As to the conditions, it is understood that no peace can be made with that government, but for a larger sum of money to be paid at once for the whole time of its duration, or for a smaller one to be annually paid.  The former plan we entirely refuse, and adopt the latter.  We have also understood that peace might be bought cheaper with naval stores than with money:  but we will not furnish them naval stores, because we think it not right to furnish them means which we know they will employ to do wrong, and because there might be no economy in it as to Ourselves, in the end, as it would increase the expenses of that coercion which we may in future be obliged to practise towards them.  The only question then, is, What sum of money will we agree to pay them annually, for peace?  By a letter from Captain O’Bryan, a copy of which you will receive herewith, we have his opinion that a peace could be purchased with money, for sixty thousand pounds sterling, or with naval stores, for one hundred thousand dollars.  An annual payment equivalent to the first, would be three thousand pounds sterling, or thirteen thousand and five hundred dollars, the interest of the sum in gross.  If we could obtain it for as small a sum as the second, in money, the annual payment equivalent to it would be five thousand dollars.  In another part of the same letter, Captain O’Bryan says, ’If maritime stores and two light cruisers be given, and a tribute paid in maritime stores every two years, amounting to twelve thousand dollars in America,’ a peace can be had.  The gift of stores and cruisers here supposed, converted into an annual equivalent, may be stated at nine thousand dollars, and adding to it half the biennial sum, would make fifteen thousand dollars, to be annually paid.  You will, of course, use your best endeavors to get it at the lowest sum practicable; whereupon I shall only say, that we should be pleased with ten thousand dollars, contented with fifteen thousand, think twenty thousand a very hard bargain, yet go as far as twenty-five thousand, if it be impossible to get it for less; but not a copper further, this being fixed by law as the utmost limit.  These are meant as annual sums.  If you can put off the first annual payment to the end of the first year, you may employ any sum not exceeding that, in presents to be paid down; but if the first payment is to be made in hand, that and the presents cannot by law exceed twenty-five thousand dollars.

And here we meet a difficulty, arising from the small degree of information we have respecting the Barbary States.  Tunis is said to be tributary to Algiers.  But whether the effect of this be, that peace being made with Algiers, is of course with the Tunisians without separate treaty, or separate price, is what we know not.  If it be possible to have it placed on this footing, so much the better.  In any event, it will be necessary to stipulate with Algiers, that her influence be interposed as strongly as possible with Tunis, whenever we shall proceed to treat with the latter; which cannot be till information of the event of your negotiation, and another session of Congress.