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The Fox-North Coalition

Rockingham Ministry
During the American War of Independence, Britain's government was led by Lord North. Following the disastrous British loss at the Siege of Yorktown, however, North was subject to a motion of no confidence on 18 March 1782; although he survived by 9 votes, he received word a day later that a large group of MPs were no longer willing to support him. Accordingly, he resigned on 20 March. The resignation of North, a Tory, left Parliament fractured; there was no individual faction large enough to form a government in its own right. King George III, concerned about the possibility of Britain lacking a government while still at war, approached Lord Shelburne and offered him the post of Prime Minister. Shelburne refused; his faction in Parliament was too small to rule in its own right, and the only other grouping in Parliament that would provide him with a majority - that of Lord Rockingham - was unlikely to follow him. The King "reconciled himself" with instead offering Rockingham the job of Prime Minister, although Shelburne was to lead the negotiations over the administration's construction. This was important; Shelburne and the King had developed a good relationship, while Rockingham had alienated the monarch by supporting full independence for the fledgling United States and economic reform. Eventually, after three days of negotiations, Rockingham and Shelburne formed a joint ministry on 27 March.

John Cannon notes that in insisting on this coalition, led by Rocking but with most of the Parliamentary support from Shelburne, the King's "objective from the beginning was to drive a wedge into the opposition, and he was not unduly squeamish in this methods". His intention was to disrupt Parliament, strengthening his own position of influence by having an administration consisting "of two parts—one belonging to the king, the other to the public", with Shelburne, a close ally, as Home Secretary. Within a week of the Second Rockingham Ministry's formation, disputes had arisen, with members of the government holding contradictory opinions on almost every major issue. The Rockingham Whigs had publicly called for American independence, while Shelburne opposed it; Lord John Cavendish dissented on the subject of economic reform, and where it came to Parliamentary reform Shelburne, Charles James Fox and the Duke of Richmond were opposed by Rockingham, Cavendish and Lord Thurlow. A dispute arose on 5 April after Rockingham attempted to gain the right to advise the King on appointments to the peerage, with Shelburne excluded; although the situation was resolved, the resignation of Lord Ashburnham as Groom of the Stole a fortnight later and his subsequent replacement with Lord Weymouth - an appointment done through Shelburne, without Rockingham's acceptance - led to bitter disputes.

Meanwhile, Shelburne was working hard to build up his political connections, gaining the allegiance of Henry Dundas. Through the negotiations with Dundas, he also gained favour with William Pitt the Younger and Richard Rigby, who led a small group of MPs which would be "a useful addition" to Shelburne's supporters in Parliament. This growing support within Parliament became more and more important as the cabinet fractured, with the final straw being over American independence. On 23 May the cabinet had agreed to instruct Lord Grenville to "propose the independency of America in the first instance, instead of making it a condition of a general treaty". This was in line with Fox's opinions, something Shelburne understood; unfortunately the statement he had given to the King was that the negotiations would be a broader, more general treaty considering peace in any form, not just absolute independence. When Fox discovered this he raised the matter at a cabinet meeting on 26 June; only three cabinet members supported him, with Rockingham unable to attend due to serious illness. Fox began considering resignation, complaining that Shelburne was "trimming" policy in order to please the King; when a second cabinet meeting on 30 June "denied that the offer of independence was unconditional and irrevocable", Fox resigned. By this point Rockingham was on his deathbed, and on 1 July, he died, leaving behind a fractured cabinet with Fox and his followers uncertain about serving under Shelburne.

Shelburne Ministry
Rockingham's death took his supporters by surprise, and while they were in great disorder, Shelburne and the King put their plans into effect. Shelburne was immediately offered the position of Prime Minister, something that the opposition panicked to correct, seeking to put forward their own nominee. While Fox was "by far the ablest parliamentarian", the King's well-known dislike for him ruled him out, and eventually the opposition settled on the Duke of Portland, Rockingham's deputy and, as a "safe, uninspired and inarticulate" man, someone capable of keeping the party together. Accepting, eventually, that there was no chance of Portland becoming Prime Minister against the King's wishes, the priority instead turned to deciding if the Rockingham Whigs would serve under Shelburne. Fox and Cavendish refused, resigning in early July, while Richmond and Henry Seymour Conway stayed on. Fox took with him 50 to 60 of the Rockingham Whigs, constituting most of the party's voting strength, and was followed by the Duke of Portland, Richard FitzPatrick, John Lee and several other politicians. While political opinion originally condemned Fox's resignation as a rash action likely to destabilise the nation, it began to change when Shelburne announced the replacement appointments, who Thurlow described as "not all of the most promising sort"; Archibald Macdonald reported that "the general opinion [was] against the duration of the new administration".

Lord North and his supporters, still in the political wilderness, watched these troubles with great interest, recognising that the combined forces of North and Fox was the only way that an alternate administration could be formed. While Shelburne attempted to woo North's supporters, North himself responded guardedly, remembering with resentment the King's treatment of him during his term as Prime Minister. Meanwhile, North was also in negotiations with Fox. On 24 July, Fox contacted him with messages that they should set aside their differences and unite; he was initially rebuffed, thanks to the differencing attitudes of North's supporters. While Charles Jenkinson and Lord Grantham suggested he join forces with Shelburne, William Eden and Lord Loughborough advocated an alliance with Fox; the resulting debate, assisted by "North's constitutional sluggishness, produced total inertia". All these negotiations occurred while Parliament was not sitting; it was due to begin a new session in October, and politicians on both sides were uncertain as to the makeup. Eden's estimates were that 140 would support Shelburne, 120 North and 90 Fox, which left over 200 members unaccounted for in terms of allegiance.

Shelburne, meanwhile, was finding himself facing the same problems the Rockingham ministry had struggled to cope with. As well as the delicacy of economic and Parliamentary reform, the negotiations with the United States continued to be "plagued by the confusion arising from Shelburne's ambiguous attitude towards American independence". His statements in the aftermath of Fox's resignation made the American commissioners suspicious; Benjamin Franklin wrote directly to Shelburne demanding an explanation for his opposition to "Mr. Fox's decided plan of unequivocally acknowledging American independence". Shelburne's replies failed to allay Franklin's suspicions, and he was informed that, unless the Americans received "the most explicit and categorical assurances that independence would be absolutely and unconditionally granted", the negotiations would end. The greatest issue was over the legal status of Gibraltar, with Spain having a claim over it; when it was discovered that Shelburne had been negotiating on this point without consulting his ministers, and that he was considering ceding the territory to Spain, half of the cabinet began threatening to resign.

American independence
This political activity did not succeed in swaying North, who remained noncommittal. On 4 November he promised the King that his supporters were "in general, well inclined to concur in such measures as shall be necessary for the support of H.M.'s government", a "distinctly tepid assurance", and maintained a reserved position. Fox, meanwhile, found himself in a weak position; with the smallest grouping of MPs, he would be unable to form a government if North joined with the Shelburne administration - something rumour had that he would do - and, as a politician disliked by the King, had no chance of playing a part in a coalition with both North and Shelburne. His only asset was, as Cannon put it, "his extraordinary debating ability...the brilliant and sustained attack that Fox launched almost unaided upon the ministry in the winter of 1782-3 may be considered one of the greatest tours de force in parliamentary history".

Parliament was formally opened by the King in late 1782, and in his opening speech he announced that provisional terms had been agreed with the United States. At this point the administration suffered a setback when Lord Stormont, one of the government's MPs, attacked the cabinet for agreeing to recognition of the United States without conditions. Shelburne denied this, saying that "this offer is not irrevocable; if France does not agree to peace the offer ceases". As the cabinet had previously stated that recognition was unconditional, Fox asked for an explanation the following day; Pitt, Townshend and Conway all insisted that the original explanation was correct, creating a split in the cabinet described by Shelburne as an "awkward" situation that had created "some uneasiness" in the Commons.

The King, not informed of Townshend and Conway's participation, asked Pitt to publicly recant his statement; Pitt reacted by declaring in the following week that his explanation "had been given on mature consideration, and he persisted in it...recognition could not be revoked, even if the present treaty should go off". The result was that Shelburne was in an impossible position, with his colleages in the House of Commons refusing to support his statement that the recognition was revocable, and the King insisting that he not back down. Shelburne reacted by simply refusing to answer questions, and by the end of the debacle had alienated two of his remaining supporting cabinet members. The ongoing negotiations over peace terms further fractured Shelburne's cabinet, leading to the resignation of Richmond, Lord Keppel and Lord Carlisle.

Formation of the Coalition
The resignation of Keppel and Richmond made it easier for Shelburne to justify forming a coalition with North, which he attempted to do in late January. North rejected all offers, knowing that Pitt's dislike of him ruled out any possibility of high office, with the result that Shelburne was forced to try and negotiate with Fox. Fox's reaction was to offer an "absolute refusal", leaving Shelburne without a majority in the Commons and with both opposition groups actively trying to remove him. In desperation, Shelburne attempted to blackmail North, threatening to dissolve Parliament in the hopes that North's MPs would be "liquidated" in an election. The effect of this was that North became even more resolute in not joining with Shelburne, instead meeting with Fox on 1 February. Both parties limited their discussion to a general understanding, agreeing that there was no need for further economic reform, but permitting Fox to test the mood of the Commons in relation to Parliamentary reform. One stumbling block was over the treatment of the loyalists in the United States, with North's supporters considering abandoning them a betrayal and Fox's followers treating them as "the hirelings of royalism"; it was decided that provision would be made by them, but would be moved by North separately.

With this agreed, attention moved to the debate over American independence; Parliament was asked to express "satisfaction" at an agreement which would lead to "perfect reconciliation and friendship" with the United States. The motion passed in the House of Lords by 13 votes, which the King remarked was "undoubtedly the smallest majority I ever remember in so full a House", temporarily saving Shelburne's administration, and was followed by the motion's introduction to the Commons. It was then debated in the Commons, where Cavendish introduced an amendment stating that the House would give the motion "serious and full attention", which was opposed by Shelburne's administration. After a long debate, the amendment passed by 224 votes to 208. Cannon writes that "the most remarkable feature of the voting was the extent to which the party lines stood firm", with Fox and North losing only 8 votes. In exchange, 3 of Shelburne's supporters defected, along with 21 independent MPs and 18 of the Scottish members.

The next week was noted as one of "great confusion...although Shelburne's ministry had been dealt a blow, no one could be sure that it would prove mortal". Camden told Shelburne to resign, as did Pitt, and when the government motion itself came before the Commons on 21 February, they were defeated by 207 votes to 190. Shelburne resigned on 24 February, and Fox and North immediately began negotiating to form a coalition. For the next 5 weeks, there was no government - although the King tried to force Pitt into accepting the job of Prime Minister, he refused due to his fear that he would not be accepted by the Commons. On 1 March, the King confessed that he was in a "great dilemma", and reacted by sending for Lord Gower, another supporter of the Shelburne administration. When this failed, he attempted to split the coalition by offering the job to Lord North. North responded by stating that he "had neither the ambition nor the spirit" to hold such a senior post, and that he would only agree to help form an administration if Fox and his supporters similarly accepted. An audience with the King on 4 March led Fox to reject the proposals, and the negotiations were broken off.

Gower recommended Thomas Pitt for the job, but while Pitt detested the coalition he stated that he was "totally unequal to public business, but most certainly unequal to a task like this". His advice was instead to admit the coalition to office, while witholding the use of the Royal Prerogative to create peers, leaving "disappointments over patronage, the need for heavy taxation and the difficulties arising from the reform programme to render it speedily unpopular". The King was still unwilling to give way, although Pitt's advice was backed up by Thurlow. When Lord Ashburton advised the King, he was informed that if a speech he planned to present to the Lords did not gain him the needed assistance, he would abdicate; Ashburton successfully dissuaded him from such a course of action. Eventually he summoned North and stated that he would accept an administration comprised of both coalition parties, on the condition that Portland became Prime Minister. After negotiations, both parties agreed to this, and the King formally recognised their administration on 2 April.

Coalition
The Fox-North Coalition, led by the Duke of Portsmouth, immediately took office. It was hindered by the King's refusal to grant peerages or utilise the Royal Prerogative, which served to highlight in the eyes of the public his lack of confidence in them. This made the selection of cabinet officers difficult; it had originally been planned that North should go to the House of Lords to strengthen the administration there, and that figures such as Robert Vyner and Edward Eliot would be given honours. The impossibility of this led to reorganisations; Lord Hertford was forced to remain Lord Chamberlain, while Lord Hillsborough, who was meant to hold the post, had to be dropped from the cabinet completely. The union of the two factions also caused problems, because it meant that both had claims on financially rewarding positions which had been limited by the previous administration's economic reforms.

Government finances
The administration's most urgent task was to deal with the state of Britain's finances. A long war with the United States had left the treasury depleted, which was the only reason the King had been convinced to negotiate with the United States; at the beginning of the Fox-North coalition, the government coffers contained only £400,000, with immediate claims of £3 million against them. In addition, the lack of money slowed down the discharge of returning soldiers, since their back pay could not be provided. In response, the 77th Regiment of Foot mutinied, followed by the 68th. Under these circumstances Cavendish, who had been appointed Chancellor of the Exchequer, was tasked with negotiating a £12 million loan. Due to the short notice, the terms of the loan were poor, but it was approved by the House of Commons before passing to the Lords, where despite an attempt by Shelburne to spark a constitutional debate, it was also approved. Cavendish next moved to introduce a budget, passed on 26 May; the main feature was a tax on receipts, designed to bring in £250,000 each financial year. This alarmed the commercial community, who assumed the burden would fall upon traders, but the budget passed with 145 votes to 40.

Another financial matter was the establishment of financial security for George, Prince of Wales, who would come of age on 12 August. At the time he was staying with the royal family at Buckingham House, something which could not continue, and the question was raised of what financial provisions should be made for him. Fox, as a close friend of the Prince, suggested a guaranteed income of £100,000, including £12,000 from the Duchy of Cornwall's revenues; although Cavendish and North initially considered this excessive, they gave in and allowed Fox to put the proposal before the King. It was again restated on 6 June by Portland, who argued that, although a large sum of money, it would be acceptable to Parliament providing that it was not increased in the event of the Prince getting married. The King eventually acquiesced, only to be later informed that, in addition to this, the Prince had accumulated £29,000 of debts, which also had to be paid off. Furious, the King denounced the £100,000 as "a shameful squandering of public money", and refused to give more than £50,000, insisting that Parliament provide the rest to pay off the debts.

This left the Coalition in a precarious position; they had already stated that they would give a statement to Parliament on 17 June, and now had no idea what they were going to say. It was assumed by many within the Coalition that the administration would be forced to resign, particularly with the failure to provide information to Parliament, but when Portland met the King on 18 June he was surprised by a "remarkable change of heart"; the King apologised for his behaviour, and after a period of negotiation with the Prince of Wales overseen by Fox, the amount was raised to £60,000, which both parties accepted. Evidence from the time suggests that the rage was deliberately designed to provoke Portland's reservation so that the King could replace him with Pitt, but the disorganisation amongst other MPs left Pitt without sufficient support to form an administration if this had worked.

India Bill in the Commons
Although the administration sought to keep itself out of trouble after the incident with the Prince of Wales, the situation in India demanded their attention. Britain's Indian possessions were run by the East India Company, regulated by the Regulating Act of 1773. This had proved defective, with disputes between Warren Hastings and his council of advisers. In 1778 John Robinson, the Secretary to the Treasury, drafted a bill to widely extend the government's powers over the Company, but the administration at the time had been too preoccupied to deal with the problems. Following the First Anglo-Maratha War, which demonstrated the Company's inability to defend their possessions and "threw its finances into complete confusion", the government again found itself too busy to deal with the problem, simply extending the Company's charter by another decade. By 1783 the Company was at risk of bankruptcy, forcing the Coalition to deal with the issue. Fox knew that the task was difficult, and would result in strong action by the opposition, but had Burke draw up a bill.

This legislation involved replacing the Court of Directors with two new commissions. One, occupied by Members of Parliament, would exercise political control, while a second commission of nine would deal with the commercial side of the Company's work. The first commission, consisting of seven MPs nominated by the government, would be replaced every four years. The intentions were to provide public accountability for the Company, increase the influence of the British government over the Directors and ensure that the governance of India was undertaken with some regard to the interests of the native people.