[127] For several years, Britain had been seizing strategic points, particularly the Mosquito Coast on the eastern coast of present-day Nicaragua. Negotiations were held with Britain that resulted in the landmark Clayton–Bulwer Treaty. Both nations agreed not to claim control of any canal that might be built in Nicaragua. The treaty promoted the development of an Anglo-American alliance; its completion was Taylor's last action as president.[128]

Compromise attempts and final days
Clay took a central role as Congress debated slavery. While his positions overlapped somewhat with Taylor's, the president always maintained his distance from Clay. Historians disagree on his motivations for doing so.[129] This caused Taylor to become politically isolated as Southerners disapproved of his preference to appoint the territories of the Mexican Cession as free states while Northerners disapproved of his opposition to Clay's legislative agenda. As a result, Congress increasingly ignored Taylor while drafting a compromise.[130] With assistance from Daniel Webster, Clay developed his landmark proposal, the Compromise of 1850. The proposal allowed statehood for California, giving it independence on the slavery question, while the other territories would remain under federal jurisdiction. 