These were the last transactions of the English Government in 1697; but there was at this moment a person residing in England who was destined to produce greater changes in the face of Europe, and in its relations, than any who had gone before him. This was Peter the Czar of Muscovy, who was at this time residing at Sayes Court, a house of the celebrated John Evelyn, at Deptford, and studying the fleet and shipbuilding of England, in order to create a naval power for himself. He was only a youth of five-and-twenty, and was the monarch of a country then sunk in barbarism, which was unrepresented at the Courts of Europe, was little heard of by the rest of the Continent, and whose merchants were forbidden, on pain of death, to trade with other countries. Yet already Peter had raised a regular army, and something of a navy, putting them under the management of Scottish and French officers. By means of these, in 1696, he had besieged and taken Azov. He had put himself through all the ranks of the army, beginning as a common soldier; and he had then determined to see personally the chief maritime nations, Holland and England, and learn what he could of the arts that made them so powerful. He set out with only twelve attendants, amongst whom were his two chief princes, Menschikoff, who had been originally a pieman, and Galitzin. These were to act as his ambassadors to the Courts of Holland and England, he himself remaining incognito. He first settled at Zaandam, in Holland, where he lived in a small lodging, dressed and worked with his attendants as ship-carpenters, learning to forge the ironwork of ships, as well as to prepare their woodwork. He had a yacht on the Zuyder Zee, and practised its management, and studied rope-making and sail-making. He found himself too much crowded about and stared at on his removal to London, where he spent his time chiefly in the dockyards of Deptford, Woolwich, and Chatham. William used to go and see him at Sayes Court, and sent the Marquis of Caermarthen to attend upon him, where they are said to have drunk brandy and pepper together during the long winter evenings. In the ensuing April disturbances at home called him away, but not before he had destroyed Evelyn's fine holly hedges by driving over them in the deep snows in his sledge, to Evelyn's great mortification.

At the opening of the year 1698, all appeared peace in Europe, but it was the quiet only which lies in the bosom of a volcano. Enormous expenditure of blood and treasure had been made to repel the unprincipled schemes of Louis XIV. Europe seemed to have triumphed over him. He had suddenly surrendered all that he had striven for, as if he perceived the impossibility of his aspirations. Nothing was less the fact. Never had he been so daring in his plans of aggrandisement as at this moment. Why should he continue to drain his kingdom of its population and its substance to grasp merely at Flanders, when, by exerting the arts of diplomacy, he might possess himself, not only of Flanders, but of all Spain, the north of Italy, the Sicilies, the South American and Indian dependencies? This grand scheme Louis now resolved to compass. He had married, as we have said, the Infanta, Maria Theresa, the sister of Charles II. of Spain, and had children by her. On marrying her he had sworn to renounce all claims to the Spanish throne through her; but this weighed nothing with Louis. He resolved that a son of the Dauphin—that is, his grandson through Maria Theresa—should be put forward as the French candidate in lieu of his father. Against him was the Emperor of Germany, the first cousin of Charles II., but he had resigned his claims in favour of his son by a second marriage—the Archduke Charles. By his first marriage with a younger sister of Charles II. he was the grandfather of the Electoral Prince of Bavaria. But the rights of this claimant, like those of the Dauphin's son Philip, were somewhat discountenanced by the fact that his grandfather's marriage had been accompanied by a renunciation of rights. It will be seen, therefore, that the question was one of some intricacy, and it was complicated by doubts as to the validity of the renunciations. Louis determined that the House of Austria should be set aside, and his own issue occupy the Spanish throne, when France, in fact, stretching from Gibraltar to Flanders, and including a large share of Italy, would be able to give law to the Continent, and swallow up Flanders and Holland, if not Germany too. This was the danger which wrought on the anxious heart of William at this moment.

Montague, in the height of his popularity, undertook and carried a measure which eventually, however, did the Whigs infinite mischief. Ministers had applied to the East India Company for a loan. The Company offered to lend them seven hundred thousand pounds, to be repaid out of the supplies at the convenience of Government. The new Company, which had so long been striving after a charter, hearing of the proposal, immediately outbade the old Company, offering to lend the Government two million pounds at eight per cent. The bait was too tempting to resist; a Bill was brought into the Commons, and passed its first reading by a large majority. The old Company, alarmed, petitioned the House, stating the claims it possessed, from having been encouraged by many royal charters to invest its capital, and to create a trade with India. It begged the House to consider that a thousand families depended on the stock, and that the property of the Company in India, producing an annual revenue of forty-four thousand pounds, would all be destroyed or reduced to trifling value. They deposed that they had expended a million of money in fortifications alone; that during the war they had lost twelve ships and cargoes worth fifteen hundred thousand pounds; that since the last subscription they had paid two hundred and ninety-five thousand pounds for customs, and above eighty-five thousand pounds in taxes. They had furnished ten thousand barrels of gunpowder when the Government was greatly pressed for it, and taken eighty thousand pounds' worth of Exchequer Bills. The House weighed the proposal, but was persuaded by Montague to give the preference to the new Company. On this the old Company offered, notwithstanding their great losses, to advance two millions to Government, on condition that the charter to the new Company was not granted. The offer came too late; the Bill for the new Company was passed, and carried also in the Lords, but with considerable opposition, and a protest from one-and-twenty peers. This Act was, notwithstanding, deemed a very unjust and arbitrary measure; and the arguments of the Whigs for a standing army, and their embezzlements in the Government offices and by most flagrant contracts, seriously affected their popularity.

Towards the end of July William went to Holland, and having addressed the States-General, and given audience to a number of ambassadors at the Hague, he betook himself to his favourite seat at Loo, where, in August, he was joined by Portland, the Pensionary Heinsius, and the Count Tallard, an emissary from Louis XIV. In this retirement they discussed one of the boldest projects which could possibly be entertained by statesmen, namely, a partition of the Spanish dominions. That the scheme was Louis XIV.'s there can be no question, and, daring as it was, served but as the blinding manœuvre which covered still more daring ones. The ultimate object of Louis was the seizure of the crown and territories of Spain, to which we have already alluded, but William, with great address, at once set to work to countermine him.

This plan of dividing the empire of Spain amongst such parties as should suit the views of William and Louis had been suggested by France, apparently very soon after the peace of Ryswick, and had been going on all the spring in England in profound secrecy. One of the motives for sending Portland to Paris in January had been to learn the full particulars of this scheme, which had been somewhat mysteriously opened to William. In writing to Heinsius on the 3rd of January, when Portland was about to start for France, William expressed his surprise as to the real meaning of "something that was proposed to be done by the Republic, France, and England, towards the maintenance of the peace," and imagined it might relate to their position with the Emperor. However, he added, "the earl of Portland will readily be able to get at the bottom of this affair in France, and that is another reason for hastening his departure as much as possible."

VIEW IN THE HAGUE: OLD GATE IN THE BINNENHOF, WITH THE ARMS OF THE COUNTY OF HOLLAND.

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Portland was scarcely settled in his diplomatic position in Paris when the scheme was broached to him, but at first cautiously. On the 15th of March he wrote to William that the Ministers Pomponne and De Torcy had communicated to him, but in the profoundest secrecy, that the king their master desired to make him the medium of a most important negotiation with the king of England. The impending death of the king of Spain was likely to throw the whole of Europe into war again, unless this were prevented by engagements entered into by the kings of France and England to prevent it. For if the Emperor were allowed to succeed to Spain with its dependencies, Flanders, Italy, and the colonies, he would become so powerful that he would be dangerous to all Europe. Portland declared that he could give no opinion, nor could the king his master give an answer, so far as he could see, until he had the full views of the king of France on the subject; and that the naval and maritime interests of England and Holland might be greatly affected by any arrangement regarding the succession of the Spanish territories. The French Ministers said it would be easy to order matters regarding the Low Countries to the satisfaction of England and Holland, and that France would guarantee that the crown of Spain should not be annexed to that of France; but as to the Indies, or the security of English trade in the Mediterranean, Portland could draw nothing from them. The views of France were so far not very clear; but Portland added the important piece of information that the Count de Tallard was at that very moment setting out for London, ostensibly to congratulate William, but really to prosecute this negotiation.

Accordingly, Tallard arrived in London on the 19th of March, and he and William, in strict secrecy, admitting no one else to their confidence, discussed this scheme of Louis. This was no other than that the crown of Spain, with the Spanish Netherlands and colonies, should not be allowed to pass to the Emperor, but should be settled on the Electoral Prince of Bavaria, the third claimant; that Naples, Sicily, Sardinia, the province of Guipuzcoa on the French side of the Pyrenees, Fontarabia, San Sebastian, Ferrol, and some towns on the Tuscan coast then owned by Spain, and called Presidii, should be settled by a mutual treaty between them on the Dauphin; and that Milan should be settled on the Archduke Charles, the second son of the Emperor, to whom he had resigned his rights.