In the campaign of 1758 he received the Imperial military Order of Maria Theresa, which was instituted by the Empress Queen in the June of the preceding year. In this Order it is an inviolable principle that no officer whatsoever, "on account of his high birth, long service, wounds, or former merits, much less from mere favour, or the recommendation of others, be received; but that those only who have signalized themselves by some particular act of valour, or have aided the Imperial service by able and beneficial councils, and contributed to their execution by distinguished bravery, shall be admitted."
In the operations of the new year the King of Prussia recovered Schwiednitz from the Imperialists on the 16th April; entered Moravia on the 27th May; invested Olmutz, which was stoutly defended by the governor, General Marshall, a Scotsman; while Marshal Daun, under whom Loudon held a command, took post on the adjacent mountains, to intercept and cut off the Prussian convoys. The siege had now been open for four weeks, and the trenches were rushed with great vigour by the Scottish exile—the gallant Marshal Keith—notwithstanding the great difficulties attending it; for Loudon, bravely, and at incalculable hazard, in the defiles of Damstadt, in the principality of Lichenstien, intercepted a convoy of four hundred waggons, and obliged General Zeithen, who escorted them with twenty squadrons and three battalions, after a five hours' encounter, to retire on Trappau. This loss was irreparable, for General Putkammer, eight hundred men, and the military chest were taken.
The King of Prussia was compelled to raise the siege, and effected one of the most able retreats ever seen in Germany; he then marched to oppose the Russians, who had broken into Brandenburg under Generals Brown and Farmer, two Scotsmen, whom he met in battle at Zorndorf, defeated on the 25th August, and drove them into Poland.
Had Loudon (who was ably seconded by Daun) not intercepted General Zeithen, "the town of Olmutz must have been taken in a fortnight," says Frederick, who styles it the Battle of the Convoy; "for the third parallel was finished, and the besiegers had begun to open the saps." For this service Loudon received the rank of lieutenant-field-marshal.
He had now won the reputation of being the first cavalry officer in the service of the Empress-Queen; and he was of great use to Daun in galling and incommoding the King of Prussia during the retreat from Olmutz.
With four thousand men he took post in the wood of Opotshno, a Bohemian town, fifteen miles north-east of Koningengratz, where he intended to attack the Baron de la Mothe Fouque, who with thirty-two battalions and squadrons was conveying the heavy siege train. But there Loudon was unexpectedly assailed by Frederick, who had heard of his projected ambush, and marched to attack him in it, and he was forced to retire through the forest with the loss of a hundred Croatian troopers. He retreated towards Holitz, and thus the siege train passed unmolested to Glatz.
Loudon and General St. Ignan followed Frederick closely; at Koningengratz their Pandours slew General Saldern, Colonel Blankenzee, and seventy men, but were checked by the sabres of Putkammer's hussars; and to prevent this harassing of the rear-guard, Frederick prepared an ambuscade on a narrow path which lies through a wood at Metau. In this defile he concealed ten battalions and twenty squadrons, under whose fire the Austrians were drawn by a few flying skirmishers. "Loudon, who was very easily heated," to quote Frederick, "resolved on an assault;" but the Prussian cavalry poured upon him like a torrent, a fire opened upon his men from every point of the rocks and pass, three hundred were shot dead, and he was forced to retire. Soon after this he was lured again, by the Volunteers of Le Noble, into a ravine near Skalitz, where he was suddenly assailed by six battalions in the night, and had to give way, with the loss of six officers and seventy men.
He took possession of Peitz, a town in the Duchy of Brandenburg, on the right bank of the Matx, and left no means untried to fulfil with signal success his duty of covering Daun's left flank during the whole of the Austrian advance and Prussian retreat. Daun posted himself at Stolpen, to the eastward of the Elbe, on one hand to preserve a communication with a column which he had detached to Koningstien, and on the other to favour the active operations of Marshal Loudon, who had advanced through Lower Lusatia to the frontier of Brandenburg.
At the battle of Hochkirchen, which was fought on the 13th October, the defeat of the Prussians was solely attributed to Loudon's skill and bravery. On the 12th he had attacked a great convoy, but was repulsed by Marshal the Honourable James Keith, with the loss of eighty men, among whom was the Prince de Lichenstien, lieutenant-colonel of the regiment of Löwenstien. After this Loudon assembled his dispersed troops and took ground in a woody mountain, which was a long quarter of a league, German measure, beyond the Prussian right, facing the village of Hochkirchen. A marsh separated the flank of Frederick from this height. Daun secretly prepared a road for four columns to form a junction with Loudon, who on the night of the 13th glided down with his swift Pandours to the rear of the Prussian position, and set on fire the village of Hochkirchen, driving out by the edge of the sabre the battalions quartered there, and seizing on a battery which defended an angle of the place; while the gallant Major Lang, with the regiment of the Margrave Charles, threw himself into the churchyard, and in the dark opened a blaze of musketry on the Pandours, whose light uniforms were soon too fatally visible by the flames of the burning village. Around this conflagration the whole tide of battle rolled at midnight. The aged Marshal Keith and Prince Ferdinand of Brunswick were killed, and the Prussians were defeated with the loss of seven thousand men and most of their camp equipage.
Marshal Daun filled his despatch (which detailed this victory) with the highest encomiums on Loudon, whom he sent immediately towards Silesia in pursuit of Frederick, whose forces he was to exclude from Lusatia; and so he followed and galled them with untiring zeal and vigour, though he was then suffering from a severe and chronic disease in the stomach; but on his march towards the Saxon capital, the Prussian monarch made one vigorous stand and repulsed him; after which he retired to Zittau.