<P> Britain, by Orders in Council (1807), prohibited its trade partners from trading with France . The British countered the Continental system by threatening to sink any ship that did not come to a British port or chose to comply with France . This double threat created a difficult time for neutral nations like the United States . In response to this prohibition, compounded by the Chesapeake Incident, the U.S. government adopted the Embargo Act of 1807 and eventually Macon's Bill No. 2 . This embargo was designed as an economic counterattack to hurt Britain, but it proved even more damaging to American merchants . Together with the issues of the impressment of foreign seamen, and British support for Indian raids in the American west, tensions led to a declaration of war by the U.S. in the War of 1812 . This war, not Napoleon's blockade, sharply reduced British trade with the United States . </P> <P> The embargo also had an effect on France itself . Ship building, and its trades such as rope - making declined, as did many other industries that relied on overseas markets, such as the linen industries . With few exports and a loss of profits, many industries were closed down . Southern France, especially the port cities of Marseille and Bordeaux as well as the city of La Rochelle, suffered from the reduction in trade . Moreover, the prices of staple foods rose for most of continental Europe . Napoleon's St. Cloud Decree in July 1810 opened the southwest of France and the Spanish frontier to limited British trade, and reopened French trade to the United States . It was an admission that his blockade had hurt his own economy more than the British . It also failed to reduce British financial support to its allies . The industrialized north and east of France, and south of today's Belgium saw significantly increased profits due to the lack of competition from British goods (particularly textiles, which were produced much more cheaply in Britain). In Italy, the agricultural sector flourished . The Dutch economy, predicated on trade, suffered greatly as a result of the embargo . Napoleon's economic warfare was much to the chagrin of his own brother, King Louis I of Holland . </P> <P> Britain's first response to the Continental system was to launch a major naval attack on the weakest link in Napoleon's coalition, Denmark . Although ostensibly neutral, Denmark was under heavy French and Russian pressure to pledge its fleet to Napoleon . London could not take the chance of ignoring the Danish threat . In the Second battle of Copenhagen in August--September 1807, the Royal Navy bombarded Copenhagen, seized the Danish fleet, and assured control of the sea lanes in the North Sea and Baltic Sea for the British merchant fleet . The island Heligoland outside the west coast of Denmark was occupied in September 1807 . This base made it easier for Britain to control the trade to the ports of the North sea coast and to facilitate smuggling . The attacks against Copenhagen and Heligoland started the Gunboat War against Denmark which lasted until 1814 . </P> <P> Sweden, Britain's ally in the Third Coalition, first refused to comply with French demands and was attacked by Russia in February and by Denmark / Norway in March 1808 . At the same time, a French force threatened to invade southern Sweden but the plan was stopped as the British Navy controlled the Danish straits . The Royal navy set up a base outside the port of Gothenburg in 1808 to simplify the operations into the Baltic sea . The Baltic campaign was under the command of admiral James Saumarez . In November 1810 France demanded that Sweden should declare war to Great Britain and stop all trade . The result was a phoney war between Sweden and Britain . A second navy base was set up on the island of Hanö in the south of Sweden in 1810 . These two bases were used to support convoys from Britain to Gothenburg, then through the Danish straits to Hanö island . From Hanö the goods were smuggled to the many ports around the Baltic sea . To further support the convoys, the small Danish island of Anholt was occupied in May 1809 . A light house on the island simplified the navigation through the Danish straits . </P>

The british orders in council (1806) attempted to stop world shipping with which nation