Not knowing when he left Madrid in May of 1782 whether or not he would return after completing his assignment in Paris, Jay decided to keep for the time being the rented home his family had been occupying. He departed for France before either his personal accounts in Spain or those of the government could be settled, leaving such matters in the charge of William Carmichael, secretary of the mission. These settlements dragged out for some two years, during which time Jay kept prodding Carmichael for an accounting. A peremptory, even sarcastic, tone crept into Jay’s letters, with Carmichael adopting in response an air of injured innocence and chilly courtesy.

Initially, Jay directed Carmichael to sublease the house and to dispose of his four mules, but to take no other action without specific instructions.1 Meanwhile there had been dishearteningly little progress in settling the accounts. Just as Jay was leaving Spain he learned that Carbarrús’s banking house had failed to distinguish properly between American government funds and Jay’s personal funds.2 When Cabarrús pressed for prompt settlement, Carmichael advised him that, until the records were disentangled, it would be impossible.3 Although it would seem to have been to Cabarrús’s advantage to get this accomplished quickly, more urgent matters claimed his attention. As weeks went by, Carmichael was forced to report periodically to Jay that he had not yet received a correct version of the two separate accounts.4

Carmichael sought to reconstruct all past transactions, but by the end of July of 1782 he conceded that this was impossible without having Cabarrús’s figures or “having carefully Compared his receipts with the Charges made to his Debts.” On 19 August Carmichael reported that he had received Cabarrús’s restated accounts.5 He sent Jay his private account, but informed him that he intended to retain the public one until he could verify its accuracy. To do this he needed receipts Cabarrús had given Jay for bills of exchange the banker had paid. In his reply of 9 October, Jay asserted that he had no new information to offer and indicated he had given no instructions to Cabarrús regarding the mode of presenting the accounts except through Carmichael. When months went by without further clarification from Carmichael, Jay on 30 January 1783 dispatched a chilly letter demanding satisfactory data about both accounts.6

Failing to obtain what he considered proper cooperation from Carmichael, Jay asked Robert Morris, to have the public account sent to Philadelphia.7 When he learned that Thomas Barclay (1728–93), the vice-consul to France, had been appointed commissioner to examine and settle the accounts of all American officials in Europe,8 he recognized the necessity of having Carmichael come to Paris with all his records in order to explain his bookkeeping not only to the official examiner’s satisfaction but to Jay’s as well. On 1 June 1783, Jay urged Congress to issue instructions to that effect.9 Before a reply from America could arrive, on his own authority he ordered Carmichael to the French capital.10

Carmichael’s answer was respectful but uncompliant.11 He conceded that the accounts deserved early attention, but stated he felt obliged to stay in Spain until directed by Congress to go elsewhere. He indicated that Montmorin agreed with him completely and was writing separately to explain his reasoning. Montmorin’s letter to Jay reached Paris before Carmichael’s did,12 and led Jay to suspect that his assistant was using the French ambassador to fight his battles. Jay’s rebuke of 14 August is printed above. On 1 September Carmichael replied, respectfully but stiffly, that their ideas of duty differed and that he still declined to come.13 Montmorin received Jay’s politely phrased acknowledgment, which lacked its customary warmth.14

On 22 August Jay sent off a more conciliatory letter to Carmichael in which he suggested that Barclay might be induced to conduct the audit in Spain.15 Carmichael expressed his appreciation of Jay’s willingness to consider his position and added that his reluctance to leave had been attributable to preparations for his forthcoming presentation to the royal family.16 For the time being Jay was content to let the matter rest, but on learning early the next year that he had Congress’s backing, he again asked Carmichael to deliver the accounts both to Barclay and himself in Paris. Unwilling to disobey Congress, Carmichael reported that he would shortly leave but that in the meantime he found it necessary to explain his trip to a suspicious Floridablanca.17

Satisfied that he himself was never returning to Spain, Jay had on 20 September 1783 directed Carmichael to give up the house, pay the rent due, and dismiss the porter.18 According to local custom, Jay had been forced to purchase items in the house, such as attached looking glasses and the wallpaper. The cost of these was to be passed along to the next tenant. Most of the furniture had been obtained from a dealer who had guaranteed to buy it back at three-quarters of the original price, an option Carmichael was to exercise unless he wished to buy some or all or the pieces himself. Jay directed that other miscellaneous furniture and equipment were to be sold, except for the portraits of famous Americans, which were to be given to the Abbé O’Ryan, and the liquor, which Carmichael was to accept as a gift. After receiving these instructions, Carmichael sent word that he had begun taking inventory and would resell to the dealer only if he could not get a better price elsewhere.19 Jay’s concern, however, was about quick liquidation rather than the total sum realized, as he indicated in his letter of 28 January 1784, below.

Carmichael finally journeyed to Paris in March 1784 for the express purpose of settling the accounts,20 but, as appears from Jay’s notes for the period 27 March to 19 April, he did little or nothing about them until further pressed. Jay reminded Carmichael that his dilatory conduct was holding up the Jays’ departure for America and instructed him to bring the public accounts to Barclay who was then in Paris.21

Jay experienced less delay in obtaining his own financial statement, but he was so displeased by what he found therein that, on 24 April 1784, he wrote Carmichael a nine-page letter itemizing his complaints.22 Instead of accepting the wines and liquors as a present, Carmichael had entered them as a debt owed to Jay and then recorded the identical amount as a charge against Jay for “Sundry Expenses attending sales”, a procedure that Jay found unspecific and unsatisfactory. Carmichael had also neglected to obtain receipts from Lewis Littlepage for moneys advanced him and had failed to account for several pieces of furniture. Furthermore, some of his figures did not balance.

Worst of all, Jay complained, Carmichael had mishandled the cash advances he was supposed to have been making to the wife of Manuel Egusquisa, a servant of the Jays who had accompanied them to Paris. These advances were to be deducted from Manuel’s wages when his employment terminated. Although explicitly requested to inform Jay what he had advanced Manuel’s wife,23 Carmichael never did. When Jay sought the information from her, she wrote Manuel that Carmichael denied having instructions to pay her anything, but that he had advanced her some of his own money, which Manuel was to repay when he returned home. She also said that Carmichael did not want Sarah Jay to learn about these transactions “to avoid Questions”, adding that Carmichael was “scandalized” by the way Sally treated Manuel, but believed that Jay would “set it right.” On the basis of this communication, which could only have reinforced Jay’s suspicion of Carmichael, Jay paid his departing servant in full in May 1783. When he subsequently learned that Carmichael had advanced Manuel’s wife a sum exceeding what her husband had earned to that point in France and then entered this sum in the accounts as a debt Jay owed Carmichael, he penned an irate response in his letter of 24 April 1784.24

Jay received no reply to this letter. He sent off a two-sentence note, written in the third person and dated “May 1784”, demanding to know when he would receive an answer to it and when they would meet to conclude their business.25 Carmichael finally answered to this summons, and the private account was settled at Paris on 12 May.26

Barclay received Jay’s public accounts on 14–15 May. They included an itemized list of loans advanced Jay by the Spanish government.27 When Alexander Hamilton became secretary of the Treasury he accepted the total of $174,011, to which was added interest calculated at five per cent from the date of the loan, amounting to an additional $99,007.89. The combined total of $273,018.89, was substantially paid to the Spanish government by William Short, the American minister to The Hague, during his sojourn in Spain in 1793.28

A few moments remained between Jay and Carmichael. The latter, in an attempt at reconciliation, talked frankly with his superior. Carmichael denounced Littlepage for having played a double game and given the impression that Jay had left him in Madrid “to be a spy upon him and given him a cypher to enable him to convey his advice more safely and securely.” Jay assured Carmichael that this was “a most impudent falsehood”, a denial Jay was obliged to assert publicly when Littlepage on his return to America revived the charges.29