In response to British and French harassment of American shipping, President Thomas Jefferson signed the Embargo Act of 1807, intending to starve European powers of American goods. Instead, it devastated the domestic economy and birthed one of the most creative smuggling operations in North American history. The epicenter of this illicit commerce was Passamaquoddy Bay, straddling the ambiguous border between Maine and British New Brunswick.
Islands like Campobello and Moose Island became legal grey zones. Traders exploited geographic ambiguity and conflicting jurisdictional claims of the post-Revolutionary era. American merchants shipped flour, timber, and potash to border islands under the guise of coastwise domestic trade, which was technically legal.
Once the cargo landed on a disputed island, local operatives transferred it across narrow tidal channels to British jurisdiction, often using uncrewed rafts left to drift with the tide so traders could claim no human actively exported the goods. Customs officials were hopelessly outmatched, outnumbered, and frequently bribed or intimidated by armed crowds. In one famous scheme, merchants erected flour sheds directly on the international boundary line so goods could be moved from an American door to a British door inside the same building.
By the time the embargo was repealed in 1809, the island loophole had exposed the extreme difficulty of enforcing unilateral economic sanctions along poorly defined maritime frontiers.