Relations between the new French Republic and the American administration of President George Washington had become strained in the wake of the 1789 French Revolution.

In 1792, France and the rest of Europe had gone to war, a conflict in which Washington had declared American neutrality.

However, both France and Great Britain, the major naval powers in the war, had seized ships of neutral powers (including those of the United States) that trade with their enemies.

With the Jay Treaty, ratified in 1795, the United States had reached an agreement on the matter with Britain that angered members of the Directory that governed France.

The French Navy had consequently stepped up its efforts to interdict American trade with Britain.

By the time John Adams assumes the presidency in early 1797, the matter is reaching crisis proportions.

In March 1797, not long after assuming office, President Adams learns that Charles Cotesworth Pinckney has been refused as U. S. minister because of the escalating crisis, and that American merchant ships have been seized in the Caribbean.

Popular opinion in the United States on relations with France is divided along largely political lines: Federalists take a hard line, favoring a defensive buildup but not necessarily advocating war, while Republicans express solidarity with the Republican ideals of the French revolutionaries and do not want to be seen as cooperating with the Federalist Adams administration.

Jefferson looks at the Federalists as monarchists who are linked to Britain and therefore hostile to American values.

Adams' cabinet meets in late May 1797 to discuss French relations and to choose a special commission to France.

Adams initially proposes that John Marshall and Elbridge Gerry join Pinckney on the commission, but his cabinet objects to the choice of Gerry because he is not a strong Federalist.

Francis Dana is chosen instead of Gerry, but he declines to serve, and Adams, who considers Gerry one of the "two most impartial men in America" (he himself being the other), submits his name to the United States Senate in Dana's stead without consulting his cabinet.

Adams, in introducing the matter to Congress, makes a somewhat belligerent speech in which he calls for a vigorous defense of the nation's neutrality and expansion of the United States Navy, but stops short of calling for war against France.

Congress approves this choice of commissioners, and Adams instructs them to negotiate similar terms to those that had been granted to Britain in the Jay Treaty.

The commissioners are also instructed to refuse loans, but to be flexible in the arrangement of payment terms for financial matters.

John Marshall had left for Europe in mid-July to join Pinckney, with Gerry following a few weeks later.

The political divisions in the commission's makeup are reflected in their attitudes toward the negotiations: Marshall and Pinckney, both Federalists, distrust the French, while Gerry (who is at this time opposed to political parties) is willing to be flexible and unhurried in dealing with them.

The French Republic, established in 1792 at the height of the French Revolution, is by 1797 governed by a bicameral legislative assembly, with a five-member Directory acting as the national executive.

The Directory is undergoing both internal power struggles and struggles with the Council of Five Hundred, the lower chamber of the legislature.

Ministerial changes take place in the first half of 1797, including the selection in July of Charles Maurice de Talleyrand as foreign minister.

Talleyrand, who had recently spent a few years in the United States, is openly concerned about the establishment of closer ties between the U. S. and Britain.

The Directory, generally not well-disposed to American interests, becomes notably more hostile to them in September 1797, when an internal coup propels several anti-Americans into power.

These leaders, and Talleyrand, view President Adams as hostile to their interests, but do not think that there is significant danger of war.

In part based on advice imparted to French diplomats by Thomas Jefferson, Talleyrand decides to adopt a measured, slow pace to the negotiations.

The American commission arrives in Paris in early October, and immediately requests a meeting with Talleyrand.

After an initial brief meeting (in which Talleyrand had only provisionally accepted the commissioners' credentials), a longer meeting is held a week later.

Talleyrand seeks from the commissioners an explanation for the speech Adams had made in May, which had angered Directory members; his motivation is to determine how favorably the commissioners are disposed to the negotiations.

If they respond in an unfavorable manner, the Directory will refuse to accept their credentials.

The commissioners first learn of Talleyrand's expected demand on October 14 through an indirect channel.

They decide that no explanation will be given for Adams' speech.

What follows are a series of meetings that take place outside formal diplomatic channels.

Nicholas Hubbard, an Englishman working for a Dutch bank used by the Americans (and who will come to be identified as "W" in the published papers), notifies Pinckney on October 17, that Baron Jean-Conrad Hottinguer, whom Hubbard describes only as a man of honor, wishes to meet with him.

Pinckney agrees, and the two men meet the next evening.

Hottinguer (who will later be identified as "X") relays a series of French demands, which include a large loan to the French government and the payment of a fifty thousand pound bribe to Talleyrand.

Pinckney relays these demands to the other commissioners, and Hottinguer repeats them to the entire commission, which curtly refuses the demands, even though it is widely known that diplomats from other nations had paid bribes to deal with Talleyrand.

Hottinguer now introduces the commission to Pierre Bellamy ("Y"), whom he represents as being a member of Talleyrand's inner circle.

Bellamy expounds in detail on Talleyrand's demands, including the expectation that "you must pay a great deal of money."

He even proposes a series of purchases (at inflated prices) of currency as a means by which such money could be clandestinely exchanged.

The commissioners offer to send one of their number back to the United States for instructions, if the French will suspend their seizures of American shipping; the French negotiators refuse.

Not long after this standoff, Talleyrand sends Lucien Hauteval ("Z") to meet with Elbridge Gerry.

The two men know each other, having met in Boston in 1792.

Hauteval assures Gerry of Talleyrand's sincerity in seeking peace, and encourages him to keep the informal negotiations open.

He reiterates the demands for a loan and bribe.

Hottinguer and Bellamy again meet with the commission a week later (notably after the signing of the Treaty of Campo Formio, which ends the five-year War of the First Coalition between France and most of the other European powers), and repeat their original demands, accompanied by threats of potential war, since France is at least momentarily at peace in Europe.

Pinckney's response is famous: "No, no, not a sixpence!"

The commissioners decide on November 1 to refuse further negotiations by informal channels.

Publication of dispatches describing this series of meetings will form the basis for the later political debates in the United States.

The commissioners soon discover that only unofficial channels are open to them.

Over the next several months, Talleyrand will send a series of informal negotiators to meet with and influence the commissioners.

Some of the informal avenues are closed down (Gerry, for instance, informs Hauteval that they can no longer meet, since Hauteval has no formal authority), and Talleyrand finally appears in November 1797 at a dinner, primarily to castigate the Americans for their unwillingness to accede to the demand for a bribe.
 
In late November Talleyrand begins maneuvering to separate Gerry from the other commissioners.

He extends a "social" dinner invitation to Gerry, which the latter, seeking to maintain communications, plans to attend.

The matter heightens distrust of Gerry by Marshall and Pinckney, who seek guarantees that Gerry will limit any representations and agreements he might consider.

Despite seeking to refuse informal negotiations, all of the commissioners will end up having private meetings with some of Talleyrand's negotiators.