if all the long coast-line of Europe had been strictly watched. Moreover, the continental demand for English manufactures and English colonial produce was too strong to be altogether resisted.

The work of her famous inventors had put England as an industrial country far ahead of every European rival, and the ceaseless struggles on the Continent made it impossible for foreigners even to attempt to compete with her. Thus many things must come from England if they were to be had at all. And—as she had seized nearly all the colonies of other countries—this was almost as true of colonial produce as of manufactured goods.

So Napoleon's own soldiers marched into Russia in boots and coats that came from Northampton and Manchester. He had, indeed, to grant licences expressly allowing traders to break the rules that he himself had set up. And when leave was not granted the rules were broken without it. Smuggling flourished on a gigantic scale and under the most curious disguises. At one place the French were puzzled by the extraordinary frequency of funerals, until, opening one of the hearses, they found inside no German corpse, but English bales of cloth. At another the inhabitants seemed to have been suddenly taken with a strange desire for cartloads of sand from the sea-shore, till it was discovered that the sand was only sprinkled over a load of sugar hailing not from the neighbouring beach but from some distant colony. And elsewhere dogs were used to carry smuggled goods inland, for not every customs officer would be sharp, or perhaps plucky, enough, to stop and search each passing dog.

Yet the great risks of capture at sea or seizure on shore made the cost of smuggled goods enormous. So the Continental System meant for France herself and her allies a constant rise of prices. And this, pressing very hardly on the poor, aroused half over Europe a bitter feeling against Napoleon as the cause of all the trouble.

Meanwhile, England both gained and lost under the System. She was Mistress of the Seas. Her warships made her Orders in Council a stern reality to neutral ships. Her Empire grew with the conquest of fresh colonies, doubly valuable now as markets for her manufactures, or of places like Heligoland, an island off the German coast, from which her goods might easily be smuggled abroad. Her merchant fleet, also, in spite of losses, grew ever larger; for neutrals withdrew more every year from the risks of a trade in which they could hardly avoid offending either England or Napoleon, and so exposing their ships and cargoes to seizure.

Yet, smuggle and conquer as she might, England could not make up altogether for the closing of continental ports to her manufacturers. Even if Napoleon's subjects did succeed in obtaining English goods, they could not buy as much in these days of high prices as in earlier and cheaper times. So the warehouses of many manufacturers were choked up with stock they could not sell; and if Spain and Portugal had not been opened to English trade in the nick of time the results might have been fatal. Even as it was both merchants and manufacturers found business dangerously risky.

Happily, Napoleon never took the one step that might have ruined England. She had already ceased to produce herself enough corn for her own people, and as yet the great corn-growing lands of America and Australia, which now supply her, were still uncultivated. So she depended largely on the corn that came from Baltic ports, and had Napoleon, for only six weeks, prevented its being exported, he might have starved her into submission. But, luckily for her, he not only allowed but actually encouraged the export of corn, provided that, to help French trade, some manufactures went with it. For, he thought, if England could not sell, the more she bought the better: it would empty her purse all the sooner. And thus she escaped the worst.

In another direction, however, England had serious trouble. Among the Neutral States which suffered so severely from the Continental System and the English Orders in Council, the United States of America suffered most. For a time they even broke off all relations with both combatants, refusing to trade with either till they changed their policy. Napoleon, however, cleverly persuaded them that he had abandoned his System, and that England alone now caused their sufferings. Thus he helped to produce the war of 1812 between America and England.

But the Orders were only one out of many grounds of quarrel. The War of Independence had caused much bitterness on both sides. Later, Americans had plainly shown their sympathy with France. England had often pressed American citizens, as English subjects, for her fleets. Above all, her warships had stopped and searched American vessels even in American waters, and seized deserters from the Royal Navy. There was some excuse for England's action. She needed the help of every English subject in her tremendous struggle with Napoleon, and her laws made every man born within the Empire an English subject till his dying day. It was naturally irritating to find Englishmen refusing all service to their country on the plea that they had become American citizens. It was harder still to find them actually deserting from the Royal Navy to serve on American warships.

But English ways of doing things were harsh and offensive, and when H.M.S. Leopard  used force against the United States warship Chesapeake, to compel the surrender of deserters, America, in spite of the English Government's apology, was naturally furious. Thus—though England fought unwillingly, and bitterly resented being attacked by her own kinsmen in the crisis of her struggle with France—America entered on the strife with zest.

The war itself did untold mischief and no good. At sea several English ships, rashly challenging better-built, better-armed, and better-handled American vessels, were forced to surrender. For, puffed up by their triumph over France, officers and men alike had neglected their craft, and, in gunnery especially, were at first hopelessly inferior to their new enemy. Presently, indeed, H.M.S. Shannon  redeemed the name of England by forcing the famous Chesapeake  to surrender after a fight of only fifteen minutes, but even after that English victories were balanced by further losses.

Meanwhile by land—though most Canadians, French and English alike, were nobly loyal to the English flag—the forces were badly directed, and, as once before, the Government was too intent on making peace to fight with really good effect. The Americans, however, fared no better.

Finally, the Treaty of Ghent restored peace. The war had deprived England of all-important troops at a critical moment, dimmed her naval fame, injured her trade, and embittered more than ever her feelings towards America.

At the same time America had suffered far greater losses in proportion, while, perhaps, what successes she won injured the character of her people by fostering the natural arrogance of a young and rising nation.

And all this evil had served no good purpose, for the Orders in Council were recalled before the war began and England still claimed the Right of Search when it had ended.