During the adjournment of Parliament from the 24th to the 28th of March, the new Administration was formed, and announced in the Commons on the 28th, when the House adjourned over the Easter holidays, to give time for the re-election of such members as had accepted office. The King first sent for the Earl of Shelburne to form a new Administration, naming some members of it; but the Earl of Shelburne declined, as unable to form an Administration upon such conditions, and recommended the King to send for the Marquis of Rockingham. The King refused to see Rockingham face to face, but requested Shelburne to be the bearer of a message to him; but Shelburne only consented on the condition of "full power and full confidence." "Necessity," relates the King, "made me yield to the advice of Lord Shelburne." Before accepting the offer of First Lord of the Treasury, the Marquis of Rockingham, without neglecting some minor matters, stipulated that there should be no veto to the independence of America.[58] But it was nearly three months before an Act passed the Commons authorizing peace with America, and the acknowledgment of American Independence, and it was nearly a year before the treaty for that purpose was agreed upon.

In the meantime, "Immediately before the fall of Lord North's Ministry, in anticipation of that event, Dr. Franklin had written from Paris to Lord Shelburne with general expressions of his pacific views. On receiving that letter, Lord Shelburne, then Secretary of State, sent to Paris, as agent, Mr. Richard Oswald, a London merchant well versed in American affairs. Dr. Franklin readily conferred with Mr. Oswald, and put into his hands a paper drawn up by himself, suggesting that, in order to produce a thorough reconciliation, and to prevent any future quarrel on the North American continent, England should not only acknowledge the thirteen united States, but concede to them the Province of Canada. Such a project was not likely to find favour in the eyes of any British statesman. Mr. Oswald, however, undertook to return to England and lay it before his chief, Dr. Franklin, at his departure, expressing an earnest hope that all future communications to himself might pass through the same hands.

"Under these circumstances, the Cabinet determined that Mr. Oswald should go back to France and carry on the treaty with Franklin, though by no means with such concessions as the American philosopher desired."[59]

After the termination of hostilities between Great Britain and the colonies, the American Commissioners evinced a desire to treat with England alone. Mr. Oswald, as early as July, 1782, wrote privately to Lord Shelburne, "The Commissioners of the colonies have shown a desire to treat and to end with us on a separate footing from the other Powers." "The separate negotiation thus arising was delayed," says Lord Mahon, "first by the severe illness of Dr. Franklin, and next by some points of form in the commission of Mr. Oswald. When at length the more solid part of the negotiation was commenced, the hints of Franklin for the cession of Canada were quietly dropped, with greater case from their having been transmitted in a confidential form. It is also worthy of note that Lord Shelburne prevailed, in his desire of acknowledging the independence of the United States, by an article of the treaty, and not, as Mr. Fox had wished, by a previous declaration."

The two most difficult questions of the treaty related to the fishing grounds of Newfoundland, and the Loyalists or "Tories," as they were called. The English were unwilling to concede the use of the fishing grounds, but the Americans were firm; the result was, that by the provisions of the treaty it was agreed that the Americans should have the right to take fish on the banks of Newfoundland, but not to dry or cure them on any of the King's settled dominions.[60]

But the question which transcended all others in importance, with which this work has chiefly to do, was that of the Loyalists—a class which, by the testimony of American historians themselves, constituted, at the beginning of the war, a majority of the population of the colonies. Their numbers had been greatly reduced from various causes during the war; they had been plundered and scattered by the alternate ascendancy of opposite parties; they had all of them suffered in their property and liberty; many of them had suffered imprisonment, and not a few of them had been executed as criminals for preferring their oath of allegiance and connection with the mother country to a renunciation of their former profession of faith, and absolute submission to a newly self-created authority of rule and a new political creed. At the conclusion of the war, and in the treaty of peace, "the question of Loyalists or Tories," says Lord Mahon, "was, as it ought to be, a main object with the British Government to obtain, if possible, some restitution to the men who, in punishment for their continued allegiance to the King, had found their property confiscated and their persons banished. But from the first Dr. Franklin held out no hopes of any satisfaction on that point. 'The Commissioners,' he said, 'had no such power, nor had even Congress.'[61] They were willing that Congress should, with certain modifications, recommend those indemnities to the several States; and, as one of the negotiators from England tells us, they to the last 'continued to assert that the recommendation of Congress would have the effect we proposed.' The British diplomatists persevered in their original demand, and at one time there seemed a probability that the negotiations might break off, chiefly on this ground. Twice was Mr. Strachey, the Undersecretary of State, an able and experienced man, dispatched to Paris to aid Mr. Oswald with his counsel and co-operation. But at last the mind of Franklin, ever ingenious and fertile of resources, devised a counter scheme. He said that he would allow the losses which the Loyalists had suffered, provided another account were opened of the mischief they had done, as of slaves carried off, or houses burned; new Commissioners to be appointed to strike a balance between the two computations. At this formidable proposal, involving an endless train of discussions and disputes, the negotiators from England finally gave way."[62]

This account of the negotiation in regard to the United Empire Loyalists, taken from Lord Mahon's impartial history, is corroborated in all essential particulars by American historians. Mr. Bancroft says that "Franklin having already explained that nothing could be done for the Loyalists by the United States, as their estates had been confiscated by laws of particular States, which Congress had no power to repeal, he further demonstrates that Great Britain had forfeited every right to intercede for them by its conduct and example, to which end he read to Oswald the orders of the British in Carolina for confiscating and selling the lands and property of all patriots under the direction of the military; and he declared definitely that, though the separate governments might show compassion where it was deserved, the American Commissioners for Peace could not make compensation of refugees a part of the treaty."

"This last demand (adequate indemnity for the confiscated property of loyal refugees) touched alike the sympathy and the sense of honour of England. The previous answer, that the Commissioners had no power to treat on the business of the Loyalists, was regarded as an allegation that though they claimed to have full power, they were not plenipotentiaries; that they were acting under thirteen separate sovereignties, which had no common head. To meet the exigence, Shelburne proposed either an extension of Nova Scotia to the Penobscot, or Kennebec, or the Saco, so that a province might be formed for the reception of Loyalists; or that a part of the money to be received from sales of the Ohio lands might be applied to their subsistence."

"On the 29th of November, 1782, Strachey, Oswald, and Fitzherbert, on the one side, and Jay, Franklin, Adams, and for the first time Laurens, on the other, came together for their last word at the apartments of Jay. The American Commissioners agreed that there should be no future confiscations nor prosecutions of Loyalists, that all pending prosecutions should be discontinued, and that Congress should recommend to the several States and their Legislatures, on behalf of refugees, amnesty and the restitution of their confiscated property." "On the 30th, the Commissioners of both countries signed and sealed fair copies of the Convention." "The treaty was not a compromise, nor a compact imposed by force, but a free and perfect solution and perpetual settlement of all that had been called in question."[63]

Dr. Ramsay observes: "From the necessity of the case, the Loyalists were sacrificed, nothing further than a simple recommendation for restitution being stipulated in their favour. * * The case of the Loyalists was undoubtedly a hard one, but unavoidable from the complex Constitution of the United States. The American Ministers engaged, as far as they were authorized, and Congress did all they constitutionally could; but this was no more than simply to recommend their case to the several States, for the purpose of making them restitution. To have insisted on more, under such circumstances, would have been equivalent to saying that there should be no peace. It is true, much more was expected from the recommendations of Congress than resulted from them; but this was not the consequence of deception, but of misunderstanding the principles of the confederation. In conformity to the letter and spirit of the treaty, Congress urged, in strong terms, the propriety of making restitution to the Loyalists, but to procure it was beyond their power. * * There were doubtless among the Loyalists many worthy characters, friends of peace and lovers of justice. To such restitution was undoubtedly due, and to many such it was made; but it is one of the many calamities incident to war, that the innocent, from the impossibility of discrimination, are often involved in the same distress with the guilty.