In the early 1790’s France and Britain were the world powers trying to control most commerce from and to their far away colonies. George Washington decided that the United States would not take sides and would remain neutral. When the U.S and Britain ratified the Jay Treaty in 1796, a treaty of amity, commerce and navigation, the French government was highly unsatisfied with the agreement as it gave Britain the most favored nation trading status. France reacted by seizing U.S. merchant ships in the West Indies and by refusing to receive Charles C. Pinckney, who replaced Monroe, as U.S. Ambassador to France. Facing arrest Pinckney had to flee to the Netherlands.
John Adams wanted to avoid a full scale war with France opposing his own Federalist Party that under the direction of Alexander Hamilton used these events to turn U.S. citizens against France. Most of the impact of the XYZ affair was in domestic politics, as it was used as a tool for the opposition.
In July 1797, in order to peacefully settle the dispute the newly elected president John Adams sent a committee of three men –Charles Cotesworth Pinkney, John Marshall and Elbridge Gerry- to negotiate a peace agreement with France. Upon their arrival the committee was unable to meet with the French Foreign Minister, Charles Maurice de Telleyrand, instead he sent three agents Jean-Conrad Hottinguer (“X”), Pierre Bellamy (“Y”) and Lucien Hauteval (“Z”) to negotiate a bribe of £50,000 and a loan to the French government before negotiations could begin. The Democrat – Republican Party, suspicious of Adam’s dealings, demanded that he release all correspondence with France, and in doing so, he replaced the French agent names with X, Y and Z.
Meanwhile the U.S Navy was battling French ships in the Caribbean; Congress declared all French treaties nul and void, created the Navy Department and invested in the construction of warships, the U.S was getting ready to go to war with France. Talleyrand, the French foreign minister, attempted to restore relations and prevent a full scale war by accepting a new American commission that included William VansMurray, Oliver Ellsworth and William Richardson Davie. The outcome was the Convention of 1800 also known as the Treaty of Mortefontaine.
The treaty established a true and sincere Friendship between the French Republic and the United States of America giving each other the “Most Favored Nation” trade status. All the ships captured during the war were to be returned and French rights to fish off Newfoundland and the Gulf of Saint Lawrence were to be reestablished and guaranteed. The Treaty of Mortefontaine was ratified by both countries on December 21, 1801.