In a desperate attempt to avert war, the United States imposed an embargo on foreign trade. Jefferson regarded the embargo as an idealistic experiment—a moral alternative to war. He believed that economic coercion would convince Britain and France to respect America’s neutral rights.
The embargo was an unpopular and costly failure. It hurt the American economy far more than the British or French, and resulted in widespread smuggling. Exports fell from $108 million in 1807 to just $22 million in 1808. Farm prices fell sharply. Shippers also suffered. Harbors filled with idle ships and nearly 30,000 sailors found themselves jobless.
Jefferson believed Americans would cooperate with the embargo out of patriotism. Instead, smuggling continued, particularly through Canada. To enforce the embargo, he took steps that infringed on his cherished principles: individual liberties and opposition to a strong central government. He mobilized the army and navy to enforce the blockade, and declared the Lake Champlain region of NY, along the Canadian border, in a state of insurrection.
Pressure to abandon the embargo mounted, and early in 1809, just 3 days before Jefferson left office, Congress repealed the embargo. In effect for 15 months, the embargo exacted no political concessions from either France or Britain. It had produced economic hardship, evasion of the law, and political dissension at home. Upset by the failure of his policies, the 65-year-old Jefferson looked forward to his retirement. The problem of defending American rights on the high seas now fell to Jefferson's handpicked successor, James Madison. In 1809, Congress replaced the failed embargo with the Non-Intercourse Act, which reopened trade with all nations except Britain and France. Then in 1810, Congress replaced the Non-Intercourse Act with a new measure, Macon's Bill No. 2. This policy reopened trade with France and Britain. It stated, however, that if either Britain or France agreed to respect America's neutral rights, the United States would stop trade with the other nation.
Napoleon seized on this new policy in an effort to entangle the United States in his war with Britain. He announced a repeal of all French restrictions on American trade. Even though France continued to seize American ships and cargoes, President Madison snapped at the bait. In early 1811, he cut off trade with Britain and recalled the American minister.
For 19 months, the British went without American trade. Food shortages, mounting unemployment, and increasing inventories of unsold manufactured goods finally convinced Britain to end their restrictions on American trade. But the decision came too late. On June 1, 1812, President Madison asked Congress for a declaration of war. A divided House and Senate concurred. The House voted to declare war on Britain by a vote of 79 to 49; the Senate by a vote of 19 to 13.
Source: The Embargo of 1807
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