se flattering anticipations were formulated the bases upon
which to treat, now that the Indian question was out of the way. On
October 18 and 20 Bathurst instructed the commissioners to propose, as
a starting point, the principle that each party should hold what it
had, subject to modifications for mutual accommodation. "Considering
the relative situation of the two countries, the moderation evinced by
his Majesty's Government in admitting this principle, (thereby
surrendering claim to the future conquests), in the present state of
the contest, must be manifest." When this was accepted, but not
before, the mutual accommodations were to be suggested. The present
captured possessions were stated to be: British, Fort Michilimackinac,
Fort Niagara, and all the country east of the Penobscot; the American,
Fort Erie and Fort Malden. Upon the surrender of the two latter, Great
Britain would restore the forts at Castine and Machias. She would
retain Mackinac and Fort Niagara, the latter with a surrounding strip
of five miles of territory; and in exchange (apparently) for "all the
country east of the Penobscot," would accept that part of Maine which
lies north of the Aroostook River, thus insuring between Quebec and
Halifax a direct communication, wholly under British jurisdiction.

There were some further minor matters of detail, unnecessary to mention;
the more so that they did not come formally before the American
commissioners, who immediately rejected the proposed principle of _uti
possidetis_, and replied, October 24, that they were not empowered to
yield any territory, and could treat only on the basis of entire mutual
restitution. This Liverpool testily likened to the claim of the French
revolutionary Government[508] that territory could not be ceded because
contrary to the fundamental law of the Republic. In the American case,
however, it was substantially an affirmation that the military
conditions did not warrant surrender. Meanwhile, on October 21, the news
of Macdonough's victory reached London from American sources. Although
the British official accounts did not arrive until some time later,
Liverpool, writing to Castlereagh on that day, admitted that there could
be no doubt of the defeat of the flotilla.[509] Despite this check, the
Cabinet still cherished hopes of further successes, and were unwilling
yet to abandon entirely the last inches of the ground heretofore
assumed. "Had it not been for this unfortunate ad