21 JULY 1866, Page 1

A refusal of the proposal is probable for these reasons.

A Family Council decided on Tuesday to risk all rather than be compelled to withdraw from the German Confederation, which is Prussia's sine qud non, and a victory would compel the Prussians to retreat under a close pursuit, through a country cleared of pro- visions, and past fortresses which would send out garrisons to cut the fugitives off. It would, moreover, enable the Kaiser to boast that he had fought to the last, and submitted only to irresistible force. On the other hand, it may be accepted for these reasons. A. defeat would involve something more than submission to severe terms, there being great danger, as we have explained elsewhere, that it would be followed by the total extinction of the Austrian Empire, possibly by the exile of the House of Hapsburg. Its first consequence would probably be revolution in Vienna, where dis- content is already bitter. Then it seems certain that Prussia's demands are in some respects over moderate, the King asking only, according to the best accounts, for the annexation of the Elbe Duchies and the States between the two halves of his kingdom, with the military command and diplomatic representation of the remainder of Germany. Austria is to surrender nothing to Prussia except the leadership of Germany, and to Italy only Venetia un- shackled by conditions. The balance of probabilities inclines, we imagine, to a continuance of the war, but they are very nearly equal, and the possibility of a great vengeance in the future, when Austria has rearmed, may incline the scale to peace.