By the end of 1781, Jay had received most of the funds promised him by Spain. With additional help from France, he had satisfied most of the demands against him, but he found himself still struggling to cover the small but not insignificant remainder of the bills Congress had drawn on him. He was still due $25,615 on the $150,000 loan from Spain but was not sure whether or when he would receive it.1

With his November letter to Franklin and a discreet follow-up of 31 December still unanswered, on 11 January 1782, Jay wrote again. He had, he said, been able to borrow $30,000 from Cabarrús, now a reluctant and nervous lender. Franklin broke his silence on 15 and 19 January to inform Jay that he did not know whether he would have the funds Jay needed to reimburse Cabarrús. In a conference with Montmorin on 26 January 1782, Jay hinted that if he had to protest the bills, he would explain that he had placed too much confidence in assurances he had received from Spain. On 6 February, Jay advised the president of Congress that it was very probable that a number of the bills drawn on him would have to be protested for nonpayment.2

Cabarrús, who was heavily involved in helping the Spanish government deal with its own severe financial exigencies,3 wrote on 10 February to inquire about reimbursement of his advance of $30,000 and to remind Jay that on 14 March, bills worth approximately $35,000 would fall due. He repeatedly pledged to advance whatever sum was needed to cover these bills if he received assurances of repayment from either Floridablanca or Montmorin. Jay immediately instructed Carmichael to inform Cabarrús fully about his circumstances. On 11 February, Jay himself met with Montmorin to impress on him the seriousness of the situation and to ask him to use his influence to persuade Floridablanca to respond. At the end of a long day, he also wrote to Franklin to ask whether the Dutch loan could be extended.4 On 15 February, when Floridablanca claimed to be indisposed, Jay met with Campo and reminded him that Spain had promised to come to his aid. The response was not encouraging: France, Campo said, received far more in return for its contributions to the United States than Spain did, and other demands on the government for money (to cover the costs of Spain’s expensive campaigns to reconquer the Floridas, Minorca, and Gibraltar) made providing more funds “very inconvenient.” Jay reported this information to Montmorin.5

In a letter to the secretary for foreign affairs of 18 February, Carmichael indicated that Cabarrús was nearly $40,000 in advance, but since few additional bills would fall due until the middle of the next month, he hoped that Franklin would be able once again to cover them. He noted that Montmorin had been pressing the Spanish minister to afford more aid to the Americans and that, while it was unlikely he could provide the sum required, Floridablanca had promised to do whatever Spain’s own dire financial situation would allow. Floridablanca also, however, complained to Montmorin that Spain had not been recompensed for its “good Offices” either in ships or in flour. “To soften the harshness of his refusal to make further advances,” however, Floridablanca informed Montmorin that Campo’s instructions on treaty negotiations would soon be ready and that conversations on the treaty could then begin.6

It was clear that little help from Spain could be expected. On 25 February, Jay received three sets of accounts outstanding from Cabarrús, accompanied by a request for speedy reimbursement. On 27 February, Carmichael reported that the court had finally agreed to pay the balance ($26,000) of the loan for $150,000, an amount Floridablanca had previously deducted from the loan to pay for clothing supplied to the United States. However, he added, the money had been “in some sort appropriated” to repay Cabarrús’s advances in the previous two months. Carmichael also noted that Floridablanca had discouraged Cabarrús from advancing any additional funds and had agreed without hesitation to Montmorin’s suggestion that he take measures to ensure that Jay would not be personally held liable for any unpaid bills, which might indeed have been the case, as Jay was not “acknowledged in a public character.” The United States’ remaining debts in Spain amounted to £20,000 sterling ($88,800), he estimated, a sum he did not think could be raised. Finally, he indicated that Jay had as yet received no indication that treaty negotiations would soon begin.7

The $26,000 payment Spain made directly to Cabarrús left an outstanding balance on Jay’s account with him, a balance about which, Jay told Franklin, he was exceedingly anxious. When thanking Floridablanca for the payment in a letter of 2 March (above), Jay took the occasion to inform him that relatively few bills still remained to be provided for, that he could not rely on France for assistance, and that Cabarrús had offered to supply the funds to cover them if he could be assured of being repaid in ten to twelve months. Although Floridablanca had instructed Cabarrús to tell Jay that no more money would be forthcoming, Cabarrús again professed to be ready to supply whatever was needed if either France or Spain would pledge to repay him in ten or twelve months. Montmorin sent a courier to Paris to apprise Vergennes of the situation.8

Carmichael wrote Franklin on 3 March about their “distressed situation” and predicted that Jay would have to refuse payment on the bills coming due unless Franklin was able to help. Most of the bills, Carmichael noted, were “indorsed to French Merchants, who will be the great sufferers on this occasion.” Jay’s appeals to Floridablanca, he reported, were “without effect,” and the bills haunted Carmichael’s imagination “as much as the fatal Handkercheif did the jealous brain of Othello.” The capture of Fort St. Philip on Minorca had encouraged Spain to hope Gibraltar could also be taken, and the court had “given orders to amass a considerable sum of Money In Andalusia.” To make matters worse, d’Yranda now treated Carmichael coldly because the Americans had not been able to repay his advances on schedule.9

Jay met with Floridablanca on 9 March, received assurances that he would do his best to assist, and was told to send Cabarrús to him if Jay found himself hard pressed. Jay took this to mean that Floridablanca would accept the banker’s offer to supply the necessary funds if he were guaranteed repayment within ten to twelve months. On 11 March, Jay sent Cabarrús to Floridablanca to make the necessary arrangements for an advance. Floridablanca protested that he had told Jay to send Cabarrús only in the “last Extremity.” The final outstanding bills were due to be paid on 14 March. On that day Jay wrote Floridablanca to inform him that their holders had given him an extra day to find the funds to cover them. Jay also mentioned that he did not expect aid from France.

When Floridablanca did not respond, Montmorin again tried to come to the rescue. Floridablanca claimed not to have received Jay’s letter but told Montmorin that Jay might accept bills to the amount of $50,000 if Cabarrús was still willing to advance the funds under the terms he had previously offered. Suddenly, after meeting with Campo, Cabarrús was no longer willing to do so and demanded additional guarantees that Floridablanca would not agree to. On 16 March, Jay protested the bills, many of which belonged to Cabarrús.

The text of the protest showed Jay’s frustration at the fact that neither Spain nor France would advance the relatively small sum needed to sustain American credit, which he had struggled so long to maintain. Although urged not to mention it, he specified that the total shortfall was less than £25,000 sterling ($111,000), an amount that he had good reason to believe he would obtain when he accepted the bills. In explaining his strategy later to Robert R. Livingston, Jay noted, in cipher, “I thought it more prudent to appear a little incensed than dispirited on the occasion.” In conversation with Montmorin, he philosophized that the setback might have saved America the Mississippi.10

On the very day of the protest, Franklin wrote to inform Jay that he had been promised a new loan for 1782 and that he could therefore cover all of Jay’s bills. On 26 March, Jay heard the news and celebrated the restoration of America’s credit.12

The good news did not, however, extinguish Jay’s sense that he had been betrayed or misled by Cabarrús, who insisted that Jay had no reason to complain about his recent behavior. His demand for a more stringent guarantee, he said, was consistent with what was required in monarchies, whatever the standards might be in republics. Their business clearly at an end, Jay, he thought, should provide him with a letter approving his service as soon as he and Carmichael had settled their accounts. Although he acknowledged the banker’s prior assistance and recognized the value of a connection with a man of his influence, Jay insisted, in a letter of 2 April, that the demands Cabarrús had made that led to the protest could have “no Pretensions to Gratitude.” Jay conducted subsequent American financial transactions in Spain through the firm of Étienne Drouilhet and Company of Madrid, a firm closely associated with Cabarrús’s projects to raise funds for the Crown.13

The two-year struggle to pay the bills drawn on Jay had finally come to a close. In a letter of 22 April 1782 (above) in which he announced that he would cover all the bills Jay had accepted, Franklin commented that there was no longer any need for Jay to remain at Madrid. Jay agreed and a month later was on his way to Paris to join Franklin in the equally challenging task of negotiating a peace settlement with Great Britain.