XYZ Affair, diplomatic incident that nearly led to open war between the United States and France in 1798. President John Adams sent John Marshall, Elbridge Gerry, and C. C. Pinckney to settle disputes with France following Jay's Treaty. They were met by three unnamed agents, later called X, Y, and Z, who demanded U.S. loans and bribes before opening negotiations. When this was announced in Congress, there was an uproar, but Adams averted war and reopened negotiations with Talleyrand, the French foreign minister. Later, the agents were identified as Jean Conrad Hottinguer (X), a U.S. banker in Hamburg named Bellamy (Y), and Lucien Hauteval (Z).