paid, and the
Republican party has not lost hope.

The conditions of what Don Pedro considers a conciliatory arrangement are
entirely inadmissible. They are founded upon the marriage of Donna Maria da
Gloria, and England, France, and Austria are to guarantee her against any
_injure_ she may receive from her husband. Certainly we may safely say
these terms are inadmissible, and so break off all negotiations with Don
Pedro, who, since these terms were proposed by him, has recognised the
independent Regency of Terceira. By-the-bye, one of his terms is the
payment, by Portugal, of all the expenses incurred by himself for Donna
Maria.

It seems the draft of a decree of amnesty has been sent to Lisbon, and if
Miguel will pass that decree we are to recognise him.

The Chancellor and others seemed to think this was an awkward time, and we
had better wait a little. I think so too. However, undoubtedly our early
recognition of Miguel might lead to the prevention of a Portuguese
Revolution.

There was much conversation respecting the Bank Charter. It seemed to be
the general opinion that Government should take it upon itself to arrange
terms with the Bank, which terms will be prohibition to any other Bank to
issue notes within twenty-five miles of London. This being granted, the
Bank will do the public business for 100,000L a year less. The whole
question of country banking, whether it is to be with limited or unlimited
responsibility, a limited or an unlimited number of partners, is to be left
open to Parliament.

I suggested that the most important question was the revision of taxation.
My view now is that we must take off some of the taxes which press most on
the poorer classes, and have an income tax. I dislike an income tax as much
as any one. To me it is a very oppressive tax, but I believe it may become
necessary.

Walked to the corner of Hyde Park with Lord Rosslyn. Had some conversation
with him respecting the changes necessary in the Government before we meet
Parliament. He says Lord Althorpe will not come in without Lord Grey, and
he is not sure Lord Grey would not stipulate for Lord Durham. The latter is
out of the question on account of his temper. I do not think the Government
could go on with the Duke and Lord Grey. Of the Huskissonians, Palmerston
is the only one. To E. Stanley there is no objection.

_August 26._

At 3 Count Moltke came to the office. He had two Danish claims to speak
about.

Dinner