year will be covered by the surplus. The Budget for the present year, conscientiously drawn up, presents a new surplus of receipts. We are thus furnished with the means for providing for new outlays admitted as necessary, and to reduce the excess of expenses necessitated by the reform of the army. Insomuch as this excess remains necessarily distinct from additional taxes which cannot be dispensed with until the regular property-tax has been levied, the means to cover it will be found in the still untouched remnant of 1860. Thus, to all appearance, there will not be any reduction this year in the public treasury, any more than there was in the two preceding ones. The most strict economy has been observed in regulating the army estimates. To go beyond this would be to compromise its perfection, consequently the safety of the country. Carrying out the reorganization, my Government will submit to you a project relative to some modifications of the law of the 3rd of September, 1814, concerning the obligation of military service... My interview in the course of last autumn with the Emperor of the French has only served to strengthen the friendly relations which actually exist between the two States. The negotiations for a treaty to settle the commercial relations between the Zollverein and France are still pending. My serious and incessant efforts to effect a proper revision of the military constitution of the Germanic Confederation have not, as yet, to my great regret, been attended with any satisfactory · results. Meantime my Government is endeavouring to open

the way, by separate conventions with individual States, to a greater uniformity in the military institutions. The want

of a general reform of the Federal Constitution has recently been admitted in an expressive manner by various German Governments. Faithful to the national traditions of Prussia, my Government will incessantly work in favour of reforms, which, responding to the real situation, will more energetically concentrate the strength of the Germanic people and put Prussia in a position to favour in a more efficacious manner the interests of the common country. To my sincere regret, the difference relative to the Constitution in the Electorate of Hesse has not yet been settled; nevertheless, even in presence of recent events, I entertain the hope that the final result will not be out of keeping with the efforts of my Government, always directed towards the re-establishment of the constitution of 1831, with the modifications of articles contrary to the federal laws. My Government and that of the Emperor of Austria have entered into confidential negotiations with the Danish Government on its desire to obtain a provisional basis of agreement between the Germanic Confederation and Denmark on the question of the Duchies. We here uphold firmly the federal rights and international treaties, and it is a lively satisfaction for me to see the best feeling existing on this subject, not only between me and the Emperor of Austria, but also between us and other German Confederates."

A long and vehement discussion took place in the Chamber of Deputies on the question of

the affairs of Hesse Cassel. The object of the Liberal party was to induce the Prussian Government to interfere and force the Elector of Hesse to re-establish the Constitution which had been granted to that kingdom in 1831, but had been suppressed by the armed intervention of Austria in 1852.

On the 15th of February the Prussian Government, in conjunction with other States of the German Confederation, forwarded to Vienna a note, in which it said :--

"Should the views, on a reform of the Federal Constitution, hinted at in the latter part of the Austrian note, in favour of the establishment of a constitution for the whole Confederacy, with an efficient executive power at its head, and aiming at a political 'consolidation of a wider extent, comprising non-German territories, as already stated in the Austrian note of the 8th November, be realized, the Prussian Government would be compelled to see in such realization a far greater peril to the continuance of the Confederacy than in the reforms indicated in the Prussian despatch of the 20th December."

A Resolution, binding the Government to interfere, was carried in the Chamber of Deputies, by a majority of 241 to 58.

On the 11th of March the Chambers were dissolved. The reason of this was, that the Ministry and the Lower Chamber were at variance, and the King, thinking that the Chamber of Deputies did not represent the wishes of the nation, resolved to appeal to the constituencies. The cause of quarrel was this. The Chambers, being strongly op

posed to any increase of the army, and wishing, in fact, to reduce its numbers, demanded that the Ministry should submit the Budget for consideration, item by item, but the Ministry refused, alleging that the state of Europe rendered the measure inexpedient. A Resolution was, therefore, carried by a majority of 170 to 143, embodying the wish of the Chamber, and the Ministry resigned. The King, however, instead of accepting their resignation, dissolved the Chambers; and a general election followed soon afterwards.

meantime, the pieces from in

The Liberal

But, in the Cabinet fell to ternal discord. members of the Ministry, MM. Schwerin, Von Auerswald, and Bermuth, resigned, and a new Ministry was formed, with Prince Hohenloe as President, Count Bernstorff Minister of Foreign Affairs, and M. Von der Heydt Minister of Finance. On the 20th of March, the King issued a proclamation, countersigned by the new Ministry, in which he said :

It is my duty and my earnest wish to insure the complete effectiveness of the Constitution to which I have taken an oath, and of the representative rights of the country, but also in the same measure to maintain the rights of the Crown, and to maintain them in that undiminished strength which is necessary to Prussia for the execution of her mission. The weakening of the Crown would be greatly injurious to the Fatherland. This conviction also lives in the hearts of my subjects. It is only necessary for me to explain clearly and

of the past. It will not have escaped your Excellency's observation that two objects especially

the increase of the army estimates and the project to continue to levy the 25 per cent. additional on the income, class, meal, and slaughter taxes-were made use of at the last elections by the self-styled Progressist party as a means of agitation against the Government throughout the country, so as to gain over public opinion, and to cause the choice of the electors to fall upon members of their party. The composition of the Chamber recently dissolved has proved how successful they were. At the present moment those questions are still turned to account to influence the elections; and there is reason to fear that if suitable measures are not taken the result will be the same; the organs of the self styled Liberal party declare that the latter party can only give its assent to the army estimates under certain conditions, and that it must pronounce against increased taxation. . . These considerations convince me that to push the election in a Government sense we must renounce, from the 1st of July, the levy of additional taxes, and make positive promises on the subject before the time fixed for the elections. It is true that it is giving up a net receipt of 3,700,000 thalers. Although I hope it may be possible to find the means to cover a portion of that loss by an increase of the other resources of the State, it will always be very small as compared with that sum. The greater part of the latter can only be economized by a diminution of expenses in the War

Department, for which, hitherto, the additional taxes have been levied.

"I do not deny that this problem offers great difficulties to be resolved, but I flatter myself with the hope that, in consideration of the serious position in which we are placed, your Excellency will admit the importance of the motives which plead for my proposal, especially in view of the result of the forthcoming elections, and that you will be inclined to second me in my difficult post of Minister of Finance by a willing acquiescence in the measures which the force of circumstances imperiously demands.”

The result of the elections was very unfavourable to the Ministry, and when the new Chambers met on the 19th of May, there was a considerable majority in the Lower House against them. In the speech with which the Premier opened the Chambers, he said:

His Majesty the King has ordered me to open the Diet of the Monarchy in his name. The Government considers it its duty to engage your activity this Session no longer than will be necessary for the settlement of the most urgent affairs. The finances of the country continue to assume a more favourable aspect. It has not been found necessary at the close of the financial year to make use of the extraordinary credit for defraying the expense of the organization of the army which had been granted in the Budget of 1861 from the public funds. The surplus in the revenue of this year has even exceeded the requirements of the public service. His Majesty the

VOL. CIV.

King has determined, for the relief of the country, that the additional taxation should not be levied on and after the 1st of July next. From the Budget for 1862 and 1863, which is to be submitted to you without delay, you will perceive that the decrease of income arising therefrom will be fully covered by provisional re ductions in the military administration, by savings in the cost of the administration of the public debt, and by increased revenue; and that means for useful application to all departments of the public service are still available. The more detailed specification of the income and expenditure in the Budget, and the early presentation of the Budget for 1863, will afford testimony that the Government is ready to meet with willingness any practicable proposition of the representatives of the country. The necessary operations for a further regulation of the land-tax have reached the first important stage towards completion by a central committee— that, namely, of a temporary es tablishment of the classification tariff Repeated examinations have manifested the possibility of further savings of a temporary character being effected in the military expenditure. These reductions, however, in order not to injure the vital conditions of the organization of the army, can only be continued until a new source of revenue is opened by the land-tax. By this means the Government shows that it is ready and desirous to meet the objections raised in former Sessions, and is therefore justified in expecting that, in considering the arrangements and require[P]