On 2 June 1779 Shelburne called attention to the distressed state of Ireland, and ‘desired the House to recollect that the American war had commenced upon less provocation than this country had given Ireland’ (ib. xx. 663–9, 675). On 1 Dec. he again called attention to the affairs of Ireland, and moved a vote of censure upon the administration for their neglect of that country, but was defeated by 82 votes to 37 (ib. xx. 1157–69, 1178). He supported the Duke of Richmond's motion for an economical reform of the civil list (ib. xx. 1263–6), and made a violent attack upon the king during the discussion of the army extraordinaries (ib. xx. 1285–91; see also Life, iii. 67). On 8 Feb. 1780 he moved for the appointment of a committee of both houses to inquire into the public expenditure, but was defeated by a majority of 46 votes (Parl. Hist. xx. 1318–32, 1362, 1364–70). On 22 March he fought a duel in Hyde Park with Lieutenant-colonel William Fullarton [q. v.], whom he had offended by some remarks in the House of Lords (ib. xxi. 218; see also pp. 293–6, 319–27). Owing to the prevalent suspicion that Fullarton was an instrument of the government, Shelburne, who was slightly wounded in the groin, became an object of popular favour. Several towns conferred their freedom on him, and the committee of the common council of London sent to inquire after his health. Shelburne was unjustly accused of having privately encouraged the excesses of the mob during the Gordon riots. After Rockingham's abortive negotiation with the king in July, the opposition again became divided, and Shelburne retired into the country. The only speech which he made during the session of 1780–1 was on 25 Jan. 1781, when he denounced the injustice of the war with Holland, and confessed that, ‘in respect to the recovery of North America, he had been a very Quixote.’ Moreover, he declared that ‘much as he valued America,’ and ‘fatal as her final separation would prove, whenever that event might take place … he would be much better pleased to see America for ever severed from Great Britain than restored to our possession by force of arms or conquest’ (ib. xxi. 1023–43). At Grafton's request, Shelburne returned to London for the following session. At the meeting of parliament, on 27 Nov. 1781, he moved an amendment to the address, and pointed out the impossibility of continuing the struggle with America (ib. xxii. 644–50). During the debate on the surrender of Cornwallis in February 1782, Shelburne once more asserted that he ‘never would consent under any possible given circumstances to acknowledge the independency of America’ (ib. xxii. 987–8).
When Lord North resigned in the following month, Shelburne declined to form an administration, and urged the king to send for Rockingham. The king ultimately agreed to accept Rockingham as the head of the new ministry, but he refused to communicate with him personally, and employed Shelburne as his intermediary in the negotiations. Though the Rockingham administration was formed on the express understanding that the king would consent to acknowledge the independence of America, Shelburne, in spite of his previous protests, accepted the post of secretary of state for the home department (27 March 1782). One of his first official acts was to cause a circular letter to be sent round to all the principal towns suggesting the immediate enrolment of volunteers for the national defence. On 17 May he carried resolutions for the repeal of the declaratory act of George I, and for other concessions to Ireland, without any serious opposition in the House of Lords (ib. xxiii. 35–8, 43).
Shelburne's proposals for parliamentary reform, for a general reform of the receipt and expenditure of the public revenue, and for the impeachment of Lord North were severally rejected by the cabinet. The differences between Shelburne and Fox, who regarded each other with mutual distrust and jealousy, culminated in the negotiations for peace [see Fox, Charles James]. But though at difference with his colleagues on questions of policy, he retained the confidence of the king, who freely consulted him on Burke's bill for the reform of the civil list (Life, iii. 154–62). On 3 July, two days after Rockingham's death, Shelburne, while supporting the second reading of Burke's bill, expressed a hope that he should be able ‘to introduce a general system of economy not only in the offices mentioned in the bill, but into every office whatever’ (Parl. Hist. xxiii. 143–4; see also Life, iii. 328–37). The popular effect of this bill was, however, considerably lessened by the previous grant of pensions to two of Shelburne's staunchest adherents. On Shelburne's appointment as first lord of the treasury, Fox, who had recommended the king to send for the Duke of Portland, resigned office with other members of the Rockingham party. Shelburne attempted to form an administration which should be subservient neither to the king nor to the whigs. William Pitt was appointed chancellor of the exchequer, while Thomas Townshend and Lord Grantham received the seals of secretaries of state. Of the eleven
