Britain Against Napoleon

by Roger Knight

  The relationship between the mercantile community and the naval and merchant seamen who transported and protected trade had other dimensions, and their lives intertwined at several levels. Long absences of naval officers and seamen on service abroad created a need for shore-based support in the form of naval agents and prize agents, for by this time the complexities of administration and finance required full-time professionals to make sense of them. Almost all agents were based in London, with a very few at Portsmouth and the other naval bases. As the navy grew during the Napoleonic War, so did the number of naval agents.* Forty-six individuals or partnerships were operating as agents at their peak in 1810, exactly double the number that had been in existence in 1793.

  The primary task of a naval agent was to draw an officer’s or a seaman’s pay at the Navy Pay Office in Somerset House. Publicans or traders might perform the task for seamen, but for the more complicated affairs of officers, specialized concerns developed, usually located around Chancery Lane and the Strand. Naval agents performed other services on a commission basis, such as investing in stocks, sending money to officers’ relatives, or even buying lottery tickets. At any one time they could hold a great deal of money, enabling them to advance loans to their clients. Risks varied, as the income of naval officers largely depended upon the fortunes of war, and lending could and did lead some agents into financial difficulties.55

  Prize agents, on the other hand, were appointed by an officer, a ship’s company, a squadron or even a whole fleet to handle the progress of a case through the Vice-Admiralty Court and, for a commission, to distribute the prize money. Prize law was complicated and many cases were contested, leading to delays in payment of several years, especially if the prize had been taken on a foreign station. Although such activities were governed by Acts of parliament, many saw the business as open to abuse; it ran more fairly and efficiently after the 1805 Prize Act.56 Plenty of money was made from prizes in the Napoleonic War by naval officers and seamen, though the previous high-value Spanish treasure ship captures were replaced as prey by the merchant ships of the various hostile powers after 1804.57 Nearly half the prizes were taken by British warships with fewer than twenty guns.58

  The merchant community also provided incentives for naval officers. After the Peace of Amiens the underwriters at Lloyd’s set up the Patriotic Fund as an encouragement to naval captains, especially with regard to the defence of trade. Between 1803 and 1810 the fund’s committee awarded elaborately decorated presentation swords or vases to those naval officers who had particularly distinguished themselves.* Perhaps the most celebrated defence of homecoming trade involved East India ships. Every year they would rendezvous at St Helena, from where they would be escorted home in convoy through the dangerous European waters. In February 1804, off the coast of Malaya, a fleet of unescorted East Indiamen from China, commanded by Commodore Nathaniel Dance, encountered the French Admiral Linois, who commanded a strong squadron. By forming a line, rather than fleeing, Dance’s East Indiamen, of a size to be confused at a distance with ships of the line, hoodwinked the French: Linois did not risk an action and retreated.59 By this subsequently much celebrated ruse Lloyd’s escaped disastrous losses. Dance received a knighthood, and each captain, though he had displayed nerve rather than conspicuous bravery, received a sword of honour.

  Individuals or groups in the private sector were usually quicker to recognize the service of seamen than the government. In addition to the presentation swords or vases, a lesser-known but admirable function of the Lloyd’s Patriotic Fund was to provide relief for those injured while on active service and the relatives of those killed. For instance, during 1805, £105,000 was voted by the fund committee for the relief of officers, seamen and marines wounded or disabled and for 570 widows, orphans or other relatives of those killed.60 The wealthy Alexander Davison, Nelson’s agent, had medals struck and awarded them to those who served at the admiral’s battles.* Substantial sums were also charitably given.†

  From the promulgation of the Berlin Decrees in November 1806, Napoleon set out to attempt to control the whole of the European coastline in order to implement what was in effect a restructuring of Europe. French military and political expansion followed this escalation of economic warfare very closely.61 The emperor was not attempting to starve Britain, for there were too many alternative sources of supply; rather, he was attempting to destroy the British economy by blocking trade with the Continent.62 At the same time, he hoped to bolster the French economy by removing British competition from European markets.‡ Nevertheless, this bold move carried with it a self-inflicted wound: French foreign trade, which had been buoyant until 1806, declined rapidly (for reasons that will be discussed below); not until 1825 did its value exceed that of 1788.63

  The British countered every one of Napoleon’s provisions and more in a final order-in-council of November 1807, not only reiterating the blockade of ‘all ports or places in the colonies belonging to His Majesty’s enemies’ but also stating that ‘all goods and merchandise on board, and all articles of the produce or manufacture of the said countries or colonies, shall be captured, and condemned as prize to the captors’.64 The first major consequence of imposition of the blockades of Britain and France was that diplomatic tension increased between the United States and both countries. The Americans claimed with justification that the neutrality of their ships was being violated, and passed the Embargo Act of 1807, which prohibited American trade with Britain and France, and led to an increase in tension between France and the USA. The French retaliated with the Bayonne Decree of April 1808, in which Napoleon ordered the seizure of all American ships in European ports. In 1810 there were persistent rumours in Paris that the United States would declare war on France.65

  By now it was impossible for even neutral merchant ships to trade in Europe without subterfuge and false documents. The combined proclamations of the three governments rendered all trade as technically smuggling; yet the hostile powers themselves provided the means by which merchants could continue to trade across their borders. The main combatant nations promoted their own trade by issuing licences to shipping, so that contraband and forbidden goods could be carried – an arrangement that both the British and Spanish governments had allowed since 1797. Thus licences issued by the Privy Council’s office in London protected neutral merchant ships from arrest by British warships and privateers. After the Peace of Amiens in 1803 a small number of licences were issued. Pressure from the City, however, ensured that after the Berlin Decrees the number of licences rose sharply.66

  A large part of the licensed trade was with the Continent, often under German or Prussian flags. Napoleon’s ‘Continental System’ was therefore not proof against those determined to carry on trade. Merchants of all countries discovered new routes and methods to avoid customs officials of any country. Bankers in London and Kent were in touch with their French equivalents, often using trusted family networks, to finance smuggling across the Channel.67 The government frequently made use of these informal and illegal lines of communication for its own purposes, such as sending bills of credit to a French bank to support British prisoners of war in France, or for more nefarious reasons, such as financing British intelligence agents abroad through a number of British banks, including Coutts.68

  It was from 1807 that smuggling to the Continent grew to its greatest volume, most effectively from two offshore islands now in British possession. After its capture in 1800, Malta became an important centre for penetrating French-held territories bordering the Mediterranean. The island possessed 165 vessels in 1803; by 1811 this number had increased five times to 840. Traditional trade along the Illyrian coast via Trieste and Fiume was replaced by a trade in contraband.69 In the North Sea, Heligoland, an Island off the coast of Germany, also came to prominence, even though it is no bigger than Hyde Park in Central London.70 The British occupied the island in 1807, protecting it with a naval squadron, and it became a very efficient smuggling centre for transit of goo
ds to the north German ports.

  On the Continent itself, the small port of Tonningen on the west coast of southern Denmark enjoyed a remarkable if short renaissance: in 1809 over a hundred American vessels unloaded goods there, as did 281 British ships. The Rothschild family used this route to transport textiles into Germany: before the blockade Nathan had sent his bales of cloth from Manchester overland to Hull, to be shipped to Hamburg and thence by canal and road to Frankfurt. The family’s agent in Hamburg, John Parish, was arrested by the French when the city was occupied in late 1806, on suspicion of handling British goods, but after six months the Hamburg house of Parish and the Rothschilds resumed business.71 For a period the goods were exported to southern Baltic ports, principally to Lübeck, but thereafter the overland route from there to Frankfurt was long and fraught with danger.72

  Once landed, these goods could, of course, still be seized by French customs officials. Elaborate arrangements ensured that smuggled goods evaded discovery by the authorities. French restrictions had damaged Hamburg’s normal port trades, resulting in very high rates of unemployment, experienced in all annexed Continental ports.* It was therefore not difficult to find people willing to engage in smuggling: an estimated 6,000 to 10,000 people ferried contraband into Hamburg from nearby Altona. Goods were transported in double-bottomed carts; sugar was disguised as sand. At one point, the number of funerals passing between the two cities began to raise suspicions in the minds of French officials; when coffins were opened they revealed bags of sugar, coffee, vanilla and indigo instead of corpses. French military rule was intensely unpopular in the annexed territories, for troops were billeted at no cost to the French and swingeing taxes were also levied.73 In such an atmosphere, officials could be persuaded, for a price, to look the other way – only an estimated 5 per cent of smuggled goods was actually confiscated.74 Merchants had more knowledge, more persistence and more motivation to continue trade than those who sought to stop them, even though delays in delivery and payment caused extreme fluctuations in levels of business and difficulties with cash flow.75

  As a consequence of smuggling and the dislocation of trade the customs revenues of the French Empire plummeted from 51 million francs in 1806 to 11.5 million in 1809. In addition, lack of trade made life very difficult for French wheat farmers, unable to export any surplus crops. These two factors led to an acknowledgement by France that the Continental System could not maintain an absolute barrier to foreign trade. In August 1810 the French also began to issue licences, sold by the Ministry of the Interior to merchants and shipowners: the exporting of grain, wines, silk and imported colonial products was permitted, although import duties were set very high and the import of British manufactured goods was still prohibited.76 French ports were granted more licences than those in annexed nations.* Extraordinarily, the amount of wheat exported to Britain was very considerable, with 74 per cent of British imported wheat coming from France in 1809 and 1810.† In 1810 and 1811 French licences issued for exporting wheat to England specified that the payment for the cargo should be in specie or bullion rather than in credit notes, for Napoleon was looking for every means to cut into British gold reserves, upon which credit ultimately depended. The export of gold from Britain had been illegal since 1797, but from 1808 to 1810 the pound depreciated against European currencies by as much as 15 per cent. If gold could be smuggled into France, British merchants would be keen to use it to pay illegally for cargoes that came in licensed ships, because a profit could be realized by using the gold instead of British bank notes.

  These financial difficulties were exacerbated by the impact of Napoleon’s blockade on the British economy. To reinforce his policy, in October 1810, just after the introduction of French licences, the emperor increased penalties for smuggling on the Continent. A new customs court was created to impose stringent penalties for handling British goods, including ten years’ penal servitude or branding for the worst offenders.77 Such severity was effective. Yet, even as Napoleon tightened his economic grip, the first major crack appeared in the edifice of the French Empire. The British blockade under Saumarez in the Baltic was succeeding in stopping Russian trade with France, and the Russian economy suffered a decline.78 The tsar came under domestic pressure not only from Russian merchants but also from the nobility, who were bereft of luxuries such as coffee and sugar, and British manufactured goods. Concerned about the damage caused to Russian trade by the Treaty of Tilsit, the tsar opened Russian ports to neutral ships on 31 December 1810. From that moment it became apparent that Napoleon would attempt to crush Russia.

  An important subplot of the economic struggle between Britain and France – the need to accumulate gold and silver – remained of vital importance. Not only did gold reserves symbolize government and market confidence, but precious metals were the preferred means of payment for Continental subsidies, immediately convertible to military use, although many British loans were not made in scarce specie but with drafts guaranteed by the government.79 But for naval and military operations specie was critical. At sea anywhere in the world a purser on board a warship could lean over the side of the ship to negotiate in silver dollars with traders in local boats for fresh meat or vegetables for the crew. Far greater amounts were needed to run a large army. Silver, in particular, usually in the form of Spanish dollars, was essential for many uses, not least for paying the troops. A soldier could buy extra rations, frequently a necessity rather than a luxury, and unpaid troops could quickly become a liability. Lack of cash could therefore have an immediate effect upon strategic and military decisions.

  By contrast, Napoleon raised the money he required by punitive taxation of the nations that he had conquered, which paid dearly for military weakness. He forced Spain into signing the ‘Treaty of Subsidies’ in October 1803, money that Spain did not have in its Treasury, but needed to bring from Mexico. The first shipment was seized by the British in 1804, which action caused Spain to declare war on Britain.80 As we shall see, the rest of the silver reached France by means of complex international mercantile networks. Extracting money from other Continental powers was easier for the emperor. Austria paid 75 million francs in 1805 and 164 million when defeated again. Between 1806 and 1812 Prussia provided a sum estimated at between 470 and 514 million francs. With this money, and in contrast to Britain, France maintained the convertibility of its paper currency to gold: it was essential that it did so, for its reputation for defaulting extended back to the last days of the ancien régime. In spite of the apparent stability of the French currency, foreign investors chose London as a safe and profitable home for their capital.81

  The most complex of all the mercantile attempts to acquire specie, between 1805 and 1808, was the ‘Hope–Baring contract’. Gabriel-Julien Ouvrard, one of the most respected bankers in Paris, took on the task of securing the money owed to France by Spain from the 1803 treaty from his own government. His efforts came to involve bankers from France, Spain, Holland, Germany, America, Mexico and Britain. Ouvrard travelled first to Madrid, and then to Amsterdam to negotiate with Hope & Co., one of the largest and most well-connected banks in Europe. As a result of successful negotiations, David Parish, Hope’s agent in Hamburg, then travelled to New York in early 1806 to supervise the complex transactions by which silver was to be sent from Mexico to France via the United States, principally Baltimore. To pay for the specie, at least thirty-eight ships sailed to Vera Cruz in Mexico, carrying goods, particularly British textiles. The risk to neutral ships from British warships was too great to send specie across the Atlantic, so coffee, sugar and other tropical products were shipped to France as the means by which the French government was paid its Spanish subsidy.

  For the final phase of the project, the London house of Barings was brought into the arrangement: a high degree of trust existed between the banking houses of the Hopes and the Barings, for they were connected by marriage. Sir Francis Baring asked for and received permission from the British government to ship the silver from Mexico, and
even secured the services of a frigate to do so. For, although the specie was eventually going to the enemy, the merchants had secured a far more valuable asset from the Spanish government than a single cargo: British merchants could now trade with the Spanish American Empire. This concession came at a particularly propitious time, just as trade with the Continent became extremely difficult because of Napoleon’s blockade. Thus it was that the last shipment of silver under the contract was undertaken by the British frigate Diana, which took on her cargo at Vera Cruz in June 1807. On board was Sir Charles Baring, who supervised the loading of silver to the value of £828,792, the largest single risk insured by Lloyd’s during these wars.82

  The acquisition of sufficient amounts of gold bullion and silver specie became more difficult in 1808 and 1809, when scarcity was exacerbated by merchant demand caused by the boom years of trade. Another major specie contract was signed in mid 1806, with the Treasury paying for Mexican dollars procured by the merchants Gordon & Murphy, and the bankers Irving Reid, who had a further contract with the Spanish government.83 Great profits could be made, but trade at such a distance with such valuable cargoes was open to fraud. Of a number of dollar-buying ventures that went wrong, the example of a former governor of Dominica and recently unseated Whig MP, Colonel Andrew Cochrane Johnstone, was the worst. He was one of the unscrupulous Cochrane family with a long career of corruption who in 1814 was tried with his nephew Lord Cochrane for attempting a spectacular stock exchange fraud. In Mexico in 1808 and 1809 Cochrane Johnstone exceeded his instructions and purchased dollars above the price agreed with the Treasury. When the money arrived in England, it was short, and a proportion of it was found in Cochrane Johnstone’s private bank account. Spencer Perceval refused, rightly, to pay the commission on the transaction.84