On the 5th of December Parliament met, and the king, though not yet able to announce the signing of the provisional treaty with France and America, intimated pretty plainly the approach of that fact. Indeed, Lord Shelburne had addressed a letter to the Lord Mayor of London eight days before the articles with America were actually signed, that this event was so near at hand that Parliament would be prorogued from the time fixed for its meeting, the 26th of November, to the 5th of December. It was, indeed, hoped that by that day the preliminaries with France and Spain would be signed too. This not being so, the king could only declare that conclusion as all but certain.

This announcement drew from the Opposition a torrent of abuse of Ministers, who, in reality, had only been carrying out the very measure which they had long recommended, and which Fox, in particular, had been seriously endeavouring to accomplish whilst in office. Their censures appeared to arise rather from the fact that the war was ended without their mediation than from anything else. Fox upbraided Lord Shelburne with having once said that, when the independence of America should be admitted, the sun of England would have set. Yet this had been the opinion not of Lord Shelburne merely, but of numbers who now saw reason to doubt that gloomy view of things, and there was the less reason for Fox to throw this in the face of the Prime Minister, as he had been himself, whilst his colleague, earnestly labouring with him for that end. Still he was naturally sore from Shelburne's successful intrigues against his diplomacy. On the 18th of December he moved for copies of such parts of the provisional treaty as related to American independence; but in this he was supported by only forty-six members.

On the 26th the Houses adjourned for a month, for the Christmas recess, and during this time the treaties with France and Spain made rapid progress. The fact of America being now withdrawn from the quarrel, coupled with the signs of returning vigour in England—Rodney's great victory and the astonishing defence of Gibraltar—acted as a wonderful stimulant to pacification. Spain still clung fondly to the hope of receiving back Gibraltar, and this hope was for some time encouraged by the apparent readiness of Lord Shelburne to comply with the desire, as Chatham and Lord Stanhope had done before. But no sooner was this question mooted in the House of Commons than the public voice denounced it so energetically, that it was at once abandoned. On the 20th of January, 1783, Mr. Fitzherbert signed, at Versailles, the preliminaries of peace with the Comte de Vergennes, on the part of France, and with D'Aranda, on the part of Spain. By the treaty with France, the right of fishing off the coast of Newfoundland and in the Gulf of St. Lawrence was restored, as granted by the Treaty of Utrecht; but the limits were more accurately defined. The islands of St. Pierre and Miquelon, on the coast of Newfoundland, were ceded for drying of fish. In the West Indies, England ceded Tobago, which France had taken, and restored St. Lucia, but received back again Grenada, St. Vincent, Dominica, St. Kitt's, Nevis, and Montserrat. In Africa, England gave up the river Senegal and the island of Goree, but retained Fort St. James and the river Gambia. In India, the French were allowed to recover Pondicherry and Chandernagore, with the right to fortify the latter, and to carry on their usual commerce. They regained also Mahé and the factory of Surat, with their former privileges. The articles in the Treaty of Utrecht, regarding the demolition of the fortifications of Dunkirk, were abrogated. Spain was allowed to retain Minorca and both the Floridas, but she agreed to restore Providence and the Bahamas. The latter, however, had already been retaken by us. She granted to England the right of cutting logwood in Honduras, but without the privilege of erecting forts or stock-houses, which rendered the concession worthless, for it had always been found that without these it was impossible to carry on the trade. With the Dutch a truce was made on the basis of mutual restoration, except as concerned the town of Negapatam, which Holland ceded. The preliminaries, however, were not settled till nearly eight months afterwards.

It was not to be wondered at that when, on the 24th of January, the preliminaries of peace were laid on the tables of the two Houses, there should be a violent denunciation of the large concessions made by Ministers. Spain had been granted better terms than in any treaty since that of St. Quentin. She had obtained the most desirable island of Minorca, with the finest port on the Mediterranean. She had got the Floridas, and had given up scarcely anything, whilst, had the British, now freed from the dead weight of America, pursued the war against her, she must soon have lost most of her valuable insular colonies. France had given up more, but she recovered very important territories which she had lost, and especially her settlements of Pondicherry and Chandernagore, in the East Indies; but America had conceded nothing, and yet had been allowed to determine her own frontier, and to share the benefits of the fishing all round our own Transatlantic coasts.

A new and surprising phenomenon was discovered in the attacks upon Ministers for these concessions: Fox and North were in coalition! Fox, who so lately had declared North and his colleagues men "void of every principle of honour and honesty," and who would consent, should he ever make terms with them, to be called "the most infamous of mankind," now as warmly declared that he had ever found Lord North—this man void of honour and honesty—a man always "open and sincere as a friend, honourable and manly as an enemy, above practising subterfuges, tricks, and stratagems." Lord North, on his side, repaid the compliments of Fox, growing enthusiastic on the genius, eloquence, and generous nature of that statesman. "While I admire the vast extent of his understanding," exclaimed North, "I can rely on the goodness of his heart." The coalition was looked upon with disfavour, but it was justified to a considerable extent during the debate on the peace. Lord John Cavendish truly represented that France and Spain were on the verge of ruin; that Holland was in an exhausted and helpless condition; and that as for America, it was in the very gulf of destitution, the people refusing to pay the taxes ordered by Congress for the continuance of the war. And it was to such defeated and demolished enemies that Ministers had conceded almost everything they had asked. Lord North turned more particularly to the concession made to the French in the East Indies. It was in that quarter, he said, that he looked for a consolidated and expanding empire, calculated to recompense us, and more than recompense us, for the loss of America. From that splendid continent we had completely driven the French, and the soundest policy dictated their continued firm exclusion from it. Yet here had Ministers most fatally readmitted them, to renew their old plots and alliances against us, by which they would to a certainty continue to harass, thwart, and weaken us, till we once more went through the ruinous and sanguinary process of expulsion. He was equally severe on the surrender of Minorca and the Floridas to Spain, and the admission of the unconceding, unconciliating Americans to our own proper fishing grounds. Fox called on Ministers to produce the treaty which he had sketched a few months before, and to see what very different terms he had demanded, and would have exacted. That the sense of the House went with these sentiments was shown by both the amendments of the Coalition being carried by a majority of sixteen. Lord John Cavendish moved another resolution strongly condemning the terms of the treaty, but consented that the peace now made should remain inviolate. This was also carried, by a majority of seventeen, being two hundred and seven votes against one hundred and ninety.

This majority of the Coalition compelled Lord Shelburne to resign; but the rest of the Administration remained in their places, in the hope that Pitt would now take the Premiership. In fact, the king, on the 24th of February, sent for Pitt and proposed this to him; but Pitt was too sensible of the impossibility of maintaining himself against the present combination of parties. The next day Dundas moved and carried an adjournment for three days, to give time for the arrangement of a new Cabinet. Pitt continued to persist in declining to take the Premiership, and on the 2nd or 3rd of March the king sent for Lord North. His proposal was that North should resume the management of affairs; but North insisted on bringing in his new friends, and to that the king objected. Matters remained in this impracticable condition till the 12th, when the king sent for North, and proposed that the Duke of Portland should be asked to form an Administration; but this did not at all advance matters, for Portland was equally determined with North to maintain the Coalition, and the king was resolved to have nothing to do with Fox, whilst Fox was equally determined not to admit the king's friend, Lord Stormont, to any Cabinet of which he was a member. On the 31st the announcement was made that Pitt had resigned, and that the king was prepared to submit to the terms of the Coalition. George, with deep and inward groans, submitted himself once more to the slavery of the great Whig houses, and, as some small recompense, the Coalition admitted Lord Stormont to a place in the Cabinet.

The new Administration arranged itself as follows:—The Duke of Portland, First Lord of the Treasury; Lord North, Home Secretary; Fox, Secretary for Foreign Affairs; the Earl of Carlisle, Privy Seal; Lord John Cavendish, again Chancellor of the Exchequer; Admiral Lord Keppel, the head of the Admiralty again; Lord Stormont, President of the Council; the great stumbling block, Thurlow, removed from the Woolsack, and the Great Seal put into commission; Burke again Paymaster of the Forces, and his brother Richard as Secretary to the Treasury in conjunction with Sheridan. Such was this strange and medley association, well deserving Burke's own description of a former Administration, as of a strange assemblage of creatures, "all pigging together in one truckle-bed." Those who formed exclusively the Cabinet were Portland, North, Fox, Cavendish, Carlisle, Keppel, and Stormont, so that the great Whigs had taken care again to shut out Burke, who was only a man of genius. Such an incongruous company could not long hold together. The king did not conceal his indignation at seeing Fox in office; the whole Court openly expressed its loathing of the anomalous union; the country had no confidence in it; Fox felt that he had wounded his popularity by his sudden and violent change.

At first the course of affairs was not eventful. On the 7th of May Pitt moved a series of resolutions as the basis of a Bill for reform of Parliament. The main features of this scheme were those of taking measures against bribery and corruption; the disfranchisement of boroughs when a majority of the electors was proved corrupt; and the addition of a hundred new members to the House of Commons, nearly all of them from the counties, except an additional member or two from the metropolis.

On the 23rd of June the king sent down a message to the Commons, recommending them to take into consideration a separate establishment for the Prince of Wales, who had arrived at the age of twenty-one. This young man, whose whole career proved to be one of reckless extravagance and dissipation, was already notorious for his debauched habits, and for his fast accumulating debts. He was a great companion of Fox, and the gambling roués amongst whom that grand orator but spendthrift man was accustomed to spend his time and money, and therefore, as a pet of this Coalition Ministry, the Duke of Portland proposed to grant him one hundred thousand pounds a year. The king, alarmed at the torrent of extravagance and vice which such an income was certain to produce in the prince's career, declared that he could not consent to burden his people, and encourage the prince's habits of expense, by such an allowance. He therefore requested that the grant should amount only to fifty thousand pounds a year, paid out of the Civil List, and fifty thousand pounds as an outfit from Parliamentary funds. The Ministers were compelled to limit themselves to this, though the saving was merely nominal, for the debts on the Civil List were again fast accumulating, and the prince was not at all likely to hesitate to apply to Parliament to wipe off his debts, as well as his father's when they became troublesome to him. Resenting, however, the restraint attempted to be put upon him by his father, the prince the more closely connected himself with Fox and his party, and the country was again scandalised by the repetition of the scenes enacted when Frederick, Prince of Wales, father of George III., was the opponent of his own father, George II., and the associate of his opponents. Such, indeed, had been the family divisions in every reign since the Hanoverian succession. On the 16th of July Parliament was prorogued.