In seeking to defuse the conflict with France, President John Adams originally sent three special representatives to try and negotiate a settlement. Elbridge Gerry, John Marshall, and Charles Pinckney arrived in France in the fall of 1797. They hoped to negotiate an end to the treaties of 1778 and get French-American relations back on an even keel.
Shortly after their arrival, the three Americans were approached by three representatives of the French Foreign Minister, Charles Maurice de Talleyrand-Périgord. The three men told the Americans that negotiations would begin after France was given a loan of $12 million and Talleyrand was given a bribe of $250,000. Such financial exchanges were a fairly normal part of European diplomacy, but the Americans reacted in horror. Seeing these demands as a form of extortion and bribery, Marshall and Pinckney sailed for home. Gerry remained, hoping to salvage some sort of agreement from the negotiations, but he met with little success.
When word of this incident reached the United States, many Americans reacted with anger. John Adams, in reporting to Congress, used the letters X, Y, and Z instead of the real names of the French representatives. Hence, the incident became known as the XYZ Affair. The XYZ Affair brought the United States very close to a real war with France. The Federalists in Congress called for some sort of retribution because of the insult to American honor. Attempts were made to silence supporters of France through the adoption of the Sedition Act (see Chapter 25). The Federalists also voted money to increase the size of the army and navy so that the United States would be better prepared for any military activity that occurred. The partisan press became very involved in the debates over the XYZ Affair. The Federalist newspapers called for war to defend American honor, while the Republican news sheets called for an investigation into how the negotiations could have been bungled so badly.