Before the firm attitude of the note of September 9, the British Government again procrastinated, and receded from demands which sound policy should from the first have recognized as untenable, unless reposing upon decisive military success and occupation. On September 19, their commissioners replied[500] that while the exclusive military possession of the lakes would be conducive to a good understanding, without endangering the security of the United States, it had not been advanced as a sine quâ non. A final proposition on the subject of the Canadian boundaries would be made, when the Indian question was settled. Concerning this, they were "authorized distinctly to declare that they are instructed not to sign a treaty of peace, unless the Indian nations are included in it, and restored to all the rights, privileges, and territories, which they enjoyed in the year 1811," by treaties then existing. "From this point the British plenipotentiaries cannot depart." They were instructed further to offer for discussion an article establishing Indian boundaries, within which the two countries should bind themselves not to make acquisitions by purchase during a term of years. To the absence of Lord Castlereagh, and consequent private correspondence between him and his colleagues in London, we owe the knowledge that the question of purchasing Indian lands, and the guarantee, would no longer be insisted on; and that the military control of the lakes was now reduced in purpose to the retention of Forts Michilimackinac and Niagara.[501] The intention remained, however, to insist upon the Indian provisions as just stated.

On September 26, the American commission replied that, as thus presented, there was no apparent difference in the purposes of the two nations as regarded the substantial welfare of the Indians themselves. The United States meant towards them peace, and the placing them in the position in which they stood before the war. "The real difference was" in the methods proposed. Great Britain "insisted on including the Indians, as allies, in the treaty of peace between her and the United States." But the Indians concerned dwelt within the acknowledged bounds of the United States, and their political relations towards her were no concern of Great Britain; nor could any arrangement be admitted which would constitute them independent communities, in whose behalf Great Britain might hereafter claim a right to interfere. The error underlying the British demand was the assumption that the Indian tribes were independent; whereas, in their relation to foreign countries, they were merely dwellers in the United States, who had made war upon her in co-operation with Great Britain. The upshot was a mutual agreement, drawn up by the British plenipotentiaries, that upon the conclusion of peace each state would put an end to hostilities in which it might be engaged with the Indians, and would restore them to the rights enjoyed before 1811. The Americans accepted this, subject to ratification at home, on the ground that, while it included the Indians in the peace, it did not do so as parties to the treaty, and left the manner of settlement in the hands of each Government interested. The agreement thus framed formed one of the articles of the treaty.

On September 27 the Gazette account of the capture of Washington was published in London. Lord Bathurst, who in the absence of Castlereagh was acting as Foreign Secretary, despatched the news the same day to the commissioners at Ghent, instructing them to assure the Americans that it made no difference in the British desire for peace, nor would modify unfavorably the requirements as to frontier, as yet unstated.[502] Liverpool wrote coincidently to Castlereagh, suggesting that he should communicate to the sovereigns and ministers at Vienna the moderation with which the Government was acting, as well as the tone assumed by the American commissioners, "so very different from what their situation appears to warrant." "I fear the Emperor of Russia is half an American, and it would be very desirable to do away any prejudices which may exist in his mind, or in that of Count Nesselrode, on this subject."[503] The remark is illuminating as to the reciprocal influence of the American contest and the European negotiations, and also as to the reasons for declining the proposed Russian mediation of 1813. The continent generally, and Russia conspicuously, held opinions on neutral maritime rights similar to those of the United States. Liverpool had already[504] expressed his wish to be well out of the war, although expecting decided military successes, and convinced that the terms as now reduced would be very unpopular in England; "but I feel too strongly the inconvenience of a continuance not to make me desirous of concluding it at the expense of some popularity."

It was in this spirit, doubtless, that Bathurst instructed the envoys that, if the Americans wished to refer the very modified proposals, or to sign them conditional upon ratification at home, either proposition would be accepted; an assurance repeated on October 5.[505] Were neither alternative embraced as to the Indian settlement, the negotiation should be closed and the commission return to England. British military anticipation then stood high. Not only was the capture of Washington over-estimated, but Ross and Cochrane had impressed their Government with brilliant expectations. "They are very sanguine about the future operations. They intend, on account of the season, to proceed in the first instance to the northward, and to occupy Rhode Island, where they propose remaining and living upon the country until about the first of November. They will then proceed southward, destroy Baltimore, if they should find it practicable without too much risk, occupy several important points on the coast of Georgia and the Carolinas, take possession of Mobile in the Floridas, and close the campaign with an attack on New Orleans."[506] This was a large programme for a corps of the size of Ross', after all allowance made for the ease with which Washington had fallen. It is probably to be read in connection with the project of sending to America very large re-enforcements; so numerous, indeed, that Lord Hill, Wellington's second in the Peninsula, had been designated for the command. This purpose had been communicated to Ross and Cochrane; and at the time of the capture of Washington they had not received the letters notifying them that "circumstances had induced his Majesty's Government to defer their intention of employing so considerable a force in that quarter."[507] For this change of mind America doubtless was indebted to European considerations. Besides the expectations mentioned, the British Government had well-founded reasons to hope for control of Lake Ontario, and for substantial results from the handsome force placed at the disposal of Sir George Prevost, to which the triumphant expedition of Cochrane and Ross had been intended only as a diversion.

Under these flattering anticipations were formulated the bases upon which to treat, now that the Indian question was out of the way. On October 18 and 20 Bathurst instructed the commissioners to propose, as a starting point, the principle that each party should hold what it had, subject to modifications for mutual accommodation. "Considering the relative situation of the two countries, the moderation evinced by his Majesty's Government in admitting this principle, (thereby surrendering claim to the future conquests), in the present state of the contest, must be manifest." When this was accepted, but not before, the mutual accommodations were to be suggested. The present captured possessions were stated to be: British, Fort Michilimackinac, Fort Niagara, and all the country east of the Penobscot; the American, Fort Erie and Fort Malden. Upon the surrender of the two latter, Great Britain would restore the forts at Castine and Machias. She would retain Mackinac and Fort Niagara, the latter with a surrounding strip of five miles of territory; and in exchange (apparently) for "all the country east of the Penobscot," would accept that part of Maine which lies north of the Aroostook River, thus insuring between Quebec and Halifax a direct communication, wholly under British jurisdiction.

There were some further minor matters of detail, unnecessary to mention; the more so that they did not come formally before the American commissioners, who immediately rejected the proposed principle of uti possidetis, and replied, October 24, that they were not empowered to yield any territory, and could treat only on the basis of entire mutual restitution. This Liverpool testily likened to the claim of the French revolutionary Government[508] that territory could not be ceded because contrary to the fundamental law of the Republic. In the American case, however, it was substantially an affirmation that the military conditions did not warrant surrender. Meanwhile, on October 21, the news of Macdonough's victory reached London from American sources. Although the British official accounts did not arrive until some time later, Liverpool, writing to Castlereagh on that day, admitted that there could be no doubt of the defeat of the flotilla.[509] Despite this check, the Cabinet still cherished hopes of further successes, and were unwilling yet to abandon entirely the last inches of the ground heretofore assumed. "Had it not been for this unfortunate adventure on Lake Champlain," wrote Bathurst to Castlereagh, "I really believe we should have signed a peace by the end of this month. This will put the enemy in spirits. The campaign will end in our doing much where we thought we should have done little, and doing nothing where we expected everything."[510] He announced the intention to send Pakenham in Ross' place for the New Orleans expedition, and to increase his force in the spring, should the war last till then. Meanwhile, it might be well to let the Powers assembled at Vienna understand that, whatever the success in Louisiana, the inhabitants would be distinctly told that in no case would the country be taken under British protection. They might be granted independence, but preferably would be urged to place themselves again under the Spanish Crown; but they must know that, in treating with the United States, neither of these solutions would be made by Great Britain a sine quâ non. The Government had probably taken a distaste to that peremptory formula by the unsatisfactory result of the proposition about the Indians.

This care concerning the effect produced upon the course of events at Vienna appears forcibly in the letters of Liverpool. After the receipt of the American commission's refusal to accept the basis of the uti possidetis, he wrote to Castlereagh, October 28, that he feared it put an end to any hopes of bringing the American war to a conclusion. The expectation of some favorable change in the aspect of affairs, however, decided the ministry to gain a little more time before bringing the negotiation to a close; and the envoys at Ghent were therefore to be instructed to demand a full projet of all the American conditions before entering on further discussion. The same day Liverpool sent a second letter,[511] in which he said distinctly that, in viewing the European settlement, it was material to consider that the war with America would probably be of some duration; that enemies should not be made in other quarters by holding out too long on the questions of Poland, Naples, and Saxony, for he was apprehensive that "some of our European allies will not be indisposed to favor the Americans; and, if the Emperor of Russia should be desirous of taking up their cause, we are well aware from some of Lord Walpole's late communications that there is a most powerful party in Russia to support him. Looking to a continuance of the American war, our financial state is far from satisfactory. We shall want a loan for the ensuing year of £27,000,000 or £28,000,000. The American war will not cost us less than £10,000,000, in addition to our peace establishment and other expenses. We must expect, therefore, to have it said that the property tax is continued for the purpose of securing a better frontier for Canada." Castlereagh himself had already spoken of the financial conditions as "perfectly without precedent in our financial history."[512]

The renewal of the European war, avowedly dreaded by Liverpool,[513] was thought not impossible by Castlereagh and Wellington; while conditions in France already threatened an explosion, such as Bonaparte occasioned in the succeeding March. "It is impossible," wrote Wellington, "to conceive the distress in which individuals of all descriptions are. The only remedy is the revival of Bonaparte's system of war and plunder; and it is evident that cannot be adopted during the reign of the Bourbons."[514] Neither he nor Castlereagh doubted the imminence of the danger. "It sounds incredible," wrote the latter, "that Talleyrand should treat the notion of any agitation at Paris as wholly unfounded."[515] A plot was believed to exist, which embraced as one of its features the seizing of the Duke, and holding him as a hostage. He himself thought it possible, and saw no means in the French Government's hands adequate to resist. "You already know my opinion of the danger at Paris.... The event may occur any night, and if it should occur, I don't think I should be allowed to depart. My safety depends upon the King's;"[516] but he was characteristically averse to any step which bore the appearance of precipitate withdrawal.

While the American negotiators were drawing up the projet which they had decided to present in response to the British demand, the combination of circumstances just stated led the British ministry to resolve on removing Wellington from Paris on some pretext, lest his services should be lost to them in the emergency now momentarily dreaded. The urgency for peace with America co-operated to determine the ostensible reason, which was almost a true one. The American command was offered to him. "The Duke of Wellington would restore confidence to the army, place the military operations on a proper footing, and give us the best chance of peace. I know he is very anxious for the restoration of peace with America, if it can be made upon terms at all honorable. It is a material consideration, likewise, that if we shall be disposed for the sake of peace to give up something of our just pretensions, we can do this more creditably through him than through any other person."[517] Liverpool voiced the conclusions of the Cabinet, and it would be difficult for words to manifest more forcibly anxiety to escape from a situation. Wellington himself drew attention to this. "Does it not occur to your lordship that, by appointing me to go to America at this moment, you give ground for belief, all over Europe, that your affairs there are in a much worse situation than they really are? and will not my nomination at this moment be a triumph to the Americans, and their friends here and elsewhere?"[518] Conditions were alarming, but the action resembled panic.

The offer, which was really a request, brought Wellington by a side wind into the American negotiations, and enabled him to give the Government the weight of his name and authority in concluding a peace otherwise than on their "just pretensions." The war, he said, has been honorable to Great Britain; meaning doubtless that, considering the huge physical mass and the proximity of the United States, it was well done to have escaped injury, as it was militarily disgraceful to the American Government, with such superiority, to have been so impotent. But, he continued, neither I nor any one else can achieve success, in the way of conquests, unless you have naval superiority on the lakes. That was what was needed; "not a general, nor general officers and troops. Till that superiority is acquired, it is impossible, according to my notion, to maintain an army in such a situation as to keep the enemy out of the whole frontier, much less to make any conquest from the enemy, which, with those superior means, might, with reasonable hopes of success, be undertaken.... The question is, whether we can obtain this naval superiority on the lakes. If we cannot, I shall do you but little good in America; and I shall go there only to prove the truth of Prevost's defence, and to sign a peace which might as well be signed now." This endorsed not only Prevost's retreat, but also the importance of Macdonough's victory. The Duke then added frankly that, in the state of the war, they had no right to demand any concession of territory. He brushed contemptuously aside the claim of occupying the country east of the Penobscot, on the ground of Sherbrooke's few companies at Castine, ready to retreat at a moment's notice. "If this reasoning be true, why stipulate for the uti possidetis?"[519]