"Mr Jay, therefore, is entreated to reflect on the idea just stated to him, and in answer to inform us what measures he thinks suitable to this scheme, in order that they may be laid before the King, and his orders taken thereon. If the expedient in question should be adopted, it will at the same time be necessary to take measures in concert to reimburse to the King this considerable sum, as well as others already expended in favor of the United States. The first idea which offers for reciprocal convenience is that Congress should engage to build without delay some handsome frigates and other smaller vessels of war, fixing the price of each, and the time when they will be finished.
"This point once settled, it will be proper immediately to take measures to equip these vessels as fast as they are ready; to point out what articles will be necessary to send from Spain for this purpose, and in what port they will have notice to receive them. After this it is expedient to be informed, whether the Americans themselves will engage to come to the ports of Bilboa, St Ander, Ferrol, or Cadiz, for the said articles, which they will find ready, and afterwards transport them in their own vessels of war or letters of marque to America. On this supposition it is conjectured, that it would be easy to find hands enough in America to man these new built vessels, which will sail under Spanish colors. There are certainly among the subjects of the said United States many who have made the voyage, and are acquainted with the usual route of the ships of the English East India Company, and who know perfectly well the ports and places at which they stop. This fact established, it is proposed to equip in the ports of the United States four good frigates, and some other lighter vessels, with the effects which shall be sent from hence on account of Spain. This small squadron, under Spanish colors, shall be employed to intercept the convoys of the said Company by cruising in the proper latitudes. The measures just pointed out appear to be the most proper to reimburse, in some shape, the expenses already incurred by his Catholic Majesty, and to answer for such security as has been proposed to be given in this memoir. It being always understood, that a share of the prizes taken from the English by this small squadron shall be given to the crews, and even to Congress, in proportion to the assistance which they shall furnish for the equipment of the vessels.
"A speedy and decisive answer to all the points here enumerated is requested, and Mr Jay is too enlightened not to perceive that the common cause is interested therein."
To this paper, which deserves much attention, I returned the following answer.
"Aranjues, June 9th, 1780.
"Sir,
"The propositions which your Excellency did me the honor to send on the 7th inst. have been considered with all the attention, which their great importance demands.
"The evidence they contain of his Majesty's friendly disposition towards the United States will, I am persuaded, make correspondent impressions on the citizens of America; and permit me to assure you, that his Majesty's desire of contributing to my personal satisfaction by measures conducive to the welfare of my country, has excited my warmest acknowledgments and attachment.
"The enlarged ideas my constituents entertain of the power, wealth, and resources of Spain, are equal to those they have imbibed of the wisdom and probity of his Catholic Majesty, and of that noble and generous system of policy, which has induced him to patronize their cause, and, by completing their separation from Great Britain, effectually to disarm the latter. Such wise and liberal designs, followed by such great and extensive consequences, would add a bright page to the annals of a reign already signalised by important events. It is, therefore, with deep regret that Congress would receive information that the aid they solicit, small when compared with their ideas of the resources of Spain, has been rendered impracticable by the expenses of a war, which, on the part of Spain, is of a recent date. Nor will their disappointment be less than their regret, when they find their credit diminished by the failure of a measure, from the success of which they expected to raise it.
"The kind disposition of his Majesty to become responsible at the expiration of two years for the amount of the bills in question, and that even with interest, is a proof of his goodness, by which I am confident the United States will consider themselves greatly obliged. But when it is considered that bills of exchange, immediately on being drawn and sold, become a medium in commerce, and pass through various hands in satisfaction of various mercantile contracts; that the drawer and every endorser become responsible for their credit at every transfer; and that the object of the merchants last holding the bills, as well as of all other merchants, is money in hand or actively employed in trade, and not money lying still, at an interest greatly inferior to the usual profits to be gained in commerce; I say, on considering these things, it appears to me that, although no objection can be made to the good faith of his Majesty, which is acknowledged by all the world, yet that the last holders of the bills will prefer recovering the amount of them, with the usual damages on protests, to delay of payment for two years with interest.