The Continental System was foreign policy initiative action adopted by Napoleon in his economic warfare with England from 1806 to 1812. Economic warfare had been carried on before 1806, but the system itself was initiated by the Berlin Decree, which claimed that the British blockade of purely commercial ports was contrary to international law. It was extended by the Warsaw Decree (1807), the Milan Decree (1807), and the Fontainebleau Decree (1810), which forbade trade with Great Britain on the part of France, her allies, and neutrals.
After the destruction of the French naval fleet at Trafalgar in 1805, Great Britain was master of the seas, and napoleon was master of the continent. Napoleon believed that this inconsistency might never lead to any final solution with Great Britain so he began to wage economic war with Great Britain as he believed (rightfully so) that the English would stop at nothing to defeat Napoleon and the French.
Napoleon expected that the unfavorable trade balance and loss of precious metals would destroy England’s credit, break the Bank of England, and ruin English industry. Great Britain retaliated by the Orders In Council, which forbade nearly all trade between England and any nation obeying the Berlin Decree.
One of the most dramatic results of the commercial warfare was the English unprovoked bombardment of neutral Copenhagen (1807) and the seizure of the Danish fleet. The trade restrictions of the continental system led to a decline of the significance of Amsterdam; it never regained its former prominence. England had control of the sea, and large-scale smuggling thrived all along the European coast (with U.S. privateers taking a large part in the illegal trade).
Napoleon himself issued special licenses for trade bringing in colonial goods on the payment of duties. Napoleon’s Russian campaign of 1812 was partially brought on by Russia’s refusal to conform to the decrees (although they had agreed to under the Treaty of Tilsit), and the war between England and the United States, known as the War of 1812, was to some extent a result of the economic warfare. But so difficult was the enforcement of the system that in his effort to impose it on Russia, Napoleon had to violate it in France. Whether the continental system delayed the introduction of the Industrial Revolution to France is much debated, though it did foster the development of beet sugar manufacture and machine spinning of textiles.