local inhabitants. The second was the arrest of drunken British officers who were causing a disturbance in the streets of Rio. The Brazilian government refused to yield and Christie issued orders for British warships to capture Brazilian merchant vessels as indemnity. Brazil's Navy prepared for imminent conflict, the purchase of coastal artillery was ordered, several ironclads were authorized and coastal defenses were given permission to fire upon any British warship that tried to capture Brazilian merchant ships. Pedro II was the main reason for Brazil's resistance as he rejected any suggestion of yielding. This response came as a surprise to Christie, who changed his tenor and proposed a peaceful settlement through international arbitration. The Brazilian government presented its demands and severed diplomatic ties with Britain in June 1863 upon seeing the British government's position weaken. Apogee The diplomatic victory over the British Empire and the military victory over Uruguay in 1865, followed by the successful conclusion of the war with Paraguay in 1870, marked the beginning of the "golden age" of the Brazilian Empire. The Brazilian economy grew rapidly; railroad, shipping and other modernization projects were started; immigration flourished. The Empire became known internationally as a modern and progressive nation, second only to the United States in the Americas; it was a politically stable economy with a good investment potential. In March 1871, Pedro II named the conservative José Paranhos, Viscount of Rio Branco as the head of a cabinet whose main goal was to pass a law to immediately free all children born to female slaves. The controversial bill was introduced in the Chamber of Deputies in May and faced "a determined opposition, which commanded support from about one third of the deputies and which sought to organize public opinion against the measure." The bill was finally promulgated in September and became known as the "Law of Free Birth". Rio Branco's success, however, seriously damaged the long-term political stability of the Empire. The law "split the conservatives down the middle, one party faction backed the reforms of the Rio Branco cabinet, while the second—known as the escravocratas (English: slavocrats)—were unrelenting in their opposition", forming a new generation of ultraconservatives. The "Law of Free Birth", and Pedro II's support for it, resulted in the loss of the ultraconservatives' unconditional loyalty to the monarchy. The Conservative Party had experienced serious divisions before, during the 1850s, when the Emperor's total support for