The questions, therefore, to be considered were:-1. Whether Denmark would give up the Danish budget for the year, to avoid a Federal execution, on the understanding that serious negotiations should be undertaken before April, 1862; and-2. Whether the Confederation would agree to defer Federal execution if the Danish Government authorized her Majesty's Government to make a declaration in their name to that effect. A conference in London in the autumn was proposed, as the best means of finally settling the questions at issue.

The Danish Government, being pressed as to its readiness to adhere to its part of the above proposal, M. Hall explained that his suggestion referred only to the sacrifice of any particular item of the supplementary budget which might be objected to by the Holstein States, and not to the surrender of the whole. He also insisted on the necessity for Denmark of a definite result before the meeting of the Rigsraad in October, 1862.

The Prussian Government, on the other hand, expressed their readiness to recommend to the Confederation the delay of execution, and the subsequent renewal of direct negotiations, if Denmark would make the declaration as recommended by her Majesty's Government. With regard to the proposal for a European conference, the Prussian Government did not think the time favourable, and the Danish Government made difficulties as to the question of Schleswig being discussed in a conference, on the ground that they could never allow Schleswig to be made a subject of negotiation in Germany. France and Russia supported the representations of her Majesty's Government, but the idea of a conference having fallen to the ground, the Danish Government were unwilling to make the required declaration respecting the budget, if direct negotiations with Germany were to be the only result.

Being pressed, however, by her Majesty's Government, who undertook to endeavour to bring about a friendly mediation on the part of the Great Powers if direct negotiations failed, the Danish Government eventually complied, and notified their intention accordingly to the Prussian and Austrian Governments.

They urged, at the same time, that the negotiations should be entered upon at once, and the means by which they proposed to arrive at an understanding were thus defined by M. Hall:-" So to regulate the relations of Holstein that the king may be able to comply with the demands of the Diet as to the more complete autonomy of that duchy, without thereby attacking the independence of the parts of the monarchy which do not belong to the Confederation."

The Diet met on the 12th August to receive the Danish communication, and agreed to the postponement of Federal execution.

The Prussian Government replied to the Danish communication in a conciliatory manner.

The Diet then adjourned, without giving any positive authority to Austria and Prussia to negotiate with Denmark on behalf of the Confederation; and this omission, coupled with the retirement of Baron Schleinitz from the Prussian Foreign Office, were alleged by the Prussian Government as reasons for delaying the commencement of the negotiations. The Danish Government were most anxious that something should be done before the time for the meeting of the Rigsraad in October, and her Majesty's Government repeatedly urged Prussia to hasten the commencement of negotiations.

The Governments of France, Russia, and Sweden joined with her Majesty's Government in these representations; but it was not until the end of October that Count Bernstorff, the new Prussian Minister for Foreign Affairs, expressed his readiness to receive the Danish propositions. The Danish Foreign Minister, thereupon, forwarded proposals to Vienna and Berlin, the principal points of which were:-1. That under existing circumstances, a provisional arrangement only could be come to. 2. That, considering the difficulties likely to arise from the action of the two Assemblies (of Denmark and Holstein) on affairs common to both, it would be desirable, as far as possible, to limit the sphere of that action; and, therefore, that all affairs respecting which separate action can be taken by either Assembly, without prejudice to the common interests, should be subject to the separate legislative action of each. 3. The army and details of taxation. (not including the tariff) to come under the above head. 4. The appointment of joint committees of the two Assemblies to settle questions in dispute. 5. In case of disagreement between the two Chambers, the Government to reserve the power of carrying out in one part of the monarchy the resolutions of its Assembly, although not adopted by the Assembly of the other part. 6. The States of Holstein to have the right(a.) Of making grants in the financial department. (b.) Of determining the expenditure in their share of these branches of the common expenditure which would by this plan be placed exclusively under their legislative action. (c.) Of voting the expenditure for the provincial affairs of the duchy. 7. These rights to apply only to the sums to be voted by each Assembly for the common affairs in excess of the normal budget which would be fixed by the Government.

A joint answer was given by the two German Governments on the 5th of December. They expressed dissatisfaction at the tenor of the communication, and objected to it on the ground-1. That only a provisional settlement was proposed. 2. That the proposals did not differ from those which had already been rejected by the Holstein States. 3. That the arrangements of 1852 were not taken as the basis of the proposals. 4. That the position of Schleswig was not alluded to. The despatch concluded by observations on the mal-administration of Schleswig.

The Danish Government lost no time in forwarding a rejoinder to the German communication, in which they stated at length the reasons which made it impossible to come at once to a definitive settlement. They endeavoured to prove by an historical retrospect of the question that the proceedings of the German Confederation and the threats of Federal execution had made it impossible for Denmark to carry out fully the proclamation of 1852, and they protested against the introduction into the discussion of the question of Schleswig, which they did not admit to be within the competency of the Confederation. They, however, defended the administration of that duchy against the attacks of the German despatch, and reiterated their hopes that a settlement might be arrived at.

Her Majesty's Government urged the Danish Government to adopt a liberal policy towards Schleswig, but the latter maintained the impossibility of making any concessions to that duchy before the Holstein affair was settled; and such concessions must, they said, be made proprio motu, and not in compliance with the demands of the German Confederation, which had no right to interfere in the relations between Schleswig and Denmark. A despatch from the Swedish Government, supporting the views of

Denmark, was communicated to her Majesty's Government, and in replying to it Lord Russell, while admitting that Schleswig is no part of the Confederation, and can only be treated as part of a European kingdom, maintained that the King of Denmark was bound by his promises to Prussia and Austria, and that he should "enable himself to show to Germany and Europe that his promises of 1852 were scrupulously carried into execution; that his German subjects in Schleswig were, equally with his Danish subjects, the objects of his impartial protection; and that the local Diet of Schleswig, fairly elected and fairly constituted, has all the powers necessary for the well-being and social happiness of Schleswig."

This despatch was communicated to the Danish and Prussian Governments. In the conversation which ensued on its communication to M. Hall, that minister objected that the task set by her Majesty's Government to Denmark was impossible to execute, and that Germany never would be satisfied. He maintained that all the promises made to Austria and Prussia had been already fulfilled; that with regard to the equality of Germans and Danes in Schleswig, it was not included in those promises, but only in the royal patent, which was not an international document; and he stated that the King intended to make concessions, but that he must choose his own time. Čount Bernstorff, on the other hand, stated that no settlement could be accepted which did not include Schleswig, and that what Germany wanted was "political reform" in that duchy, and that the engagements taken by Denmark comprised non-incorporation and equality of Schleswig, and these could not be fulfilled so long as the Reichsrath existed in its present form. Count Bernstorff contended that Denmark should give to Schleswig the same constitution as to Holstein, and Schleswig should cease to be represented in the Reichsrath; but in his (Count Bernstorff's) opinion, the only real solution of the question was to be found in the partition of that duchy.

The Rigsraad met on the 25th of January. The royal speech notified the intention of the Government to grant greater freedom to Schleswig, especially a more popular foundation to its provincial institutions, which, it said, might be accomplished without danger to the peace and unity of the country when the settlement of the differences with the German Confederation had secured Schleswig against foreign intervention. With regard to the budget, the speech stated that the Rigsraad would vote the common expenses only for Denmark and Schleswig.

On the 8th of February the Austrian and Prussian Governments addressed a further joint note to Denmark, in which, after repeating their objections to the provisional character of the Danish proposals, they asked categorically whether the Danish Government did or did not recognize the binding character of the promises made by it in 1851-52 respecting Holstein and Schleswig, and whether it would or would not make these promises the basis of negotiation with the German Powers.

A further note was sent by the two Governments to Copenhagen, protesting against any legislation of the Rigsraad which would affect the relations of Schleswig to the kingdom.

On the 6th of February Lord Russell, in commenting on the language used by Count Bernstorff, as reported in Lord A. Loftus's despatch of January 25, limited the demands which Austria and Prussia were entitled, in the opinion of her Majesty's Government, to make, to the following:1. That the decrees of the German Confederation in respect to Holstein and

Lauenburg should be obeyed. 2. That the provisions of 1851-52 should be scrupulously fulfilled.

Count Bernstorff professed an entire concurrence with this opinion when Lord Russell's despatch was communicated to him, but in a further interview with Lord A. Loftus he re-asserted his opinion that to satisfy Germany the Reichsrath for Schleswig must be abolished, and reverted to the plan for a partition of Schleswig as the only real solution of the question.

The Danish Government communicated a memorandum to her Majesty's Government, in which their view of the Schleswig question was re-asserted, and the danger of exciting faction and discord in Schleswig if the concessions were to be made in consequence of the unauthorized interference of Germany, was pointed out.

They maintained that the existing state of things was part and parcel of the Constitution of Schleswig, and could not be altered but by a vote of the Schleswig Diet. Lord Russell urged that that assembly would joyfully accept such concessions, if offered.

These representations were, however, as fruitless as the former ones. M. Hall protested that the promises of 1851-52 did not extend to liberty of the press and of petition. He defended the church and school system, and affirmed that it would require changes in the Schleswig constitution to alter them. Such changes could not be made without the consent of the Schleswig Diet, and it was impossible to convoke that Diet until the situation produced by the recent proceedings of Austria and Prussia at Frankfort was cleared up.

The proceedings here alluded to were a proposition made by Austria and Prussia to the committee of the Diet that that assembly should express its approval of the recent despatches of the two Governments respecting Schleswig. The Danish Minister recorded his protest against these proceedings, and M. Hall stated that such an introduction of Schleswig into a resolution of the Diet would be the first overt act of interference of the Diet in the affairs of Schleswig, and he added that any hostile measures taken in consequence of the proposition would be regarded by Denmark not as Federal execution, but as war.

The Danish Government replied on the 12th March to the AustroPrussian note of February 8. They declared their intention of adhering to the engagements of 1851-52, but denied the right of Germany to impose on Denmark her arbitrary interpretation of those engagements. They denied the right of Germany to interfere with the relations of Schleswig to the monarchy, and stated that if the questions of Holstein and Schleswig were treated together, and the Diet subsequently took any active measures to enforce their demands, such measures not being confined to objects purely German, but partaking of an international character, would be considered by Denmark not as Federal execution, but as war. They then demanded an explicit answer to their proposals of October 26, and ended by asking what the position really was which the Confederation claimed for Holstein.

The Danish answer was considered very unsatisfactory at Vienna and Berlin. The German Courts persisted in maintaining that the questions of Holstein and Schleswig could not be separated, and that a settlement of the former could not be agreed to without an arrangement as to the latter, while Denmark protested against this doctrine, and especially against the introduction of Schleswig into the report of the committees of the Diet.

This report was, however, adopted by the Diet on the 13th of March. It is right to state that Count Bernstorff's plan for the partition of Schleswig was disapproved by the Austrian Foreign Minister, who, however, left the conduct of the negotiation with Denmark entirely in the hands of Prussia.

Count Platen, the Hanoverian minister, having, at the request of Lord Russell, drawn up a memorandum of his views for the settlement of the duchies question, Lord Russell forwarded it to Copenhagen, and desired Mr. Paget to recommend to M. Hall's consideration two of the plans therein proposed.

The first of these was a plan for a general representation of the monarchy in the Rigsraad elected in each portion of the monarchy according to population, with the proviso that no resolution of the Rigsraad should pass without the assent of two-thirds of the assembly.

The second proposed to substitute for the Rigsraad two chambers: the one elected according to population and voting by a simple majority; the other a kind of senate in which each State should be equally represented.

Mr. Paget was authorized, in case M. Hall was not totally averse to one or other of these plans, to proceed to Holstein and recommend them to the leading men of the duchy, in the hope that Denmark and Holstein might together agree on the terms of an arrangement without the intervention of Germany.

Mr. Paget accordingly communicated the plans in question to M. Hall, who, however, condemned them as impracticable and declined to entertain

them.

Lord Russell about the same time addressed the French Government, urging the advantage of the Governments of Great Britain, France, and Russia coming to an understanding on the question, and suggesting the possibility of obtaining the concurrence of the duchies in some plan of arrangement without the intervention of Germany.

A few days later he addressed an identic despatch to Paris, St. Petersburg, and Stockholm, proposing that, in view of the dangers threatened to the integrity of Denmark by the recent resolution of the Diet respecting Schleswig, the four Governments should call upon Austria, Prussia, and the Diet, for explanations as to their views and intentions respecting Schleswig. The French Government, however, declined to adopt the suggestions of her Majesty's Government.

The last note of the Danish Government to the German Powers remained unanswered, and early in May the Danish Government, in a note communicated to the four non-German Powers, complained bitterly of this delay, and intimated their intention of breaking off the negotiations, and appealing to the non-German Powers if an arrangement was not shortly come to.

The Prussian Government, on the other hand, addressed an angry rejoinder to the Danish note of May 8th to their representatives at the four Courts.

It was not until July that a draft of the answer to be given to the Danish despatch of the 12th March was laid before the Austrian Government by Prussia; and further delay occurred from an objection on the part of Austria to adopt the wording of the Prussian draft. Count Rechberg proposed simply to communicate to Denmark the adhesion of Austria to the Prussian despatch; but this not being considered satisfactory by Count Bernstorff, Count Rechberg proceeded to draw up a draft to be