The episode had unfortunate consequences: it aroused the distrust of the Spanish Government and delayed the surrender of Natchez and other posts which Spain had agreed to cede in the Treaty of 1795; and it furnished Talleyrand, who had become Minister of Foreign Affairs under the Directory, with an additional argument for the cession of Louisiana to France. France in control of Louisiana and Florida would be "a wall of brass forever impenetrable to the combined efforts of England and America."

Early in March, 1797, dispatches arrived from the envoys which were full of sinister disclosures. On the 19th, President Adams announced gloomily that he perceived "no ground of expectation" that the objects of the mission could be accomplished "on terms compatible with the safety, honor, or the essential interests of the nation." He renewed his recommendations of measures of defense "proportioned to the danger." The average Republican regarded this message as tantamount to a declaration of war. Jefferson spoke of it as "an insane message." The partisan press held it to be further proof of British bias in John Adams, the old aristocrat! But when the President sent to Congress the deciphered dispatches, and the newspapers had printed extracts from them, a wave of indignation swept over the country. For the moment the wildest partisan of France was silenced.

The envoys told a sordid tale of French intrigue and greed. It appeared that they had never been received officially when they made known their presence on French soil, but had been approached by agents of Talleyrand, whom they referred to in the dispatches as Mr. X, Mr. Y, and Mr. Z. They were much mystified by the language used by these gentlemen, until the evening of October 18, when Mr. X called on General Pinckney and whispered that he had a message from Talleyrand. "General Pinckney said he should be glad to hear it. Mr. X replied that the Directory, and particularly two of the members of it, were exceedingly irritated at some passages of the President's speech, and desired that they should be softened; and that this step would be necessary previous to our reception. That, besides this, a sum of money was required for the pocket of the Directory and Ministers, which would be at the disposal of M. Talleyrand; and that a loan would also be insisted on. Mr. X said if we acceded to these measures, M. Talleyrand had no doubt that all our differences with France might be accommodated. On inquiry, Mr. X could not point out the particular passages of the speech that had given offense, nor the quantum of the loan, but mentioned that the douceur for the pocket was twelve hundred thousand livres, about fifty thousand pounds sterling."

Unwilling to believe their ears, the astonished envoys asked to have these proposals put in writing. Mr. X not only complied with this request, but brought with him Mr. Y, a confidential friend of Talleyrand, who repeated the terms upon which the envoys would be received, and pointed out convenient means by which the money could be secretly transferred.

The American commissioners responded that while they had ample powers to make a treaty, they had none to make a loan. They offered, however, to send one of their number to America for further instructions, provided that the Directory would check the further capture of American vessels. Nevertheless, the efforts of X and Y to secure the douceur were not relaxed. Finally, finding the envoys either obstinate or obtuse, Mr. X exclaimed, "Gentlemen, you do not speak to the point. It is money; it is expected that you will offer money." The Americans were inexorable. "What is your answer?" asked X impatiently. "It is," said the envoys, "no, no; not a sixpence."

On November 1, the commissioners agreed to hold no more indirect intercourse with the Government, but to prepare a statement of the American grievances against France and to send it to Talleyrand. Two weary months passed before they received his answer. Couched in language which was both contemptuous and insulting, this reply of Talleyrand terminated the mission. The Directory intimated that in future they would treat only with Gerry as "the more impartial" member of the commission. Pinckney and Marshall remonstrated against this discrimination, but Gerry unwisely consented to deal with Talleyrand alone. Marshall secured a passport with some difficulty and departed for home. Pinckney with more difficulty secured permission to retire to southern France with his invalid daughter.

The war spirit now ran high. President Adams declared that he would never send another minister to France without assurances that he would be "received, respected, and honored as the representative of a great, free, powerful, and independent nation," and the people supported this declaration with surprising unanimity. Demonstrations occurred in all the playhouses of Philadelphia and New York; young men formed associations and donned the black cockade as an emblem of patriotic devotion; even in the quiet towns of New England, women met to drink tea and to sing the new song "Adams and Liberty." Cities along the coast vied with one another in their eagerness to build warships. The patriotic fervor found expression in original song and verse. "Hail Columbia" was the happy inspiration of young Joseph Hopkinson, of Philadelphia. For once in his life President John Adams found himself a popular hero riding on the crest of public applause.

To the intense disgust of Jefferson, even Republicans caught the war fever, and joined with the Federalists in putting the country on a war footing. Among the earliest measures of Congress was an act providing for the establishment of a Navy Department. In rapid succession followed acts authorizing the President to permit merchantmen to arm in their own defense and our warships to seize French vessels which preyed upon our commerce. On July 7, the existing treaties with France were repealed. In short, without a formal declaration, the United States was virtually at war with France. The new navy soon put to sea and gratified national pride by several gallant victories, the most notable being the capture of the frigate L'Insurgente by the newly commissioned Constellation, on February 9, 1799. When peace was restored in 1800, the navy had a record of eighty-four prizes, most of which were French privateers.

The organization of the provisional army did not move so rapidly, partly because of the incompetence of the Secretary of War, and partly because of an unseemly wrangle for precedence among the three major-generals whom Adams had named. Conscious of his own inexperience in military affairs, President Adams had persuaded Washington to take chief command of the army with the distinct understanding that he would not be called into active service unless an emergency arose. Washington named Hamilton, C. C. Pinckney, and Knox as major-generals, and the President sent the nominations to the Senate in this order. Misunderstandings arose at once as to the relative rank of these three major-generals. Hamilton and his intimates in the circle of the President's advisers urged that as his name was first on the list he was the ranking officer. At this Knox took umbrage, for he had outranked Hamilton in the old army; and so, too, had Pinckney. Knowing the intrigue in Hamilton's behalf and not a little alarmed at the prospect of having the direction of the war pass into the hands of a man whom he regarded as a rival, Adams determined to sign the commissions in the reverse order, thus giving Knox precedence. The friends of Hamilton were enraged at this turn of affairs and prevailed upon Washington to write a letter of protest to the President. Adams was finally persuaded to date all three commissions alike and to leave the designation of rank to the commander-in-chief. Washington promptly named Hamilton as inspector-general with precedence over Pinckney and Knox; whereupon Knox refused to serve.

The immediate outcome of this controversy was to widen the rift which was already separating the President from the faction led by Hamilton. Adams had taken office in the belief that Washington's cabinet advisers were loyal to him. "Pickering and all his colleagues are as much attached to me as I desire," he had written just before his inauguration. But he speedily found that all were accustomed to look to Hamilton as the virtual leader of the Federalist party. Moreover, he found himself thrust into the background in the matter of military appointments, as soon as Hamilton took over the actual work of organizing the army. The Constitution made him commander-in-chief; circumstances seemed to conspire, he complained bitterly, "to annihilate the essential powers given to the President." He had, too, all the natural aversion of a civilian for military affairs. "Regiments are costly articles everywhere," he told McHenry testily, "and more so in this country than in any other under the sun. And if this country sees a great army to maintain, without an enemy to fight, there may arise an enthusiasm that seems to be little foreseen."