On the Prussians, under Prince Henry, passing the Elbe in July, Daun reinforced Lacy with six battalions and some regiments of horse. In spite of their utmost efforts, Frederick, after fighting the Imperialists on the heights of Buckersdorf, where an Irish officer named O'Kelly ably defended their redoubts with only 4000 men, recovered the city of Schweidnitz on the 22nd July, though defended by 9000 men, under another Irish general named Butler. He then turned his eyes towards Saxony, and proposed to besiege Dresden.
After Loudon entered Silesia in August, some severe fighting ensued, especially at Munsterberg, and on the hills of Labedau. Lacy was then hovering with his troops near Grossenhayn, and encamping at Gros-dobritz, from whence he advanced his videttes as far as Strehlen along the Elbe—for Count O'Donnel still occupied Dresden or its neighbourhood.
In September, Lacy was sent with his brigade, 15,000 strong, by Daun, to join the Russians at Brandenburg, with orders to ravage all the electorate, which, while covered by the army of Soltikoff, he did so effectually as to compel Frederick either to shift his camp from Buntzelwitz, on which he had 466 guns with 182 mines, or to weaken his army by sending out detachments to protect the burning country. In doing the latter some of Prince Henry's cavalry were severely cut up by Lacy's dragoons in a forest near Reisa; and to avoid such unpleasant surprises in future, the Prussians cut down all the magnificent timber that surrounded the old castle of Hubertsbourg; but on Lacy's nearer approach they retired to Potsdam and Spandau. In October, Prince Henry of Prussia and Marshal Daun were both encamped—one under the walls of Dresden, and the other under the ramparts of Meissen, while their hussars and light troops fought together hourly, and Lacy hovered in the neighbourhood of Lusace, watching some large detachments of Prussians.
In December he again terrified the inhabitants of the capital by appearing suddenly within seven miles of Berlin; but on an overwhelming force under General Bandemer being sent against him by Prince Henry, he recrossed the Elbe and retreated.
Fortunately in 1762 there was concluded with the Court of Vienna a cessation of hostilities for the provinces of Saxony and Silesia. This partial truce induced the Princes of the Empire to sign a treaty of neutrality to save their petty dominions from the ravages of Frederick; and as Sweden and Russia, on the accession of the Czar Peter III, had concluded a truce with him, the Septennial War was thus left to be finished by the two powers which began it—Prussia and Austria.
In that year the Khan of the Crimea proposed to join the former, and indeed marched 5000 men towards the frontier of Poland for that purpose; but the death of the Czarina Elizabeth, and the consequent revolution in Russia, had so bewildered the poor Tartar, that not knowing what side to take, he timidly retreated to Perekop. On this Frederick recalled the Prince of Bavern from Moravia, with his troops, that together they might make doubly sure of Schweidnitz.
They joined forces, and the prince encamped on the heights of Peilau. Scarcely had this junction been effected before the Austrians, under Daun, Lacy, and O'Donnel, entered among the mountains on the 16th of August, 1762, and after a skirmish at Langan Bielau, encamped with forty battalions and forty squadrons close by; while General Beck, another Imperialist, occupied the Kletchberg with twelve battalions and twenty squadrons. All night the Prussians were under arms; their cavalry bitted and saddled, their muskets loaded, and port-fires lit; every trooper slept beside his horse, and each gunner by his cannon. Daun assailed the Prince of Bavern in his position with great impetuosity. Lacy passed the village of Peilau with six battalions, which he skilfully kept concealed behind a hill whereon his artillery were posted. To cover his left flank, O'Donnel marched forty squadrons directly from Peilau, and three times his Imperial cuirassiers were repulsed from the valley, and by a volley of grape from fifteen six-pounders his confusion was completed. O'Donnel, with the loss of 1500 dragoons, fell back, and thus exposed the left flank of Lacy, who, after making great efforts to storm the heights occupied by the foe, was compelled to retreat; and next day Daun retired by Wartha and Glatz to Scharfneck, where he remained till the close of the campaign.
This was the last military service of importance performed by Marshal Count Lacy at that time; for soon after, the war came to a close, by the treaty of peace, signed in February, 1763, by which it was agreed that a mutual restitution of conquests and oblivion of injuries should take place; and that Prussia and Austria should be put in the same position as when the hostilities began; and thus happily ended this truly atrocious strife, in which nearly NINE HUNDRED THOUSAND SOLDIERS PERISHED. Prussia fought ten pitched battles, and lost 180,000 men; Russia, four great battles, and lost 120,000 men; Austria, ten battles, with the loss of 140,000 men; France lost 200,000; Britain, 165,000; Sweden, 25,000; and the Circles 28,000; while Austria found herself encumbered by one hundred millions of crowns of debt!
For fourteen years Lacy led a life of peace, devoting himself to the development of discipline in the Austrian army, till the death of the Bavarian Elector, on the 30th December, 1777, opened up a new prospect of aggrandizement to the Imperial Government, and again lighted the torch of war in Germany. The Elector Palatine, the Elector of Saxony and Duke of Mechlenburg-Schwerin laid claim to the vacant Electoral hat; but their voices were lost when the formidable and covetous House of Hapsburg also put forth a demand, and the Emperor Joseph and Marshal Lacy appeared with 100,000 men, and an immense train of artillery, at the celebrated position of Konigsgratz, above the confluence of the Adler and the Rhine.
The Prussians and Saxons broke into Bohemia, and compelled Loudon to retreat, and a year of the old manœuvring war and devastation followed, till the Congress of Teschen, by which Charles Theodore, Elector Palatine of the House of Neuberg, obtained the Bavarian hat, on the 13th May, 1779. The Emperor was compelled to relinquish his unjust claims, and tranquillity was restored to Germany, enabling Count Lacy, then in his sixty-first year, once more to sheath the sword; and this command which he held in the Bavarian dispute was the last act of importance performed by him in the service of Austria.