Before he withdrew, the king, who retained his high opinion of his political wisdom, consulted him on the constitution of the new Cabinet. Walpole recommended that the post of First Lord of the Treasury, including the Premiership, should be offered to Pulteney, as the man of the most undoubted talent. If he should refuse it, then that it should be given to Lord Wilmington, who, though by no means capable of directing affairs by his own energy, was of a disposition which might allow them to be conducted by the joint counsel of his abler colleagues. The king consented that the Premiership should be offered to Pulteney, though he hated the man, but only on this condition, that he pledged himself to resist any prosecution of the ex-Minister. Pulteney declined the overture on such a condition, for though he said he had no desire to punish Walpole, he might not be able to defend him from the attacks of his colleagues, for, he observed, "the heads of parties, like those of snakes, are carried on by their tails." The king then sent Newcastle to Pulteney, and it was agreed to allow Wilmington to take the post of First Lord of the Treasury. Carteret thought that this office was more due to him, but Pulteney declared that if Wilmington were not permitted to take the Premiership he would occupy it himself, and Carteret gave way, accepting the place of Secretary of State, with the promise that he should manage in reality the foreign affairs. In all these arrangements the king still took the advice of Walpole, and Newcastle was instructed to again endeavour to draw from Pulteney a promise that he would at least keep himself clear of any prosecution of the late Minister. Pulteney evaded the question by saying that he was not a bloody or revengeful man; that he had always aimed at the destruction of the power of Walpole, and not of his person, but that he still thought he ought not to escape without some censure, and could not engage himself without his party.

Newcastle, who wanted to retain his place in the new Cabinet, was more successful on his own behalf. Pulteney said he had no objection to himself or the Lord Chancellor, but that many changes must be made in order to satisfy the late Opposition, and to give the Cabinet a necessary majority. Pulteney then declared that, for himself, he desired a peerage and a place in the Cabinet, and thus the new Ministry was organised:—Wilmington, First Lord of the Treasury; Carteret, Secretary of State; the Marquis of Tweeddale, Secretary for Scotland; Sandys, the motion-maker, Chancellor of the Exchequer; the Prince of Wales was to receive the additional fifty thousand pounds a year; and his two friends, Lord Baltimore and Lord Archibald Hamilton, to have seats at the new Board of Admiralty.

When these arrangements became known, the Tory party grew dreadfully exasperated. But not the Tories only—there were throngs of Whigs who had battled zealously for the same object, and with the same hope of personal benefit, and yet they were passed over, and Pulteney, Carteret, and their immediate coterie had quietly taken care of themselves, and thrown their coadjutors overboard. A meeting was appointed between Pulteney and the rest already in office, and the Duke of Argyll, Chesterfield, Cobham, Bathurst, and some others. The Prince of Wales was present, and the different claims were discussed. Argyll was satisfied by being made Master-General of the Ordnance, Colonel of His Majesty's Royal Regiment of Horse Guards, Field-Marshal and Commander-in-Chief of all the forces in South Britain. Chesterfield got nothing, professing to wait to see a more thorough change of men before he went amongst them; but Cobham was made a Field-Marshal, and restored to the command of the Grenadier Guards, but he could get nothing for his nephew, the fiery Oppositionist, Lyttelton. Lord Harrington was made an Earl and President of the Council. But what surprised the country most was that Pulteney, hitherto the head and soul of the party, should have been content to sacrifice himself for the sake of a title. He was made Earl of Bath and received a place in the Cabinet; but by this change, although he seemed to have a brilliant career before him, he forfeited the confidence of the country, which had always looked up to him as the most determined and disinterested of patriots. From this moment he sank into insignificance and contempt. Some others of the old officials remained in as well as Newcastle. Sir William Yonge and Pelham, brother of Newcastle, retained their posts, Yonge as Secretary of War, and Pelham as Paymaster of the Forces.

The new Ministry were now to find that it was very difficult to perpetuate principles and measures which they had for a quarter of a century been condemning simply because they furnished weapons of annoyance to the party then in power. The public, still smarting under the ruinous mismanagement of the war, returned to the charge, by demanding an inquiry into the conduct of Walpole, whom they accused of their sufferings. These petitions were introduced and recommended by what were called the Boy Patriots—Pitt, Lyttelton, and the rest.

As a means of popularity, they insisted on the standing army being abolished in time of peace, on the strict limitation of placemen in Parliament, and on the return to triennial Parliaments. These were hard topics for the patriots now in power to digest. But the depression of trade continued, and no one could suggest a remedy but that of reducing taxation at the very time that all parties were zealous for the prosecution of the war. Finding no other solution to their difficulties, the public turned again to the demand of an inquiry into the administration of Walpole, hoping to lay bare in that the causes of their sufferings. Accordingly Lord Limerick, on the 23rd of March, rose and proposed a committee to inquire into the administration of Walpole, not for twenty, but for the last ten years. Pulteney not only voted, but spoke in favour of this motion, and it was carried by a majority of seven. Lord Limerick was chosen chairman, and such was the partial and vindictive spirit in which they went to work in examining papers and witnesses, that the honourable-minded Sir John Barnard, though so staunch an opponent of Walpole when in power, declared that he would no longer take part in the labours of a committee which displayed so little regard to the general inquiry, but concentrated all their efforts on the ruin of one individual.

But the Committee found itself opposed in these objects in the highest quarter. The king displayed the most firm disposition to protect his late Minister, and was in constant communication with Walpole and his friends for the purpose. Every means were used to protect from the scrutiny of the Committee those who were possessed of the most important information, and to induce them to remain obstinately silent. Mr. Edgecumbe, who had managed the Cornish boroughs for Walpole, and could have revealed things which would have filled the Committee with exultation, was raised to the Upper House, and thus removed from the power of the Commons. Paxton, the Solicitor to the Treasury, a most important witness, remained unshakably silent, and was committed to Newgate; nor was the Committee more successful with Scrope, the Secretary to the Treasury. This officer, who, no doubt, held most desirable knowledge in his bosom, firmly refused to make any disclosures, though he was now a very feeble old man. Other officials declined to make statements whose disclosure might incriminate themselves, and which they were excused from doing by the great principles of our judicature. To remove this obstacle Lord Limerick, the Chairman of the Committee, then moved that a Bill of Indemnity should be passed, to exempt witnesses from all penalties in consequence of their disclosures. This passed the Commons by a majority of twelve, but was rejected in the House of Lords by a large majority.

After contending with such difficulties—for the Committee was, in truth, combating with all the powers of the Crown—it was not likely that it would produce a very effective report. In fact, desirable as it was that a deep and searching inquiry should have been made, and the mysteries of that long reign of corruption thrown open, the fact that the Monarch and the Minister had gone hand in hand through the whole of it was, on the very surface, fatal to any hope of a successful issue, and what rendered this fatality greater was, that the Committee too obviously went into the question hotly to crush an old antagonist who had defeated and humiliated them for a long course of years, rather than to serve the nation. When, therefore, on the 30th of June, they presented their report, the feeling, on its perusal, was one of intense disappointment. It alleged that, during an election at Weymouth, a place had been promised to the Mayor if he would use his influence in obtaining the nomination of a retiring officer, and that a church living had been promised to the Mayor's brother-in-law for the same purpose; that some revenue officers, who refused to vote for the ministerial nominees, were dismissed; that a fraudulent contract had been given to Peter Burrell and John Bristow, two members of the House of Commons, for furnishing money in Jamaica for the payment of the troops, by which they had pocketed upwards of fourteen per cent. But what were these few trifling and isolated cases to that great system of corruption which the public were satisfied had spread through all Walpole's administration, and which abounded with far more wonderful instances than these? The very mention of them, and them alone, was a proclamation of defeat.

The Committee of Inquiry, stimulated by the disappointment of the public, began preparations for a fresh report; but their labours were cut short by the termination of the Session. In order to conciliate in some degree public opinion, Ministers hastened to allow the passing of a Bill to exclude certain officers from the House of Commons; they passed another to encourage the linen manufacture; a third, to regulate the trade of the Colonies; and a fourth, to prevent the marriage of lunatics. They voted forty thousand seamen and sixty-two thousand landsmen for the service of the current year. The whole expenditure of the year amounted to nearly six million pounds, which was raised by a land-tax of four shillings in the pound; by a malt-tax; by a million from the sinking fund; and by other resources. They provided for the subsidies to Denmark and Hesse-Cassel, and voted another five hundred thousand pounds to the Queen of Hungary. On the 15th of July the king prorogued Parliament; at the same time assuring the two Houses that a peace was concluded between the Queen of Hungary and the King of Prussia, through his mediation; and that the late successes of the Austrian arms were in a great measure owing to the generous assistance of the British nation.

Deserted by the Prussians, the French retired with precipitation to Prague, where they were followed by the Austrian army under Prince Charles of Lorraine and Prince Lobkowitz. Soon after the Grand Duke of Tuscany took the principal command, and the French offered to capitulate on condition that they might march away with their arms and baggage. This was refused; but Marshal Belleisle stole out of Prague in December, and, giving Lobkowitz the slip, made for the mountains with fourteen thousand men and thirty pieces of artillery. Belleisle displayed unwearied activity in protecting his men and baggage from the harassing pursuit of Lobkowitz. Notwithstanding this his men perished in great numbers from famine and the severity of the season. They had been reduced to eat horseflesh before leaving Prague, and now they fell exhausted in the deep snows, and were mercilessly butchered by the Austrian irregulars and peasantry. On the 29th of December he reached Eger, and from that point marched into Alsace without further molestation; but he then found that of the thirty-five thousand troops which he took into Germany, only eight thousand remained. Though this retreat was celebrated as one of the most remarkable in history, the Marshal, on reaching Versailles, was received with great coldness.