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Jefferson’s Embargo was an attempt to head off calls for war that came in from all over the country in the wake of the Chesapeake-Leopard incident. Jefferson certainly didn’t inflate the abuses: he would rather have done nothing.
There was essentially no southern shipping. Yes, New England state flouted the Embargo (and later the War of 1812). Individual New Englanders did indeed decide that it was better for them to trade with the enemy in Canada illegally than to comply with the law, and state governors and legislatures in several states helped them with this. I provide the story in JAMES MADISON AND THE MAKING OF AMERICA, and for a more detailed version I recommend Henry Adams’s history of the US during the Madison administration.