The palace is filled with Irish attendants, of both sexes, whose animosity to us and our cause is as decided and inveterate as is their attachment to it in America. The Princess of Asturias has on several occasions, and lately in particular, treated such English as come here with much condescension and distinction. The last instance I allude to happened to lady Winchelson, and the Lord her son, who came from America, (where he commanded a regiment) to Lisbon for his health. They were accompanied by a Mr Graham and his lady, and sister, both sisters of Lady Stormont, and visited the Escurial in their way to France.

If the Ministers perceive any aversion in their future King and Queen to an alliance with us, they can easily find pretexts to retard it until they see their own justification in the urgency of the conjuncture, that may appear to have forced them into the measure. This however is but conjecture founded on the knowledge of some little incidents in the interior of the palace, and strengthened by the conduct of the Ministry, not only in the great object of Mr Jay's mission, but also in several minute particulars in which they might act to our satisfaction, without showing any marked partiality in our favor. So far from Mr Jay's having been yet able to obtain further succors, the French Ambassador has not procured the payment of moneys advanced in the month of May, by the Marquis de Yranda, to enable Mr Jay to discharge the bills due that month, although the Minister engaged his word to the Ambassador to repay this sum in equal monthly payments. In fact the Court itself is distressed, and with difficulty finds means to answer its own engagements.

I believe I may venture to write with some certainty on this subject, for I have been on an intimate footing with the person who has transacted for the Court the most part of its money negotiations for more than twelve months past. I knew and cultivated him before he was in favor, and my introduction of him to Mr Jay, procured him the commission on the payment of our bills, and a considerable credit in consequence of the sums supposed to pass through his hands monthly for this purpose. As he has been the founder of the paper system in this country, and as he is likely soon to establish a national bank, he will probably make some figure in the annals of this reign. His name is Francis Cabarrus, born in Bayonne, but sent early to Spain to acquire a knowledge in its commerce, in which his father was considerably interested. His marriage at the age of nineteen (he is now twentynine) displeased his family, from whom after that period he received no assistance. With a small capital, as he himself informed me, he came and established a soap-work in the neighborhood of this city. While there he introduced himself to the notice of the Count de Campomanes, by becoming a member of the patriotic society, the friends of their country; of which the last mentioned gentleman is in a great measure the founder. He soon conciliated his esteem, as well as that of the Governor of the Council of Castile, to whom he became known by means of his friend and patron M. Campomanes. Through their interest he procured a contract to supply wheat and flour, in a time of scarcity, and commenced banker. The last year he proposed his plan for procuring cash for government, on terms mentioned in former letters. His genius is brilliant, active, and enterprising, with more imagination than solidity, although he is by no means deficient in acquired knowledge, arising from reading and reflection, the result of experience. His eloquence, enforced by a very prepossessing countenance and figure, seizes the heart before it convinces the judgment, and this joined to his knowledge of commercial and money transactions, has obtained for him the confidence of M. Musquiz, who consults him at present in all affairs of finance.

I have thought proper to say thus much of this gentleman, not only on account of the part he has had, and is like to have in money matters, but because he has on all occasions manifested himself a friend to our cause, of which he is an enthusiastic advocate, being totally divested of local prejudices. He offered to procure five hundred thousand dollars for the States, payable at Havana on condition of being reimbursed by government in two years, the payments to commence at the expiration of two months after his orders for the delivery of the money to the agents of Congress were despatched. He will make the advances for the payment of the bills due next month, which amount to thirtytwo thousand dollars, and for the reimbursement of which Mr Jay relies on Dr Franklin, for after the delays we have experienced here, and the knowledge of their own distresses, there is no great reason to think this Court will grant us any considerable pecuniary assistance, unless a happy change in the situation of our affairs should precipitate a treaty, and lead them to extraordinary exertions, as proofs of their amity. The support of their fleet at Cadiz, of forty sail of the line, the sieges of Gibraltar and Mahon; their expensive armaments at the Havana, and the preparations making for an expedition from Europe to that quarter, which will sail next month, exhaust their European and American revenue, and all the resources by which they have hitherto obtained money.

The insurrections in Peru augment this expense, and the same spirit of revolt, which seems to have extended to Mexico, will add to it. These discontents have been occasioned by duties imposed since the administration of M. Galvez, the present Minister of the Indies. The project was proposed by Carrasco, Marquis de la Corona, to the Marquis of Squillace then Minister, who was much inclined to adopt it, and named the projector to visit Spanish America, in order to form on the spot the plan of its execution. He declined the mission on various pretexts, and another was appointed for this purpose, who died on his passage. M. Galvez, the present Minister of the Indies, succeeded him, and on his return to Spain made a report so agreeable to his Majesty, that it procured him the important post he now occupies.

The novelty of these measures, joined to the vexations and impositions occasioned, as is said, by the collectors of them, has created much dissatisfaction in these countries. I have my information from some of the principal natives of Mexico and Peru here, and also from a foreigner, who obtained permission to visit Mexico, and who made the voyage from motives of curiosity. Four thousand troops are to be embarked at Cadiz for the expedition abovementioned, and it is said will be escorted by four vessels of the line, who at the same time convoy the register ships bound to the Havana and Vera Cruz. As this convoy will sail about the same time that the expedition from Brest will be ready for sea, it is probable they may form a junction. Ten thousand troops are to be employed in the one last mentioned, and I am told will sail escorted by twenty sail of the line. Part of which will probably join the grand fleet at Cadiz, and the rest proceed to the West Indies, where I have reason to think they will act in concert with the Spaniards. A friend of mine is to embark on board the French fleet as interpreter. He speaks and writes the Spanish language perfectly.

I have also some reason to believe that the French naval force, and a larger body of troops than they have yet sent to America, will appear on our coasts earlier the next, than they did the present year. Jamaica is thought to be the first object of these expeditions, and this conjecture arises from the appointment of M. Galvez to the command of the Spanish force in the West Indies, whose project for attacking that Island is well known. In France, it is said that a part of the troops to be embarked at Brest, is intended for the East Indies; and here, that theirs are sent to suppress the revolt at Santa Fé, mentioned in my letter of the 17th ult.[12] I rather think that two French ships of the line, now at Cadiz, and as many frigates, who have taken and are taking in provisions for a long voyage, are destined to the eastern part of the world, and that they will take with them a considerable sum in dollars, for the payment of their land and sea forces there. The French Ambassador has obtained, or is about to obtain, permission to send out of the kingdom two and a half million of dollars, part of which sum is probably destined to the purpose above mentioned.

The sieges of Gibraltar and Mahon go on slowly. The operations against these fortresses have not been so vigorous hitherto as to promise a speedy reduction of either; when the efforts of these besiegers become more interesting, I shall transmit regular accounts of their progress. The Court of Great Britain proposes to send five hundred troops to America, exclusive of recruits, to be drawn from Germany and Ireland. These it is said, will sail with thirteen sail of the line in the course of next month. The East India Company also send a reinforcement of seven thousand men to the East Indies, with four sail of the line. If this information can be credited, the East and West India, and American reinforcements will sail at the same time, to insure by their united force their safety on the coast of Europe.

In Holland the divisions are still great, and likely to be so. The Provinces have not yet all agreed to the loan proposed by France for the use of Congress. I am informed the Stadtholder's friends give it all the opposition in their power. That Prince has, as I have already advised the Committee, been obliged to consent to the augmentation of the marine. The news of the birth of the Dauphin will probably reach America before this letter. It is expected it will be received there with demonstrations of satisfaction that will be highly flattering to the French nation. The great age and infirmities of the Count de Maurepas, render it probable that he will not survive the winter. The Queen's influence, it is thought, will increase by the birth of the Dauphin, and the death of this Minister. Permit me to conclude with the flattering hopes of a brilliant close of the campaign, which the well concerted plan of our General and allies communicated to me by the Count de Montmorin, renders highly probable. The success of this operation, and what is expected, may perhaps render Mr Jay's next information more agreeable and interesting to Congress, to whom I beg leave to present my humble respects.

I have the honor to be, &c.