Charles in fact yielded the point to which he had hitherto clung, and, as Ashley demanded, promised that no Catholic should be benefited by the Indulgence. The bargain once struck, and his ministers outwitted, it only remained for Charles to outwit his Parliament. A large subsidy had been demanded in 1670 for the fleet, under the pretext of upholding the Triple Alliance; and the subsidy was granted. In the spring the two Houses were adjourned. So great was the national opposition to his schemes that Charles was driven to plunge hastily into hostilities. An attack on a Dutch convoy was at once followed by a declaration of war, and fresh supplies were obtained for the coming struggle by closing the Exchequer, and suspending under Clifford's advice the payment of either principal or interest on loans advanced to the public Treasury. The suspension spread bankruptcy among half the goldsmiths of London; but with the opening of the war Ashley and his colleagues gained the toleration they had bought so dear.

By virtue of his ecclesiastical powers the King ordered "that all manner of penal laws on matters ecclesiastical against whatever sort of Nonconformists or recusants should be from that day suspended," and gave liberty of public worship to all dissidents save Catholics, who were allowed to say mass only in private houses. The effect of the Declaration went far to justify Ashley and his colleagues (if anything could justify their course) in the bargain by which they purchased toleration. Ministers returned, after years of banishment, to their homes and their flocks. Chapels were reopened. The gaols were emptied. Bunyan left his prison at Bedford; and hundreds of Quakers, who had been the special objects of persecution, were set free to worship God after their own fashion.

The Declaration of Indulgence however failed to win any expression of gratitude from the bulk of the Nonconformists. Dear as toleration was to them, the general interests of religion were dearer, and not only these but national freedom was now at stake. The success of the Allies seemed at first complete. The French army passed the Rhine, overran three of the States without opposition, and pushed its outposts to within sight of Amsterdam. It was only by skill and desperate courage that the Dutch ships under De Ruyter held the English fleet under the Duke of York at bay in an obstinate battle off the coast of Suffolk. The triumph of the English cabinet was shown in the elevation of the leaders of both its parties. Ashley was made Chancellor and Earl of Shaftesbury, and Clifford became Lord Treasurer. But the Dutch were saved by the stubborn courage which awoke before the arrogant demands of the conqueror. The plot of the two Courts hung for success on the chances of a rapid surprise; and with the approach of winter which suspended military operations, all chance of a surprise was over.

The death of De Witt, the leader of the great merchant class, called William the Prince of Orange to the head of the Republic. Young as he was, he at once displayed the cool courage and tenacity of his race. "Do you not see your country is lost?" asked the Duke of Buckingham, who had been sent to negotiate at the Hague. "There is a sure way never to see it lost," replied William, " and that is, to die in the last ditch." With the spring the tide began to turn. Holland was saved and province after province won back from France by William's dauntless resolve. In England the delay of winter had exhausted the supplies which had been so unscrupulously procured, while the closing of the Treasury had shaken credit and rendered it impossible to raise a loan. It was necessary in 1673 to appeal to the Commons, but the Commons met in a mood of angry distrust. The war, unpopular as it was, they left alone. What overpowered all other feelings was a vague sense, which we know now to have been justified by the facts, that liberty and religion were being unscrupulously betrayed. There was a suspicion that the whole armed force of the nation was in Catholic hands. The Duke of York was suspected of being in heart a Papist, and he was in command of the fleet.

Catholics had been placed as officers in the force which was being raised for the war in Holland. Lady Castlemaine, the King's mistress, paraded her conversion; and doubts were fast gathering over the Protestantism of the King. There was a general suspicion that a plot was on foot for the establishment of Catholicism and despotism, and that the war and the Indulgence were parts of the plot. The change of temper in the Commons was marked by the appearance of what was from that time called the Country party, with Lord Russell, Lord Cavendish, and Sir William Coventry at its head, a party which sympathized with the desire of the Nonconformists for religious toleration, but looked on it as its first duty to guard against the designs of the Court. As to the Declaration of Indulgence, however, all parties in the House were at one. The Commons resolved "that penal statutes in matters ecclesiastical cannot be suspended but by consent of Parliament," and refused supplies till the Declaration was recalled.

The King yielded; but the Declaration was no sooner recalled than a Test Act was passed through both Houses without opposition, which required from every one in the civil and military employment of the State the oaths of allegiance and supremacy, a declaration against transubstantiation, and a reception of the sacrament according to the rites of the Church of England. It was known that the Protestant dissidents were prepared to waive all objection to oath or sacrament, while the Bill would wholly exclude Catholics from share in the government. Clifford at once counselled resistance, and Buckingham talked flightily about bringing the army to London. But the grant of a subsidy was still held in suspense; and Arlington, who saw that all hope of carrying the "great plan " through was at an end, pressed Charles to yield. A dissolution was the King's only resource, but in the temper of the nation a new Parliament would have been yet more violent than the present one; and Charles sullenly gave way. Few measures have ever brought about more startling results.

The Duke of York owned himself a Catholic, and resigned his office as Lord High Admiral. Throngs of excited people gathered round the Lord Treasurer's house at the news that Clifford, too, had owned to being a Catholic and had laid down his staff of office. Their resignation was followed by that of hundreds of others in the army and the civil service of the Crown. On public opinion the effect was wonderful. "I dare not write all the strange talk of the town," says Evelyn. The resignations were held to have proved the existence of the dangers which the Test Act had been framed to meet. From this moment all trust in Charles was at an end. "The King," Shaftesbury said bitterly, "who if he had been so happy as to have been born a private gentleman had certainly passed for a man of good parts, excellent breeding, and well natured, hath now, being a Prince, brought his affairs to that pass that there is not a person in the world, man or woman, that dares rely upon him or put any confidence in his word or friendship".