so far as they may concern the balance of power in Europe.

"We rejoice in doing justice to the sentiments which have dictated the steps taken by the three powers. Austria especially is too alive to the blessings of peace not to see with pleasure the efforts made to avert from the face of Europe the calamities of war.

"Notwithstanding the difficulties of our position in presence of the existing state of affairs, notwithstanding the very natural objections to which the idea of a meeting called upon to discuss questions of a most delicate nature, as regards the Imperial Government, might give rise in our minds, we do not refuse to associate ourselves with these efforts. thus wish to give a fresh proof of the conciliatory and disinterested views which have never ceased to animate our policy.

We

"The Imperial Government desires only to receive beforehand the assurance that all the powers which are to participate in the projected conference are as ready as itself not to pursue any private interest to the detriment of the general peace. In order that the work of peace, which the cabinets have in view, may be successfully accomplished, it appears to us indispensable that an agreement should be come to beforehand, to the effect that all plans tending to give a territorial aggrandizement or an increase of power to any one of the powers invited to the meeting, be excluded from the deliberations. Without this preliminary guarantee, which removes all ambitious designs, and leaves room only for arrangements equitable for all parties in the same degree, it appears to us impossible to depend on a happy issue for the proposed deliberations.

'No power imbued with really peaceful views will hesitate to enter into an engagement such as that which I have just indicated, and the cabinets will, in that case, be able to occupy themselves with some chance of success at the solution of the present difficulties.

"We believe that the English Government will not fail to recognize the legitimacy of our request. It will no doubt observe our sincere wish to secure to the conferences the only basis possible to prevent any illusion, avert misunderstanding, protect existing rights, and thus again allow Europe to attach well-founded hopes of peace to the opening of the deliberaVOL. III.

tions. As soon as the three Governments which have invited us are prepared to give us the assurance we ask for, the Imperial Government will hasten, by sending a plenipotentiary to Paris, to confirm the adhesion it this day gives, with the above reservation, to the proposal which has been made to it.

"It must, however, be clearly understood that the position assumed by the Imperial Government towards that of King Victor Emmanuel cannot either be altered or prejudged by the eventual consent of Austria to be represented in an assembly which has to apply itself to the Italian difficulty.

"In all diplomatic conferences held before war may have broken off any former engagement, it must be admitted that the international law of Europe, and therefore the treaties, naturally serve as starting-points of discussion. We believe that this remark cannot give rise to any objections; it is sufficient to show the attitude which we shall have to assume; and we think that we are giving the powers a pledge of the perfect loyalty of our intentions in showing a frankness which must be completely reciprocal if it is desired that a sincere effort at reconciliation should be attempted.

"Lastly, we must express some surprise that the Government of the Pope is not also invited to take part in deliberations concerning the Italian difficulty. Surely the situation of Italy cannot be discussed without taking the interests of the Papacy into consideration. Apart from the questions of right, which we desire, however, to preserve entire, the temporal power of the Pope is, it appears to me, a fact recognised by all Governments. His Holiness has therefore the unquestionable right to make his voice heard in an assembly which has to оссиру itself with the affairs of Italy.

"Be so good as to communicate this despatch to Lord Clarendon, and to express to him the hope that he will receive our remarks with the same loyal spirit which has dictated them to us.

"We are of opinion that the respective positions should be clearly defined on either side, if we would not lull Europe and ourselves by false illusions at the risk of thus augmenting rather than diminishing the peril.

"We think, therefore, that we are rendering 21

service to the general interest in making this request, and in inviting such explanations as will throw more light on the situation."

On the 4th June the Earl of Clarendon received a despatch from Sir A. Malet, informing him that the Diet held their ordinary sitting and received the report of the commission appointed on the 29th May to consider the invitation to send a plenipotentiary to take part in the conferences about to be held in Paris, to deliberate on the means of maintaining peace. The proposal had been accepted, and the resolution to send a representative to the Paris conferences had been adopted by the Diet with unanimity and promptitude quite unusual in the Diet's deliberations.

The following is the note of Baron Kubeck, the President of the Diet, on the subject :

"The undersigned, minister of Austria, president of the Germanic Diet, has had the honour of receiving the note which his Excellency Sir Alexander Malet, envoy extraordinary and minister plenipotentiary of her Britannic Majesty to the Germanic Confederation, has been pleased to address to him on the 27th ultimo, by common understanding with his Excellency the envoy extraordinary and minister plenipotentiary of his Majesty the Emperor of the French, and of his Majesty the Emperor of all the Russias, to invite the Germanic Confederation to take part in the deliberations which are to take place in Paris in the interests of the maintenance of peace.

"He has hastened to communicate this note to the Upper Diet, and has the honour of informing Sir A. Malet that the Diet has just resolved to respond to the invitation made to the Germanic Confederation. In like manner as the Governments of Great Britain, France, and Russia have acted under a common feeling of peace and reconciliation, the Diet, true to the spirit of the treaties on which the Germanic Confederation is based, is animated by a great desire to contribute, so far as depends upon it, to the maintenance of peace.

"It manifests this desire in making every possible effort to this effect in its own sphere, and it will also prove it by a loyal and disinterested co-operation in the proposed negotiations.

"These deliberations will have for object the question of the Elbe duchies, the Italian diffi

culties, and the reforms to be introduced into the Federal pact so far as they may interest the balance of power in Europe.

"There is no obstacle in the way of the Germanic Confederation taking part in the deliberations on the question of complications in Italy, which not only concern European, but also German interests. The other questions, however, necessitate some explanatory observations. The Holstein question, putting Schleswig aside, has always been considered purely German; that of the reform of the Federal constitution, excepting as regards the international relations of the Germanic Confederation, has always been looked upon as purely internal, and there is no ground for believing that these questions will be looked upon in a different light during the coming deliberations. The Diet thinks it right to confine itself, therefore, to laying down these principles. It also believes itself confident of the general assent in declaring that it will ever adhere to the principle that no modification or abrogation of the treaties can be made without the consent of the parties interested.

According to these views the Germanic Confederation will send, as soon as possible, its plenipotentiary to Paris.

"The Diet has confided this honourable mission to the Baron von der Pfordten, minister of State of his Majesty the King of Bavaria; he will join the other plenipotentiaries as soon as the date of the meeting is made known.

"The undersigned begs that his Excellency Sir A. Malet will bring this communication under the notice of the Government of her Britannic Majesty."

On the 4th June the Earl of Clarendon wrote to Lord Bloomfield with reference to the despatch communicated to him by the Austrian ambassador, being the reply of the Austrian Government to the invitation to attend a conference which had been presented by his excellency and his French and Russian colleagues. He said that he told Count Apponyi that he claimed no right on the part of her Majesty's Government to remonstrate against the course which a great and independent power like Austria thought proper to pursue for the maintenance of her dignity and in defence of her interests; but that as England

was deeply interested in the preservation of peace, and as her Majesty's Government had spared no effort to prevent a war which they thought would be without sufficient cause, and therefore unjustifiable, he must be permitted to express his sincere regret that Austria should have put her veto upon the meeting of a conference which other powers had agreed to attend for the purpose of deliberating upon the questions that now endangered the peace of Europe.

He begged leave also to say that, in his opinion, Austria would have stood better in the eyes of Europe, if the views and the arguments contained in the despatch which his excellency had just had the goodness to read to him had been stated by an Austrian plenipotentiary at the conference, where he would have had the opportunity of learning how they were judged by the representatives of other powers, and how far they might be capable of modification, as well as how far other powers might be brought to view matters in the same light as Austria.

On the 5th June the Earl of Clarendon received a despatch from Mr. Elliot, dated, Florence, May 30, stating that General La Marmora had no difficulty in at once declaring that as soon as the invitation was made, the Italian Government would be ready to accept it, and in order that no unnecessary time might be lost, he said he would be glad to prepare his answer if he knew the exact terms in which the invitation would be made.

And on the 5th the Marquis d'Azeglio communicated to the Earl of Clarendon the following despatch from General La Marmora :

"The representatives of Great Britain, France, and Russia at this court presented to me this day identic notes in the name of their respective Governments, inviting Italy to take part in the deliberations to take place in Paris, in order to solve by means of diplomacy the three principal questions which threaten with imminent war both Italy and Germany.

"The Government of the king adheres to this proposal with all the eagerness demanded by the urgent nature of the existing complications. It lends its support to the noble undertaking of the three great neutral powers with the greater alacrity, since it is far from apprehending, with respect to the interests

which concern it most, the trial of a solemn debate.

"We believe it to be a duty incumbent on the Governments engaged in the dispute not to elude the difficulties which have provoked it: the efficacy of the work to be performed by the conference depends on it. As far as we are concerned, the clearly defined nature of our position with regard to Austria renders this duty an easy one to fulfil.

"The double nature of the existing differences between Prussia and Austria has been defined in the notes which the ministers of the three powers have been pleased to remit to me. Failing any mutually recognized basis of solution, this is at least a starting-point which will allow the conference to give at the outset a useful direction to its discussions. The Government of the king is desirous to contribute its share, in order that the meeting of the plenipotentiaries of the different powers may be followed by results favourable to the interests of Germany. As to the difference which for a long time has divided Austria and Italy, it would seem that the definition of its object has not even been deemed necessary.

"From whatever point of view it is considered, it is impossible to ignore the fact that the domination of Austria over Italian provinces creates between Austria and Italy an antagonism which vitally affects the very existence of the two States. This situation, after constituting for several years a permanent danger to the peace of Europe, has just reached a decisive crisis.

"Italy has been forced to arm to ensure her independence; she is convinced, on the other hand, that the meeting convoked at Paris will aid in the settlement now considered indispensable, as it is not too much to say, by the conscience of Europe.

"I beg, M. le ministre, that you will communicate the contents of this despatch without delay to his excellency the minister for foreign affairs."

On the 5th June the Earl of Clarendon wrote to Earl Cowley with reference to the answer returned by the Austrian Government to the invitation to a conference, which had been addressed to it by the Governments of England, France, and Russia as follows :—

"M. Drouyn de Lhuys observes that, by

excluding any fresh territorial arrangements the cabinet of Vienna precludes the conference from entertaining the question of the Italian dispute; that by reason of the declaration made at Frankfort by Austria on the 1st June, the question of the Elbe Duchies is equally withdrawn from discussion in the conference, inasmuch as it is transferred to the Diet; and that the remaining question of Federal reform, which would have been treated of in conference from its bearing, first, on the differences between Austria and Prussia, and, secondly, on the general interest of the balance of power, is not of itself of sufficient importance to warrant the convocation of a conference.

"The French Government, under these circumstances, concur with those of England and Russia in considering that it would be of no advantage to open the conference; they are deeply grieved at the disappointment of the hopes which they had placed in its result; they do full justice to the readiness with which Italy and Prussia have accepted the invitation of the three powers; they desire to record the high opinion they entertain of the frankness. and sincerity of the British Government, which so greatly contributed to the establishment of an understanding between the three powers; and they take exactly the same view as the British Government of the incident which has compelled them to suspend their efforts to bring about a discussion which they trusted would have conduced to the reconciliation of the powers now in arms, and to the maintenance of peace."

On the same date the following circular was issued to her Majesty's ministers at the German Courts and Berne :

"It is with the utmost regret that I have to acquaint you that looking to the reserves made by the cabinet of Vienna in announcing its readiness to attend the proposed conference at Paris, it has appeared hopeless to anticipate any good result from such a meeting of the plenipotentiaries of the several powers, and therefore the project has been altogether abandoned.

"Her Majesty's Government do not feel called upon to pronounce any judgment on the course that the Austrian Government has pursued in this matter. But they cannot do otherwise than feel the greatest regret that

apparently the last expedient for preserving the peace of Europe has been renounced without a trial, and that there remains nothing more for the neutral powers at the present moment to do than to look on with sorrow at the misery and ruin by which it is probable that some of the fairest countries in Europe will be overwhelmed.

"But though disappointed at the failure of their recent endeavours, in conjunction with France and Russia, at all events to retard for a time the breaking out of war, while conscious of having used their utmost exertions for that purpose, her Majesty's Government will not abandon the hope that the experience of its evils may in a short time render all those who are engaged in it more disposed to lay aside extreme pretensions and ambitious views, and to accept with sincerity the good offices of friendly powers for the settlement of differences and for the reconciliation of animosities. Her Majesty's Government will be at all times ready to contribute to the utmost of their ability, and with entire singleness of purpose, to the adjustment, not only of the questions which now divide the litigant States, but of any others which may arise between them in the prosecution of hostilities.

"It is the earnest desire of her Majesty's Government that all such differences should be settled between States without a recourse to war."

And on the 8th, the Earl of Clarendon wrote to Lord Bloomfield, Lord A. Loftus, Mr. Elliot, and Sir A. Malet, as follows:

"The Austrian ambassador has communicated to me a despatch from his court in reply to the invitation which you, in conjunction with your colleagues of France and Russia, addressed to the Austrian government to attend a conference at Paris, having for its object to devise means for maintaining the peace of Europe.

"The Prussian ambassador and the Italian minister have made known to me in the same manner the replies of their respective courts; and her Majesty's envoy at Frankfort has reported to me the result of his communication on the subject with the Diet of the Germanic confederation.

"It is unnecessary for me to comment severally on these answers, which, with one exception, would have realized the object which the

governments of England, France, and Russia sought to obtain by their invitations, and would have admitted of a free deliberation between the neutral and the dissident powers that might have resulted in an amicable understanding in regard to all points of difference by which the latter are divided.

"Unfortunately the decision of Austria to subject her entrance into the conference to the acceptance by the other powers of a preliminary condition which would have eliminated from discussion one of the topics most fraught with danger to the general peace, and her further decision to make over to the German confederation, as far as she was concerned, the solution of another most vital question, debarred the conference from entering upon two out of the three matters for the settlement of which it was proposed that it should assemble; and it has appeared, therefore, to the governments of England, France, and Russia, useless to open a discussion upon the third alone, which only partially affected the general interests of Europe.

"Under these circumstances her Majesty's government could not hesitate to concur with the governments of France and Russia in the inutility of proceeding further with the proposed conference, and it only remains for me to instruct you to announce to the government to which you are accredited that it is abandoned.

"But in making this communication, and in expressing the regret of her Majesty's government at the disappointment of the expectations which Europe might have entertained of a successful issue of the conference, you will add that her Majesty's government will not abandon the hope that, at no distant day, recourse may be had to the friendly intervention of neutral and disinterested powers for restoring the good understanding now unfortunately interrupted; and that in that case her Majesty's government will be found disposed to exert to the utmost their good offices in the cause of conciliation and of peace."

THE CUSTOMS.

Tenth Report of the Commissioners of Her Majesty's Customs on the Customs.

THE most remarkable event in the commercial history of the year 1865 has undoubtedly been the termination of the protracted Civil War in America.

The sudden and unexpected conclusion of this disastrous struggle in the month of April, by releasing large quantities of cotton from detention, contributed greatly to the success of the efforts which have been made for some time past by other nations, to supply the demand for that article in this country. Both causes combined, have now succeeded in relieving us from the pressure of what has been popularly called "the cotton famine," a calamity which, it is believed, has, in the course of the past four years, inflicted upon one class alone a loss of from 60 to 70 millions sterling.

The removal at the same time of the restrictions which war imposes upon commerce immediately led, as we shall presently show, to a most extraordinary increase in our exportations to the United States, which have been carried on, during the last two months of 1865 in particular, on a scale of unprecedented magnitude.

In addition to, and concurrently with, the operation of these external influences, the general prosperity of the trade. and industry of this country, which has prevailed with but little interruption throughout the year, the tendency on all sides to an advance in the rate of wages, and the absence of any commercial failures of importance, have all contributed to give a more favourable character to the returns of exports, imports, and home consumption, which we annually present to your lordships, than might have been expected after the unusually large increase in our commercial transactions presented by the returns of 1863 and 1864, as recorded in our last two reports.

The exports of the produce and manufactures of the United Kingdom, which in 1864 showed an increase in value of 14 millions, or 9 per cent., when compared with those of 1863, and of 23 millions, or 18 per cent. in 1863 when compared with 1862, still give in 1865 a further rise of more than 5 millions, or 3 per cent.