[Extract.]

Mr. Clay to Mr. Seward.

No. 157.]

Sir: By a telegram from Berlin we learn that a clause inserted in the treaty of peace, just concluded at Prague between Prussia and Austria, stipulates the reunion of the Lombardo-Venetian kingdom to the kingdom of Italy, with no other condition than the assumption by Italy of a proportionate part of the Austrian debt, conformable to the precedent established in the treaty of Zurich when Lombardy was ceded in 1859.

The partition of the debt as well as the determination of boundaries remain subjects of negotiation between this government and Austria, and there are still hopes that the latter power may be induced to cede a portion of the Trent country on Lake Garda.

The questions of Venice and Borne, the exciting causes of domestic agitation, once removed, Parliament will have the time and temper to give its attention to the finances and other imperious demands of home government.

Italy has now before her a serious work of reorganization, and her present situation is not unlike that of our own country; there is the same susceptibility in regard to French intervention on the Peninsula and on our own continent; duties of reconciliation and reconstruction rest upon the legislators of both countries * * * * * *

The King and his ministers seem disposed to do their part of the work in Italy. The royal decree of amnesty for political offences, which I had the honor to bring to your notice, has been followed by others, not so significant in a national point of view, but more important as affecting the internal condition of the country; such as establishing greater freedom for the exercise of certain professions and trades, by the abolition of special authorizations which were heretofore required from the ministry of the interior or the royal prefectures.

Probably the most striking feature of the present political situation in Europe is the prominence given to nationalities, irrespective of dynastic interests or tradition. There is a corresponding gain to the people, and national ascendency in Germany may even bring about an extension of liberty in France. Our own rebellion was an anachronism not less in this respect than in laying the foundation of a new state with slavery as the corner-stone.

And though Italy comes out of the recent struggle with little military prestige beyond the individual bravery of her soldiers, yet with the completion of the national territory there is felt the need of larger liberties for the citizens and a broader basis for constitutional government. I believe the popular sentiment in this country and in our own will sustain the executive policy of expansion rather than contraction and centralization of power on the re-establishment of national unity.

I have the honor to be, sir, your obedient servant,

GREEN CLAY, Chargé d’Affaires ad interim.

Hon. William H. Seward, Secretary of State, Washington, D. C.