The Duke of Bedford came to me yesterday, and told me he had never been so disheartened about politics in his life, or so hopeless of any good result for his party, in which he saw nothing but disagreement and all sorts of pretensions and jealousies incompatible with any common cause, and Aberdeen, whom I met at dinner yesterday, is of much the same opinion. The principal object of interest and curiosity seems now to be whether Palmerston will join them or not. On this the most opposite opinions and reports prevail. Just now it is said that he has resolved not. At all events, if he does, he will have to go alone, for he can take nobody with him, as it certainly is his object to do. But it does not appear now as if there was the least chance of Gladstone or Sidney Herbert joining him. The Duke of Bedford told me that both Derby and Palmerston were in better odour at Windsor than they were, and that the Queen and Prince approve of Pam's move about the Resolutions, and think he did good service. Aberdeen also thinks that though the Whigs and Radicals are angry with Lord Palmerston, and that his proceeding was unwarrantable, he stands in a better position in the country, and has gained credit and influence by what he did. Abroad, where nobody understands our affairs, he is supposed to have played a very great part, and to have given indubitable proof of great political power.

December 9th.—Within these few days the Budget, which was not ill received at first, has excited a strong opposition, and to-morrow there is to be a pitched battle and grand trial of strength between the Government and Opposition upon it, and there is much difference of opinion as to the result. The Government have put forth that they mean to resign if beaten upon it. Derby and Disraeli were both remarkably well received at the Lord Mayor's dinner the night before last, and this is an additional proof that, in spite of all their disreputable conduct, they are not unpopular, and I believe, if the country were polled, they would as soon have these people for Ministers as any others. Nobody knows what part Palmerston is going to take.

DEFEAT ON THE BUDGET.

December 18th.—The last few days have been entirely occupied by the interest of the Budget debate and speculations as to the result. We received the account of the division at Panshanger yesterday morning, not without astonishment; for although the opinion had latterly been gaining ground that the Government would be beaten, nobody expected such a majority against them.[1] Up to the last they were confident of winning. The debate was all against them, and only exhibited their weakness in the House of Commons. It was closed by two very fine speeches from Disraeli and Gladstone, very different in their style, but not unequal in their merits.

[1] [The division on the Budget took place on December 16 after five nights' debate, the numbers being—for the Government, 286; against, 305; adverse majority, 19.]

Panshanger, December 19th.—I went to town yesterday morning to hear what was going on. Lord Derby returned from Osborne in the middle of the day, and the Queen had sent for Lords Lansdowne and Aberdeen. She had been gracious to Derby, and pressed him to stay on, if it were only for a short time. I saw Talbot, and from the few words he let drop I gathered that they have already resolved to keep together, and to enter on a course of bitter and determined opposition. Not that he said this, of course, but he intimated that he had no idea of any new Government that might be formed being able to go on even for a short time, and that they would very speedily be let in again. The language of the Carlton corresponds with this, and I have no doubt they will be as virulent and as mischievous as they can. It remains to be seen, if a good Government is formed, whether some will not be more moderate, and disposed to give the new Cabinet a fair trial.

Clarendon writes me word that the meeting at Woburn between John Russell, Aberdeen, Newcastle, and himself has been altogether satisfactory, everybody ready to give and take, and anxious to promote the common cause, without any selfish views or prejudices. Newcastle is particularly reasonable, disclaiming any hostility to John Russell, and only objecting to his being at present the nominal head of the Government, because there is rightly or wrongly a prejudice against him, which would prevent some Liberals and some Peelites joining the Government if he was placed in that position; but he contemplates his ultimately resuming that post, and he (Newcastle) is ready to do anything in office or out. There is no disposition to take in Cobden and Bright, but they would not object to Molesworth.

I went over to Brocket just now, and found the Palmerstons there. He is not pleased at the turn matters have taken, would have liked the Government to go on at all events some time longer, and is disgusted at the thought of Aberdeen being at the head of the next Ministry. This is likewise obnoxious to the Whigs at Brooks's, and there will be no small difficulty in bringing them to consent to it, if Lansdowne refuses. Beauvale said if Palmerston had not been laid up, and prevented going to the House of Commons, he thinks this catastrophe would not have happened, for Palmerston meant to have done in a friendly way what Charles Wood did in an unfriendly one, and advised Disraeli to postpone and remake his Budget, and this advice so tendered he thinks Dizzy would have taken, and then the issue would have been changed and deferred till after the recess. But I don't believe this fine scheme would have taken effect, or that Dizzy would or could have adopted such a course. Beauvale says he is pretty sure Palmerston will not take office under Aberdeen's Premiership; on the other hand, Aberdeen has no objection to him, and will invite Palmerston, if the task devolves upon him. Ellice fancies Lansdowne will decline, and that Aberdeen will fail, and that it will end in Derby coming back, reinforced by Palmerston and some Peelites. The difficulties are certainly enormous, but by some means or other I think a Government will be formed. The exclusions will be very painful, and must be enormous. Lord Derby met Granville and others at the station on Friday, and he said he calculated the new Cabinet could not consist of less than thirty-two men, and many then left out. It will be a fine time to test the amount of patriotism and unselfishness that can be found in the political world.

THE COALITION MINISTRY.

London, December 21st.—I came to town yesterday morning, and heard that the day before (Sunday) a very hostile feeling towards Aberdeen had been prevailing at Brooks's, but no doubt was entertained that the Government would be formed. In the afternoon Clarendon came to me on his way to the House of Lords, and told me all that had passed up to that time. On receiving the Queen's summons, a meeting took place between Lansdowne and Aberdeen at Lansdowne House, at which each did his best to persuade the other to accept the commission to form a Government. Lansdowne pleaded absolute physical inability, and his friends seem to be quite satisfied that he really could not undertake it. Accordingly Aberdeen gave way, and departed for Osborne on a reiterated summons, and, after telling the Queen all that had passed between Lansdowne and himself, undertook the task. Nothing could be more cordial all this time than the relations between himself and John Russell; but as soon as it became known that Aberdeen was to form the new Government, certain friends of John Russell set to work to persuade him that it would be derogatory to his character to have any concern in it, and entreated him to refuse his concurrence. These were David Dundas and Romilly, and there may have been others. This advice was probably the more readily listened to, because it corresponded with his original view of the matter and his own natural disposition, and it produced so much effect that yesterday morning he went to Lansdowne and told him that he had resolved to have nothing to do with the new Government. Lansdowne was thunderstruck, and employed every argument he could think of to change this resolution. It so happened that he had written to Macaulay and asked him to call on him to talk matters over, and Macaulay was announced while Lord John was still there. Lansdowne told him the subject of their discussion, and the case was put before Macaulay with all its pros and cons for his opinion. He heard all Lansdowne and Lord John had to say, and then delivered his opinion in a very eloquent speech, strongly recommending Lord John to go on with Aberdeen, and saying that, at such a crisis as this, the refusal of his aid, which was indispensable for the success of the attempt, would be little short of treason. Lord John went away evidently shaken, but without pronouncing any final decision. Clarendon then called at Lansdowne House, and heard these particulars, and Lansdowne entreated him to go and see Lord John and try his influence over him. Clarendon had the day before given him his opinion in writing to the same effect as Macaulay. He went, saw him, and repeated all he had before written. Lord John took it very well, and, when he left him, said, 'I suppose it will be as you wish,' and when I saw Clarendon he seemed reassured, and tolerably confident that this great peril of the whole concern being thus shipwrecked in limine had passed away. After the House of Lords where I heard Derby's strange and inexcusable speech, we again discussed the matter, when he said Lord John had raised another difficulty, for he said he would not take the Foreign Office, alleging, not without truth, that it was impossible for him or any man to perform the duties of so laborious an office and lead the House of Commons. Lord John also signified to Clarendon that he should insist on his being in the Cabinet, which Clarendon entreated him not to require. Newcastle, who was there, suggested that Lord John might take the Foreign Office for a time, and if he found the two duties incompatible, he might give it up, and Clarendon seemed to think this might be done, and at all events he means to persuade Lord John (as no doubt he will) to make up his mind to take it, for his not doing so would certainly be very inconvenient. Should Lord John prove obstinate in this respect, I have no doubt Clarendon will himself be put there.