This was a man whom Struensee could employ, and therefore he recalled him, in order to entrust to him the reform of the Danish army, and employ him in the negotiations with Russia for the pestilent exchange of territory. Falckenskjold was reluctant to quit the Russian service, where he had the best prospects of speedy promotion; but he yielded to Struensee's wishes, as a speedy return to the Russian service was promised him, but chiefly that he might offer his assistance in the diplomatic negociations between the two kingdoms.

On arriving in Copenhagen, Falckenskjold was nominated proprietor and colonel of the regiment of Foot Guards, and attached to the commission appointed to renew the suspended negociations with Russia, about which Struensee was extremely anxious. As Falckenskjold was thoroughly acquainted with Russian affairs, he was sent to Petersburg with the embassy intended to press for the fulfilment of the treaty signed in 1768, and, disappointed in his expectations, returned at the period when the menacing storm was rapidly gathering over Struensee. Brandt insisted on his being appointed marshal of the court, but Falckenskjold could not be persuaded to accept the office, and contented himself with being the confidential adviser of Struensee, and in that capacity repeatedly warned him to take his measures against any sudden change of fortune—advice which, unfortunately, was not listened to by the dazzled favourite, who was constantly engaged with fresh schemes.

At the time when Falckenskjold reached Copenhagen, Rantzau's faction were urging an open war with Russia, in consequence of the non-fulfilment of the treaty; and even Struensee did not consider such a war desperate. But Falckenskjold was violently opposed to it, and when Struensee declared that the bomb-ketches built to attack Algiers could be employed to batter Cronstadt, and that the king would not hesitate to sacrifice all his plate to defray the expenses of such an expedition, the old soldier brought forward some pregnant facts. He reminded Struensee that a resource of this nature, employed by Louis XIV. daring the war of the Succession, only produced 450,000 livres. He then entered into a detail about the expense of a single campaign against Russia, and compared it with the present resources of Denmark, the condition of her armaments, and the assistance she might expect from foreign powers. Besides, supposing that the king, though he (Falckenskjold) was far from admitting the fact, was strong enough to attack such an enemy with a hope of success, the maritime powers, especially England, would not suffer their relations to be interrupted in the Baltic, or allow ports advantageous to their trade, and from which they derived a great portion of their naval equipment, to be destroyed. Falckenskjold also urged that, there was reason to apprehend that the King of Prussia would interfere in the quarrel to the prejudice of Denmark, in order to carry out his designs upon Holland.

These considerations produced an effect on Struensee, but Rantzau and his partisans did everything to efface the impression they had produced. The threatening tone which they openly assumed in talking about Russia, and which they rendered the fashion in Copenhagen, was carried to so insulting a point, that the Russian chargé d'affaires repeatedly told Falckenskjold that he would have left long before were it not for the hopes that he (Falckenskjold) gave him. This indiscreet bravado on the part of the Rantzau faction greatly displeased Struensee, however, and gave weight to Falckenskjold's remonstrances.

In the meanwhile, Struensee's reforms went on uninterruptedly; and various ameliorations in the law courts appeared one after the other. Thus a regulation was issued relating to the corvées on the noble estates, by which the poor serf ceased to be a helpless tool in the hands of his owner. Certain days and hours in the week were set apart for compulsory service, but the remaining time was left at the disposal of the peasantry. The latter were placed under the protection of the law, and all the privileges which belonged to them as men and citizens, were secured to them.

In order to prevent the delay in judicial investigations through chicanery or neglect, a list was ordered of all persons under arrest for criminal offences, with a statement of their crimes, the time they had been detained, and the names of their judges. The names also of those judges were reported who had proved negligent in the performance of their duties.

In order that trustees might not carry on usury with the property of their wards, or squander it, but that heirs and creditors might receive their funds in due course, a list was ordered to be sent to the government of all the estates of deceased persons and bankrupts, the names of the trustees and assignees, and the period when the latter were appointed.

The two chanceries were subjected to a reorganization, the almost sovereign heads of these colleges dismissed, and in their stead the Danish Chancery had four, the German three, deputies, and the same number of departments.

The civic government of Copenhagen also underwent reorganization. The complaints raised on all sides about the misuse of authority, the slow course of business, and the maladministration of the town revenues and neglect in providing the city with provisions, were the ostensible reasons for these reforms. The magistracy would, in future, consist of a chief president, two bürgermeisters, a town syndic, a town physician, four councillors, and two representatives. But even in this simple matter court intrigues prevailed,—Count Holstein zu Holsteinborg was appointed president; one of those men with whom a great name and a little charlatanism hold the place of merit. He had been recalled from Tondern, where he was bailiff, because his wife was considered worthy of adorning the new court, and Brandt distinguished her.