Since I had the honour last to address you, it has turned out, that the reputed Spanish agent, Mr. Isquierdo, has not had the appointment of his governmt. as was expected, and that whatever may have been the appearances of an approximating negociation & settlement of our affairs, they were grounded upon no substantial Basis. Who is to blame? Whether it is Spain, who may wish to gain time & to elude a discussion & an adjustment of the subsisting differences? or whether it is France, who secretly throws obstacles in the way, whilst she openly offers her friendly mediation? or whether, which is the more probable case, there is a secret machination among the Stockjobbers, who intermeddle in our affairs, & who have procured an influence with the officers probably of both Governmts., certainly of one, & have thereby found the means of impeding & intercepting the arrangement of our affairs, to give an opportunity for propositions more favourable to their particular purpose, time will unfold.

Spain left to herself would probably pursue her own policy, & would delay a discussion & an adjustment as long as possible rightly conceiving, no doubt, that she will be able to make better terms in a time of Peace, than when under the pressure of such a war, as the one, in which she is engaged.

France on the contrary, cannot but consider her alliance with Spain, as being of that nature to engage her to make common cause in her disputes, & therefore cannot see with satisfaction, the probability of our differences to ripen into hostilities: because she will become a party to the war, and will thereby be deprived of the advantages of our neutrality, It is a plain case, that the concessions, which G. Britain has, or may make to our flag, whether derived through the general influence of the commercial intercourse, or the particular effect of a treaty, give a concomitant advantage to this Govt., & place the U.S. in a situation, to afford great benefit to the resources of both france & Spain, whether considered in reference to their colonies, commerce or revenue:* and what serves to give force to the opinion is, that if the U.S. shd. change their neutral character, & shd be obliged to have recourse to war, to procure that Justice, which is denied them by Spain, G Britain not being under the same inducements to respect the flags of other neutral States, she will add further restrictions upon the commerce of neutrals, & thereby interrupt those means, on which the resources of france & Spain essentially depend:—so fully apprized was the late Mr. Pitt of the importance & effect of the neutrality of the U. States under the existing circumstances of it, that he was known to be of the opinion, that it would be better for Great Britain to submit to the loss of our commerce, & to take the consequences of our hostilities, rather than permit the continuance of those Regulations towards neutrals, which afforded so great a protection to the commerce & resources of her enemies.

With respect to the Stockjobbers & their schemes, such is the extent of their influence, & so great is their hold upon some of the officers of this Govt., that nothing, but strong measures will break up their plans: Measures of this sort, in my opinion, will excite the attention of the Emperor to the interest of his Govt., & to the necessary consequences, which must flow from a war with the U. States; and in such an event, I have no doubt he will find sufficient motives to investigate the causes, & to correct the conduct of the spanish Governmt. let it arise from what source, it may. But permit me Sir to observe to you, that in my opinion, any expedients short of the most decisive measures, or which shall not yield to the corrupt designs attempted to be concealed, will prove unavailing, & render abortive every proposition, wch. has or may be suggested. And I ought to apprize you, that I have good reason to think, that the Stockjobbers by their correspondents in the United States & their intrigues in this city, are well acquainted with your instructions; & with the policy & views of your administration, in regard to our disputes with Spain.

I ought equally to apprize you Sir, that whilst it is supposed, that the pacific policy of your administration cannot be changed, which is strongly insisted on by the Stockjobbers & their coadjutors, who have been but too successful in diffusing the impression in both france & Spain, all the interest which the actual situation of the U.S. might otherwise give, throws no weight into the scale of the general policy of this governmt., to assist us by her friendly mediation: I therefore take it for granted, that the effectual interference of this government will not be obtained, whatever may be pretended, until the U.S. shall assume a menacing attitude by the adoption of measures of an unequivocal nature, or shall consent to pursue the plan which has been marked out by the Stockjobbers, & the persons who have intruded themselves upon our Negociations: if the latter course be pursued, the whole business must be unconditionally submitted to this Governmt., & the United States may expect to find themselves deceived in the price to be given for West Florida: that East Florida cannot be obtained & that the western limits of Louisiana will be greatly curtailed in extent:—My reasons for this opinion are grounded with other circumstances, upon the equivocal conduct of the Prince of Beneventum, who whilst he offered the friendly mediation of the Emperor, upon terms I confess wch appeared to me somewhat extraordinary, yet it is made evident, that he secretly arrested the progress of the very measure at Madrid, which he openly avowed at Paris: This is fully proved by the extract from Mr. Erving letter of the 27th of July last refered to in my letter to Mr. Madison of the 22d. of Augt., & is confirmed by other Letters, which I have since recd. from Mr. Erving:—That East Florida will not be readily obtained I have it from high authority that Mr. Hauterive a principal officer in the Department of foreign affairs, who has the foreign business respecting the U.S particularly committed to him, took occasion to say, that East Florida would not be parted with, & that its situation was too important to be readily relinquished. There are published two maps of Louisiana, one in June last & the other in the last month, which were doubtless intended to bear upon the proposed negociation; they place the western limits of Louisiana, in the river Mexicana a little to the westward of Cap. Nord, by which one half the territory lying to the westward of the Missisippi upon the Sea Coast, and a very great proportion of the interior country is curtailed: these maps I shall send to Mr. Madison by the first good opportunity, together with a number of books & charts, which refer to the same subject, & which I think it to be proper, that the Governmt. shd. be possessed of.—

Before I conclude will you permit me to observe to you Sir, that I consider the conduct of Spain from whatever cause it may proceed, so very reprehensible, that it will justify any measures, which it may be for the interest of the United States to pursue; and if this is the case, will you permit me to ask, whether under existing circumstances the present opportunity is not favourable to place that part of the United States lying to the Westward of the Allygany mountains in a state of permanent Security? and whether that Security can be rationally expected with France or Spain in possession of East or West Florida?

I hope Sir, that you will excuse me in making these suggestions, to while I am led with no disposition to obtrude my Sentiments or opinions, but only to respectfully submit to your consideration, whether the country lying to the westward of the Allyganies or even Louisiana, could be easily protected with an enemy in possession of East or West Florida?

Having written thus far I was interrupted by two important occurrences; the one shewing that the Prince of Beneventum has had no serious intention of bringing our disputes with Spain to a speedy adjustment; and the other pointing to the probable motives, which have induced his Duplicity & intrigue: for the first, I am indebted to Mr. Erving, who in consequence of the letters, which I have written to him, added to his activity & zeal to promote the negociation or to discover the true reasons for its failure, has put the subject beyond all doubt; and fixes the Blame where it shd. lie i.e. upon the Prince of Beneventum.

Mr. Erving in his letter to me dated at Madrid the 2d. instant, observes “that yesterday I had the pleasure of receiving your’s of Sept. 16 as I was on my way to visit the Prince: I endeavoured therefore without risking indiscreet conversation to learn something more upon the interesting point, to which your letter refers;—I can now assure you most positively, that neither Isquierdo nor Massarano have powers; by powers, I mean formal & sufficient authorities. I have before explained to you the character of the Prince, & therefore you never will be surprised at any inconsistencies wch. you may find in my reports of what passes between us. What he stated to me yesterday was in substance this, that he had said to the french Govt., if you can settle our differences with America, settle them in God’s name, & whenever you want the powers from us you can have them:—now says he the french Govt. has not demanded any powers from us!—thus you see he wd. place the fault on them:—you find by one of my late letters, that he had desired Isquierdo to suspend his operations during the negociation with Engld.; this however is not absolutely inconsistent with what passed yesterday; ‘operations,’ I take it meant nothing more than ‘intrigues.’—In fact his declaration of yesterday accords with the reason of the case; who can doubt, that whether he was disposed to send them or not, he would send them if required? The fault then must be wholly on your side.—If my friend had been permitted to go on in the way I had put him in, you would have had the powers long since; this he told me himself last night, your man in Paris has frightened him & he will not consent to say one word more:—I reported to him as much as I judged proper of my interview with the Prince yesterday, that he might write it to his chief. If Genl. Armstrong believes that Isquierdo has powers, upon what ground does he believe it? & believing it where can be the necessity for the least delay in entering upon the negociation? how can such delay be justified to our Govt?”—

The other circumstance wch. points to the motives for the Delay must be found not less satisfactory, altho the evidence is not equally clear & direct: but perhaps it is as fully proved as any transaction of the kind is probably susceptible: the story is this, that a M. Dautremont who formerly lived with the Prince of Beneventum in the character of a private & confidential Secretary has been for some time past in the habit of making Mr. Skipwith occasional visits with a view of drawing him into a money speculation grounded upon the events of the proposed negociation with Spain: he had previously proposed to Mr. Skipwith to hold consultations upon this subject, at the house of a M. Doyen, one of the Prince of Beneventum’s Bankers, with whom he was invited to dine for the purpose of devising ways & means of carrying it into execution; & to confer with Mr. Isquierdo upon the political & Mr. Doyen upon the private arrangements:—But to the honor of Mr. Skipwith, whose disinterestedness & purity from corruption on this & other occasions merit the respect & notice of his country, he refused the proposition, and acquainted me therewith; but as it was accompanied with no particular circumstances directly implicating any of the officers of this Governmt., I paid little attention to it; & conceived it to be nothing more than a modification of some of the schemes of the confederacy which I had before detected in the same pursuit:—The same M. Dautremont called upon Mr. Skipwith the 10th instant & told him, that as the affairs of the spanish colonies in South america from the taking of Buenos Ayres by the English had become extremely critical, it was more important than ever, that our disputes with Spain should as he believed they might be amicably arranged; that notwithstanding the reports to the contrary, Mr. Isquierdo was empowered by Spain subject however to the controul of this Government, & there was no doubt that every thing concerning it did and would depend upon the prince of Beneventum; & that he Mr. Skipwith ought to know how necessary it was to smooth the way, by reconciling public measures to the interest of influential individuals: that the X. Y. & Z. Business & the Jealousies of the american governmt. had been the cause of so much uneasiness, that in transactions of so delicate a nature other means less exposed to observation than money ought to be devised to procure the salutary purposes intended: and for this purpose he asked Mr. Skipwith, whether if in case grants of land within the territory proposed to be ceded could be procured, the ministers of the U.S could be made to confirm them in the treaty? upon which Mr. S replied, that he conceived an inconsiderable tract would not create an insurmountable obstacle to the treaty: whereupon he proceeded to open himself, and to say, that the prince of Beneventum had a very great attachment to his Brother; & that he might be well pleased to see his Brother obtain a grant of land: and if a grant in his name might create suspicion, that Mr. Isquierdo, or some other Spaniard might be easily obtained to receive the grant from the Spanish Govt.; in which case it would be understood, that he M. Dautremont & Mr. Skipwith might expect a share; to which Mr. S. replied, that he could not consent to participate. M. Dautremont then observed, that he would see M. Tallerand the brother of the Prince, who would proceed to Germany to settle the business with the Prince, in case the Prince shd. not return to Paris in a few days, which was expected. M. Dautremont then took his leave, promising to call again in a few days, but has not been since seen by Mr. Skipwith.

As I conceive it cannot be for the honor or interest of the United States to listen to inofficial propositions of any kind, and particularly to such as are bottomed on corruption I have repelled every thing of the kind, as inconsistent with my situation or your instructions, for the reason that seperate from their impropriety they will have a tendency to create Delay, & to transfer the favourable opportunity which presents of annexing East & West Florida to the United States & thereby to secure the future Peace & Safety of the Territories upon the western waters.

Will you permit me Sir to repeat my Solicitude for leave to return home as soon as our affairs with Spain shall be settled.

I am with the highest esteem and attachment most respectfully Sir, Your faithful and most obedient Servant