Roderigue Hortalez et Cie, a Very Helpful Trading Firm 

Latest Changes: 07Nov08 - split from page on France / 08Mar16 - add material on Hortalez operations /

Securing Critically Needed Arms -- in Spite of Duplicity

As relations between the colonies and Great Britain deteriorated many colonial leaders considered whether separation and independence might be a viable course of action. While such a revolution might easily be quelled in the British Isles, America was separated from Great Britain by several thousands of miles of ocean, and troops sent here could not easily be recalled to defend the homeland from attack by another European power.

Arthur Lee was born in Virginia in 1740, but he was educated in England and -- and with his brother William -- became involved in law, business, and politics in London. Arthur Lee sent to English newspapers a series of political letters supporting the colonial point of view. A number of political leaders in England agreed with the colonial argument that colonists should be included in the political decisions that affected their lives, such as electing local governments, setting taxes, and appointing judges. Helping the colonists resist the abuse of power being acquired and exercised by the king and councilors might reduce the abuse of power in Great Britain as well and keep the king in check.

If the United States were to declare independence it would need an army of at least 25,000 men and would have to provide them with clothing and equipment. However, the colonists did not have enough hard currency (gold and silver) to buy these.

1775: Arthur Lee met with John Wilkes and Pierre Augistin de Caron and they worked on a scheme that would solve this problem. Wilkes was a member of Parliament from Middlesex and a flamboyant supporter of the just and equal representation of the people in governance. Caron was a French playwrite, watchmaker, and courtier with an interest in high finance. He adopted the "stage name" Beaumarchais.

France had vast stores of surplus equipment and might be willing to supply the need, but it would have to appear be neutral, at least until the rebellion was successful. Perhaps someone could set up a "shell corporation" in a third nation that could transfer military resources from France to the U.S. while appearing to be a vendor of U.S. agricultural produce in Europe. In a November 1775 report Beaumarchais presented the plan to the King of France. French Foreign Minister Charles de Vergennes was pleased to support the project.
Ref.: Magazine of American History, II 1878 pp 663-672, or Deane papers, or Donvez “La politique de Beaumarchais”, pages 277-284.

1776 Jun: Roderigue Hortalez et Cie was setup as a French import-export company. Spanish in name only, it was headed by Beaumarchais and securing startup funding of one million livres loaned by the French government, one million livres loaned by the Spanish government, and one million livres raised from French merchants. The public story was that Hortalez agents would use these funds to hire ships and buy military supplies in France for shipment and sale to neutral merchants on Caribbean islands. While there Hortalez agents would use the money made selling arms to buy tobacco and rice from American farmers. This produce would be sold in France to raise money to repay the investors for the startup funding. Beaumarchais would keep any gain and bear any loss.

In many cases the ships sailed directly from France and Spain to Portsmouth NH or other U.S. ports and returned without any trade goods. The first shipment of arms arrived at Portsmouth NH in mid-1777. It included some 200 cannon and equipment and clothing for 25,000 men. These supplies were critical to the American victory at Saratoga in 1777 October. Although Beaumarchais’ fleet probably never consisted of more than ten transports and one fighting ship, Fier Rodrigue, the military supplies provided important aid during a time of signigicant crisis, helping the Revolution avoid an early defeat..

If the French king's agents sold surplus arms at a low price and bought American produce at a high price the Americans would secure enough hard currency to buy the arms they needed from neutral merchants, Beaumarchais would be well-paid for his efforts, and Great Britain would perhaps never guess what was going on. U.S. Commissioner Silas Deane knew about the sham and wanted to profit from it by investing funds from friends in the colonies. His business partner was , Edward Bancroft, an acquaintance who had served as a spy for Benjamin Franklin when Franklin lived in London as a commercial agent for Pennsylvaia.

Unknown to Franklin or Deane, Bancroft was now a spy for Great Britain (a secret that was not revealed until many decades after Bancroft's death). He immediately reported the Hortalez scheme to Great Britain. The French kept Deane informed of the schedule of shipping arms to the U.S. and Bancroft would report some of these sailings to Great Britain -- so that the cargoes could be captured by the British Navy -- and withheld information on other sailings -- so that Deane and Bancroft could invest in these and make a profit.

When France signed a military treaty with the U.S. in early 1778 and began shipping arms directly to the U.S. the arms trade of Roderigue Hortalez et Cie collapsed. France gave much more aid directly to the U.S. than it provided through Hortalez et Cie. However, operations continued until Adm. d’Estaing requisitioned Beaumarchais’ main vessel Fier Rodrigue to use in the storming of Grenada (July 1779). The ship's captain, de Montaut, was killed, and the 50-gun ship was so badly damaged that it never sailed again. Hortalez eventually made a profit by buying sugar in the Caribbean and selling it in Europe. From 1776 to 1783 the company had an estimated cash flow of 42 million livres.
See CHAPTER V -- Beaumarchais in France in the Revolution [posted by]

In 1781 the Continental Congress found Deane guilty of profiteering and exiled him. Bancroft's duplicity was not discovered (outside the British Foreign Office) until many years after his death.

In 1835, after decades of disputes with Beaumarchais and his heirs about the finances and whether the U.S. owed Beaumarchais or vice versa, the U.S. paid his heirs 800,000 francs .

Reference: [See Boatner for more details.]

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