Reaction in The United States
While the American diplomats were in Europe, President Adams considered his options in the event of the commission's failure. His cabinet urged that the nation's military be strengthened, including the raising of a 20,000 man army and the acquisition or construction of ships of the line for the navy. He had no substantive word from the commissioners until March 1798, when the first dispatches revealing the French demands and negotiating tactics arrived. The commission's apparent failure was duly reported to Congress, although Adams kept secret the mistreatment (lack of recognition and demand for a bribe) of the diplomats, seeking to minimize a warlike reaction. His cabinet was divided on how to react: the general tenor was one of hostility toward France, with Attorney General Charles Lee and War Secretary Timothy Pickering arguing for a declaration of war. Democratic-Republican leaders in Congress, believing Adams had exaggerated the French position because he sought war, united with hawkish Federalists to demand the release of the commissioners' dispatches. On March 20, Adams turned them over, with the names of some of the French actors redacted and replaced by the letters W, X, Y, and Z.
The release of the dispatches produced exactly the response Adams feared. Federalists called for war, and Democratic-Republican were left without an effective argument against them, having miscalculated the reason for Adams' secrecy. Congress authorized the acquisition of twelve frigates, and made other appropriations to increase military readiness. Despite calls for a formal war declaration, Adams steadfastly refused to ask Congress for one. On July 7, 1798, Congress formally abrogated the 1778 Treaty of Alliance, and two days later authorized attacks on French warships.
Read more about this topic: XYZ Affair
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