Philadelphia, February 11, 1799.

I wrote you last on the 22d of January, since which yours of January 26th is received. A bill will pass the Senate to day for enabling the President to retaliate rigorously on any French citizens who now are or hereafter may be in our power, should they put to death any sailors of ours forced on board British vessels and taken by the French. This is founded expressly on their Arret of October 29th, 1798, communicated by the President by message. It is known (from the Secretary of State himself) that he received, immediately after, a letter from Rufus King informing him the Arret was suspended, and it has been known a week that we were passing a retaliating act founded expressly on that Arret, yet the President has not communicated it, and the supporters of the bill, who themselves told the secret of the suspension in debate, (for it was otherwise unknown,) will yet pass the bill. We have already an existing army of 5,000 men, and the additional army of 9,000 now going into execution. We have a bill on its progress through the Senate for authorizing the President to raise thirty regiments (30,000 men) called an eventual army, in case of war with any European power, or of imminent danger of invasion from them in his opinion. And also to call out and exercise at times the volunteer army, the number of which we know not. Six 74's and six 18's, making up 500 guns (in part of the fleet of twelve 74's, twelve frigates, and 20 or 30 smaller vessels proposed to be built or bought as soon as we can), are now to be begun. One million of dollars is voted. The Government estimate of their cost is about 4,500 dollars (£1000 sterling) a gun. But there cannot be a doubt they will cost 10,000 dollars a gun, and consequently the 550 guns will be 5½ millions. A loan is now opened for five millions at eight per cent., and the eventual army bill authorizes another of two millions. King is appointed to negotiate a treaty of commerce with Russia, in London. Phocion Smith is proposed to go to Constantinople to make a treaty with the Turks. Under two other covers you will receive a copy of the French originals of Gerry's communications for yourself, and a dozen of G. N's pamphlets on the laws of the last session. I wish you to give these to the most influential characters among our countrymen, who are only misled, are candid enough to be open to conviction, and who may have most effect on their neighbors. It would be useless to give them to persons already sound. Do not let my name be connected in the business. It is agreed on all hands that the British depredations have greatly exceeded the French during the last six months. The insurance companies at Boston, this place and Baltimore, prove this from their books. I have not heard how it is at New York. The Senate struck out of the bill continuing the suspension of intercourse with France, the clauses which authorized the President to do it with certain other countries (say Spanish and Dutch), which clauses had passed the House of Representatives by a majority of, I believe, twenty. They agreed, however, to the amendment of the Senate. But Toussaint's clause was retained by both Houses. Adieu affectionately.

Feb. 12th. The vessel called the Retaliation, formerly French property taken by us, armed and sent to cruise on them, retaken by them and carried into Guadaloupe, arrived here this morning with her own captain and crew, &c. They say that new commissioners from France arrived at Guadaloupe, sent Victor Hughes home in irons, liberated the crew, said to the captain that they found him to be an officer bearing a regular commission from the United States, possessed of a vessel called the Retaliation, then in their port; that they should inquire into no preceding fact, and that he was free with his vessel and crew to depart; that as to differences with the United States, commissioners were coming out from France to settle them; in the meantime, no injury should be done to us or our citizens. This was known to every Senator when we met. The Retaliation bill came on, on its passage, and was passed with only two dissenting voices, two or three who would have dissented happening to be absent.

TO MR. STEWART.

Philadelphia, February 13, 1799.

Dear Sir,—I avoid writing to my friends because the fidelity of the post office is very much doubted. I will give you briefly a statement of what we have done and are doing. The following is a view of our finances in round numbers. The import brings in the last year seven and a half millions of dollars, the excise, carriages, auctions, and licenses, half a million, the residuary small articles one-eighth of a million. It is expected that the stamp act may pay the expense of the direct tax, so that the two may be counted at two millions, making in the whole ten and one-eighth millions. Our expenses for the civil list three-quarters of a million, foreign intercourse half a million (this includes Indian and Algerine expenses, the Spanish and British treaties), interest of the public debt four millions, the existing navy two and a half millions, the existing army, 5,000 men, one and a half millions, making nine and a quarter millions, so that we have a surplus of near a million. But the additional army, 9,000 men, now raising, will add two and a half millions annually, the additional navy proposed three millions, and the interest of the new loans half a million, making six millions more, so that as soon as the army and navy shall be ready, our whole expenses will be fifteen millions; consequently, there will be five millions annually more to be raised by taxes. Our present taxes of ten millions are two dollars a head on our present population, and the future five millions will make it three dollars. Our whole exports (native) this year are 28,192, so that our taxes are now a third and will soon be half of our whole exports; and when you add the expenses of the State Governments we shall be found to have got to the plenum of taxation in ten short years of peace. Great Britain, after centuries of wars and revolutions, had at the commencement of the present war taxed only to the amount of two-thirds of her exports. We have opened a loan for five millions, at eight per cent. interest, and another is proposed of two millions. These are to build six seventy-fours and six eighteens, in part of additional navy, for which a bill passed the House of Representatives two days ago, by fifty-four against forty-two. Besides the existing army of 5,000 and additional army of 9,000, an eventual army of 30,000 is proposed to be raised by the President, in case of invasion by any European power, or danger of invasion, in his opinion, and the volunteer army, the amount of which we know not, is to be immediately called out and exercised at the public expense. For these purposes a bill has been twice read and committed in the Senate. You have seen by Gerry's communications that France is sincerely anxious for reconciliation, willing to give us a liberal treaty, and does not wish us to break the British treaty, but only to put her on an equal footing. A further proof of her sincerity turned up yesterday. We had taken an armed vessel from her, had refitted and sent her to cruise against them, under the name of the Retaliation, and they re-captured and sent her into Guadaloupe. The new commissioners arriving there from France, sent Victor Hughes off in irons, and said to our captain, that as they found him bearing a regular commission as an officer of the United States, with his vessel in their port, and his crew, they would inquire into no fact respecting the vessel preceding their arrival, but that he, his vessel and crew, were free to depart. They arrived here yesterday. The federal papers call her a cartel. It is whispered that the executive means to return an equal number of the French prisoners, and this may give a color to call her a cartel, but she was liberated freely and without condition. The commissioners further said to the captain that, as to the differences with the United States, new commissioners were coming out from France to settle them, and in the meantime they should do us no injury. The President has appointed Rufus King to make a commercial treaty with the Russians in London, and William Smith, of South Carolina, to go to Constantinople to make one with the Turks. Both appointments are confirmed by the Senate. A little dissatisfaction was expressed by some that we should never have treated with them till the moment when they had formed a coalition with the English against the French. You have seen that the Directory had published an arret declaring they would treat as pirates any neutrals they should take in the ships of their enemies. The President communicated this to Congress as soon as he received it. A bill was brought into Senate reciting that arret, and authorizing retaliation. The President received information almost in the same instant that the Directory had suspended the arret (which fact was privately declared by the Secretary of State to two of the Senate), and, though it was known we were passing an act founded on that arret, yet the President has never communicated the suspension. However the Senate, informed indirectly of the fact, still passed the act yesterday, an hour after we had heard of the return of our vessel and crew before mentioned. It is acknowledged on all hands, and declared by the insurance companies that the British depredations during the last six months have greatly exceeded the French, yet not a word is said about it officially. However, all these things are working on the public mind. They are getting back to the point where they were when the X. Y. Z. story was passed off on them. A wonderful and rapid change is taking place in Pennsylvania, Jersey, and New York. Congress is daily plied with petitions against the alien and sedition laws and standing armies. Several parts of this State are so violent that we fear an insurrection. This will be brought about by some if they can. It is the only thing we have to fear. The appearance of an attack of force against the government would check the present current of the middle States, and rally them around the government; whereas, if suffered to go on, it will pass on to a reformation of abuses. The materials now bearing on the public mind will infallibly restore it to its republican soundness in the course of the present summer, if the knowledge of facts can only be disseminated among the people. Under separate cover you will receive some pamphlets written by George Nicholas on the acts of the last session. These I would wish you to distribute, not to sound men who have no occasion for them, but to such as have been misled, are candid and will be open to the conviction of truth, and are of influence among their neighbors. It is the sick who need medicine, and not the well. Do not let my name appear in the matter. Perhaps I shall forward you some other things to be distributed in the same way. Present me respectfully to Mrs. Stuart, and accept assurances of the sincere esteem of, dear Sir, your affectionate friend and servant.

TO EDMUND PENDLETON.

Philadelphia, February 14, 1799.

Dear Sir,—I wrote you a petition on the 29th of January. I know the extent of this trespass on your tranquillity, and how indiscreet it would have been under any other circumstances. But the fate of this country, whether it shall be irretrievably plunged into a form of government rejected by the makers of the Constitution, or shall get back to the true principles of that instrument, depends on the turn which things may take within a short period of time ensuing the present moment. The violations of the Constitution, propensities to war, to expense, and to a particular foreign connection, which we have lately seen, are becoming evident to the people, and are dispelling that mist which X. Y. Z. had spread before their eyes. This State is coming forward with a boldness not yet seen. Even the German counties of York and Lancaster, hitherto the most devoted, have come about, and by petitions with four thousand signers remonstrate against the alien and sedition laws, standing armies, and discretionary powers in the President. New York and Jersey are also getting into great agitation. In this State, we fear that the ill designing may produce insurrection. Nothing could be so fatal. Anything like force would check the progress of the public opinion and rally them round the government. This is not the kind of opposition the American people will permit. But keep away all show of force, and they will bear down the evil propensities of the government, by the constitutional means of election and petition. If we can keep quiet, therefore, the tide now turning will take a steady and proper direction. Even in New Hampshire there are strong symptoms of a rising inquietude. In this state of things, my dear Sir, it is more in your power than any other man's in the United States, to give the coup de grace to the ruinous principles and practices we have seen. In hopes you have consented to it, I shall furnish to you some additional matter which has arisen since my last.

I enclose you a part of a speech of Mr. Gallatin on the naval bill. The views he takes of our finances, and of the policy of our undertaking to establish a great navy, may furnish some hints. I am told something on the same subject from Mr. J. Nicholas will appear in the Richmond and Fredericksburg papers. I mention the real author, that you may respect it duly, for I presume it will be anonymous. The residue of Gallatin's speech shall follow when published. A recent fact, proving the anxiety of France for a reconciliation with us, is the following. You know that one of the armed vessels which we took from her was refitted by us, sent to cruise against her, recaptured, and carried into Guadaloupe under the name of the Retaliation. On the arrival there of Desfourneaux, the new commissioner, he sent Victor Hughes home in irons; called up our captain; told him that he found he had a regular commission as an officer of the United States; that his vessel was then lying in the harbor; that he should inquire into no fact preceding his own arrival (by this he avoided noticing that the vessel was really French property) and that therefore, himself and crew were free to depart with their vessel; that as to the differences between France and the United States, commissioners were coming out to settle them, and in the meantime, no injury should be done on their part. The captain insisted on being a prisoner; the other disclaimed; and so he arrived here with vessel and crew the day before yesterday. Within an hour after this was known to the Senate, they passed a retaliation bill, of which I enclose you a copy. This was the more remarkable, as the bill was founded expressly on the Arret of October the 29th, which had been communicated by the President as soon as received, and he remarked, "that it could not be too soon communicated to the two Houses and the public." Yet he almost in the same instant received, through the same channel, Mr. King's information that that Arret was suspended, and though he knew we were making it the foundation of a retaliation bill, he has never yet communicated it. But the Senate knew the fact informally from the Secretary of State, and knowing it, passed the bill.