Signed into law on December 22, 1807, the Embargo Act prohibited all ships destined for any foreign port from leaving the United States. This measure was designed to compel France and England to stop interfering illegally with U.S. merchant ships attempting to bring goods to Europe. At the time, France and England were embroiled in the Napoleonic Wars (a series of military conflicts fought throughout Europe over French expansionism), and each had been interfering with the other's ability to conduct trade in order to undermine their opponent's economic prosperity and stability. As part of these efforts, France and England had been seizing U.S. merchant ships. The Embargo Act was intended to apply pressure on France and England until they ended these seizures and other forms of harassment, but it backfired. It had a negligible effect on France and England but battered the American economy and was quickly repealed. The brief interruption in trade did, however, have one positive side effect: it spurred industrialization in the United States, as finished goods that had once been imported had to be manufactured domestically.
The Napoleonic Wars began soon after Napoleon Bonaparte (1769–1821) assumed power during the French Revolution (1789–99). After a decade of unrest and violence, Napoleon stabilized France and brought domestic peace. In the early nineteenth century, however, he led a series of military campaigns throughout Europe, expanding French territory and influence. These campaigns brought France into conflict with England, then the world's foremost military and economic power.
When the Napoleonic Wars began, the United States declared neutrality. This proved a huge economic advantage for the development of the nation's young economy, as the wartime deprivation in Europe meant that demand was high for foreign goods, including those from the United States. The trade boom was threatened in 1805, however, when France and England turned to economic warfare as a means of combat, and the United States got caught in the middle.
After Admiral Horatio Nelson (1758–1805) led the British navy to a crushing defeat of the French navy at the Battle of Trafalgar in October of 1805, Napoleon directed all countries under French control—which, at the time, was much of Europe—not to trade with Britain. Britain struck back by imposing a naval blockade on France. France, in turn, retaliated by interfering with shipping involving the United States, which was one of England's major trade partners. In 1806 and 1807 Napoleon closed European ports under French control to British goods and declared that neutral ships complying with British trade regulations would be confiscated. Both France and England also began to impress (forcibly draft) sailors on U.S. merchant ships.
In an effort to force France and England to stop undermining U.S. trade, President Thomas Jefferson (in office 1801–09) led an effort to create an embargo on all foreign trade. According to Jefferson and his supporters, the United States would deprive France and England of American goods as a means of demonstrating French and English reliance on these goods and compelling them to end their restrictive and illicit efforts to harm U.S. trade. Although many in the country objected to the strategy, the Embargo Act went into effect on December 22, 1807. When it did, it proved disastrous for the U.S. economy and powerless to sway the trade policy of either France or England.
As the embargo took effect, New England traders and shippers protested the act—and often subverted it by smuggling goods. Southern cotton and tobacco planters soon joined in the opposition to the act. Still, the embargo remained in effect for nearly 15 months, during which time trade collapsed and the U.S. economy suffered greatly. Surprisingly, however, while the prohibition against exports harmed U.S. merchants, shipping concerns, and agricultural producers, the de facto prohibition against the import of foreign goods proved a boon for U.S. industrial development. As imports fell—declining to levels not seen since the 1790s—the U.S. was suddenly forced either to do without many manufactured goods, notably textiles, that it had been buying from Europe or to produce them on its own. The result was a sudden increase in domestic production, an “import substitution” that occurred not as a deliberate policy but as a spontaneous byproduct of the embargo. In 1807, seven new factories were incorporated. In 1808, 26 new factories were incorporated (18 of them textile mills).
In 1809 Congress repealed the Embargo Act and replaced it with the Non-Intercourse Act, which limited the shipping embargo to France and Britain while opening trade with all other foreign nations. Although this provided a small amount of welcome relief to the U.S. economy, it had no effect on French or British interference with U.S. trade and ships. As this harassment continued, the United States was ultimately drawn directly into the military conflict between the two European nations, clashing with the British in the War of 1812 (1812–14). The Embargo Act, the Non-Intercourse Act, and the war itself all harmed the U.S. economy, but the upsurge in industrial production that began in 1807 continued. By 1814 the number of new factories in the United States reached 128 (105 of them textile mills). This growth provided the foundation for the nation's increasing industrialization during the nineteenth century.
SEE ALSO Embargo; Industrialization; Napoleonic Wars; War of 1812