XYZ Affair was the name given to a controversial exchange of diplomatic proposals between France and the United States in 1797. Relations between the two nations were strained at the time, and the exchange included outrageous demands from France. The three French agents who made these demands became known as X, Y, and Z. The XYZ Affair led to fighting at sea between the United States and France, though war was never declared.

The XYZ incident occurred while France was at war with Great Britain. The British had captured many French ships during that war. As a result, France depended on American ships to carry on the trade between France and the United States. But the French became enraged at the Americans in 1796, when the U.S.-British Jay Treaty took effect. This treaty failed to guarantee American rights to trade with France. The French then began to seize American ships and cargoes. The French government also refused to receive the United States minister, General Charles Cotesworth Pinckney, who had been appointed by President George Washington.

The next President, John Adams, tried to avoid war by sending a special mission to France. He appointed two distinguished political leaders, John Marshall and Elbridge Gerry, to join Pinckney and settle the dispute. The French foreign minister, Prince Talleyrand, tried to stall the negotiations. He believed that a political dispute in the United States between the pro-French Republicans (later called Democratic-Republicans) and the pro-British Federalists was weakening the American ambassadors' bargaining position. Talleyrand appointed three agents to deal with the Americans sent by Adams. The agents told the Americans that before Talleyrand would see them, they would have to pay him a bribe of $250,000, loan France $12 million, and apologize for pro-British policies.

Adams reported France's demands to Congress. Republican Party congressmen asked to see the letters sent home by the American ambassadors as proof that the French had acted badly. Adams gave them the correspondence but substituted the letters X, Y, and Z for the actual names of the French agents. Thus, these events became known as the XYZ Affair.

Adams then asked Congress for money to prepare for war and gave American ships permission to fire on French ships. In 1800, after two years of naval conflict, a second American mission to France obtained a peace settlement.

SOURCE: IBM 1999 WORLD BOOK