(1556 - 1790)

Spain had many rivals in the new world. There first mayor rival were the French, with their early attempts to seize the early treasures extracted from the Aztecs. In 1522, French privateers, would station themselves off of the coast of Spain, and capture treasure ships, as they returned to Spain from the new world. In the five years after the defeat of the Aztecs, French privateers were able to capture most of the treasure shipped to Spain. They captured so much, that only about 220,000 pesos of gold and silver, reached its destination.

In 1522 The Spanish government started organizing a system of protective fleet of war ships to protect and escort merchant ships, bound for Spain with precious metals from the New World. Spain paid for the War Ships, by imposing a tax, called the averia on the cargo carried on the ships. In 1526, the government required all ships bound to the colonies, travel in convoys, also.

In 1535, Spain authorized the establishment of a Mint in Mexico, to produce coins for domestic consumption. The excess of the coins produced, were sent to Spain; but, since Silver production was limited at the time, the largest denomination struck, was the 4 real piece.  In 1537, King Charles, ordered that gold coins could only be minted in the denomination of escudo coins. The largest escudo was 8 escudos, which was the same weight as the silver peso, about 27 grams of 92% gold. The practice of minting silver in reales, and gold in escudos, continued for over 300 years. One escudo was equal to Sixteen reales.

Within a few years, most of the gold and silver had been plundered from Mexico, and the flow of precious metals slowed to a trickle, back to Spain. Things did not pick up again, until after Pizarro, in 1531, conquered the Incas, and the flow of gold and silver back to Spain, increased.

Atahualpa, the Inca ruler, paid a ransom to Pizarro of a room, measuring 22 X 17 feet and 9 feet high, filled with gold and silver. After receiving this vast quantity of treasure, Pizarro executed Atahualpa, anyway.  The ransom amounted to over 6.5 tons of gold, and 13 tones of silver. Pizarro's clerks calculated that the gold was worth over 2,000,000 pesos and the silver was worth another 350,000 pesos.

By 1535, treasures from Peru were being sent to Spain, was in excess of 1,000,000 pesos a year. About 25% of that went into the royal treasury, the rest belonging to the merchants and investors. Charles had all of the gold object and ornaments, melted into escudos, destroying all of the art objects, created by the Inca culture.

 In 1545, silver ore was discovered in Peru, and it changed the way Spain extracted the treasures of the New World. Up to that point, all precious metals were obtained by stealing it from the natives. After 1545, mining became the main method for the acquisition of precession metal from America. Once mining for silver, became big business in the Colonies, gold took second place, as the metal of choice. In 1546, silver mines were discovered in Mexico, insuring two major sources of silver for Spain. 

In 1555, the new king of Spain, Philip II, became alarmed when the French plundered and burned the city of Havana, in Cuba. In consultation with the Council of the Indies and the Casa de Contratación, ordered Pedro Menéndez de Avilés (the founder of the city of St. Augustine in Florida in 1564), to undergo a study of the problem and make recommendations. He was a Spanish naval hero, that unlike most of the Spanish officials, that had little or no military knowledge, Pedro Menéndez de Avilés was an experienced naval officer that had escorted several Treasure Fleets in the past and later.

In 1564, the Council of the Indies, developed some basic rules on how the Treasure Fleet should operate to keep them safe from the predators that roamed the high seas. They need to protect the shipments of gold and silver that were being mined in Peru, Mexico and Nueva Granada..

The first thing ordered was the fortification of the main ports from which the treasure fleets sailed.

The major production centers were all located far inland, and so were the cities where the silver and gold was stored. Since the main threat to Spain's interests was from the sea, only the ports from where they were shipped to Spain, were considered as important to fortify. 
 
The silver produced in Nueva España (Mexico) was mined in Zacatecas, Guanajuato and other locations through out the country. The Mexico City Mint, produced cob-type coins, especially pieces of eight. It was shipped to Spain from the city of Vera Cruz, in the Gulf of Mexico. 
Silver was also mind in Potosi, Peru, and Peru Mint, also produced cob-type coins, that were shipped to Panama for transport to Nombre de Diós and Porto Bello, waiting for transport to Spain. It would take over two months to ship the silver from the ports of Arica and Callao, Peru to Panama. Panama city had a poor harbor and a terrible climate. But it was located on the Pacific side of the Isthmus and there were roads, across the Isthmus. The silver and gold was stored in Panama until the Treasure Fleet was scheduled to arrive in Nombre de Diós or Porto Bello. Then it was transported by mule train via the Las Cruces Trail to the town of Chagres, on the Chagres River. From there it was moved by river boats, to San Lorenzo, and from there to Nombre de Diós or Porto Bello, by ship. Another route was to continue on the Kings Highway, from Panama to Nombre de Diós.
The third source of precious metals was in Nueva Granada, were gold was paned from river beds with the help of native slave. When the native slaves became scarce, Black slaves were imported from Africa. Since there was no mint in Nueva Granada, the gold was shipped back to Spain in the form of bullion. Most of the gold from Nueva Granada was transported to Cartagena, via the rivers that flowed into the Caribbean. The gold paned from the rivers that flowed into the Pacific, was stored in Panama.

It took over 40 years, after the recommendation of the Council of the Indies for the fortification of the major ports, before work was started on the fortifications. El Castillo de San Lorenzo, was not started until 1595, and construction continued for over a hundred years. The fortifications in Porto Bello, were not started until 1597. This was after shipping port was moved from Nombre de Diós, to Porto Bello. These fortifications, also took over a hundred years, before completed.

Heavy naval patrols were ordered in the Caribbean and off the coast of Spain. These were the points where the Treasure Fleets, begun and ended their journey.

War ships were assigned the task of patrolling the Caribbean and defending the towns along the coast, especially the big cities. Since the Treasure Warehouses, were far inland, and not easily accessible, this was not a major task, and the area was patrolled by just a couple of ships. Some were stationed in Cartagena, which had a very large port, and was a bustling community. These ships had the responsibility to protect Panama as well. Another set of ships was stationed in Havana, and protected Cuba and Vera Cruz, Mexico. 

The major part of the war ships, were stationed in Spain, and had the job of protecting it from French marauders, that stayed close to the European coast and preyed on the merchant ships along the coast of Spain. The bulk of the war ships sent as escorts to the Treasure Fleet, would leave the Caribbean and sailed back to Spain, as soon as they reached their destinations.

This recommendation was never achieved. The expense of maintaining several squadrons of war ships in the Caribbean and larger ones in European waters, protecting Spain, was beyond what the King of Spain could afford. Several attempts were made to station some ships off of the coast of Panama and Mexico, but, these were soon called back to Spain. The Crown made the decision that, since treasure was not stored in these ports, they did not have to be defended so vigorously. Just as long as the pirates would only take one or two ships a year, the losses were acceptable. In reality, they lost more treasure, more that 90 % of it, by ships going down, due to storms, reefs, and poor navigation. It was also decided that the third recommendation would help alleviate the need for these ships.

Establishment of heavily guarded convoys that would operate on fixed schedules, twice a year.

Two great convoys were organized to transport the treasure. The Tierra Firme fleet would visit Cartagena and Nombre de Diós. The Nueva España fleet would go to Vera Cruz. These fleets would depart Spain, every year, loaded with supplies needed by the colonist. These trips were scheduled to take the maximum advantage of winds, currents, and avoid the hurricanes season. Each fleet traveled separately, just in case they lost on fleet to pirates or storms, they would not lose everything. 

During the last half of the sixteenth century, these convoys were composed of more than 60 merchant and war ships. There were smaller ships in the convoy, to carry messages between the ships and act as patrols. The Nueva España fleet always had at least two heavily armed galleons, while the Tierra Firme fleet had at least six galleons. This was because the Tierra Firme fleet carried the bulk of the silver and gold from South and Central America. As the production of silver increased over time, particularly from Potosi, a third type of fleet was created, composed primarily of war ships. Because of the high number of galleons in the Tierra Firme fleet, it eventually became know as the Galleones fleet.

The merchant ships of the fleet, operated on a two year cycle, with them staying in the Caribbean over the winter. The war ships, always returned to Spain, as soon as possible, leaving the Caribbean unprotected for most of the year.

The America bound fleets, first sailed to the Canary Islands to take on supplies. From there, they sailed west, using the trade winds. Each fleet left at a different time, to keep them spaced apart from one another. The fleet bound to Nueva España left during the Spring and made about four knots, and took nearly two months to reach Vera Cruz. When the officials at Mexico City, learned that the fleet was arriving in Vera Cruz, they would transport all of the silver by wagons to Vera Cruz. When the fleet arrived, there would be a large fair, where the Spanish merchants that were part of the fleet, would trade their goods for silver. These fairs generally lasted from one to two months. After the fair was over, all of the silver was load on the ships for the return trip to Spain. For the first part of the journey back to Spain, because of the winds and currents, sailed along the coast of the Gulf of Mexico, until it reached Havana.

The fleet that was bound to Tierra Firme, left Spain in the late summer. They sailed from Sevilla to Cartagena. This trip took from 4 to 6 weeks and had the job of picking up the gold and silver from the southern colonies. When the fleet arrived in Cartagena, word was sent to Panama City, advising officials, to start sending the treasure, by road and riverboats, over the Kings Highway to Nombre de Diós. The silver from Peru, was sent to Panama City, on the South Sea Fleet. This fleet was smaller and not as heavily armed as the Atlantic Fleet. This was because the Spanish believed that it was much more difficult for pirates to transverse the Straits of Magellan, and prey on the South Sea Fleet. It would take about two months, to move the silver from the ports of Arica (Chile) and Callao (Peru) to Panama, for storage. Nombre de Diós like Vera Cruz, was very unhealthy forcing the inhabitants to abandon the cities, and only come to life, when the Treasure Fleets, came to port. Once the Fleet arrived, there was great fair, just like in Vera Cruz, for the merchants to exchange silver and gold for merchandise from Europe. When the Fleet was fully loaded with treasure, it sailed to Havana, to begin its trip across the Atlantic to Spain. The Spanish used the town of Nombre de Diós as their shipping port, until 1596, when they switched to Porto Bello. Porto Bello had a much better port, and it was easy to defend, unlike Nombre de Diós.

In Havana, the Spanish had a large shipyard, for repairing ships in need of repair, and prepared for the longest part of the journey. From Havana, the fleet sailed north using the Gulf Stream, along the coast of Florida, all the way to Cape Hatteras, where they turned east, and sailed to Spain. The Florida coast was one of the most dangerous parts of the trip, because of the large number of reefs, shoals and hurricanes, along the coast. The ships would pass dangerously close to Bermuda, so that they would get their positions, before the trip across the Atlantic.

Once the fleet reached the open water of the Atlantic, it was on its own and lacked the protection of the protective squadrons the Spanish planned to establish in the Caribbean and Spanish home waters. Once close to Europe, it was easier for Spain's enemies to attack the Treasure Fleet. In response to this threat, Spanish authorities would send the Armada of the Ocean Sea, to escort them to Spain.

Although the fleet system was used extensively, merchants were allowed, at times, to sail on their own, at their own risk.
The entrance to the city of Havana, Cuba, founded in 1519. It had a very good harbor and large enough so that entire fleets could seek refuge in it. Notice that there was a chain, that protected the entrance to the port.

 

During the 17th century, Spain was being crowded on all fronts by its enemies and the only thing that kept it as a world power, was the steady flow of precious metals from America. Philip III, was able to keep Spain out of the Thirty Years' War in 1618. Philip III died in 1621, and his son, Philip IV became king. He was not as willing as his father, to avoid war, so he joined the Thirty Year's War. Warships, that were being built for the Treasure Fleet, were reassigned to the war in Europe. In the 1630's, the tides of war, turned against the Spanish, and she found herself in trouble than she could afford. With the French were making gains in Europe, the English and Dutch were plundering and settling the Spanish Main. In 1624. The English built a settlement in St. Kitts, and in 1627, Barbados. In 1627 and 1635, the French were in Guadeloupe and Martinique.

In 1621 the Dutch formed the Dutch West India Company and in 1628 sent a fleet of over 30 ships into the Caribbean under Admiral Piet Heyn to capture the Treasure Fleet. His fleet was spotted by the Spanish and the Treasure Fleet stayed in port in Cartagena and Vera Cruz. When some of his ships returned to Europe, the Spanish thought the danger had passed, and he captured the fleet off the coast of Havana, due to the in-experience of the Spanish commander. The Dutch booty was 90 tons of gold and silver worth about 3,000,000 pesos. King Philip IV suffered a nervous collapse when he heard of the loss of the gold fleet, and did not appear in public for over 5 days. In 1634 the Dutch seized Curacao, further reducing Spain's influence in the New World..

After suffering such losses, Spain ordered that all shipping would travel in armed convoys By 1629 to 1632 the fleets were composed of primarily warships and warships were permanently assigned to the Caribbean on a permanent assignment. This was part of the suggestions made by Menéndez, 85 years before, and were never fully implemented. The 1629 fleet was made up of over 20 galleons and carried 4,000 troops, under the command of Fabrique de Toledo y Osorio and Antonio de Oquendo, two of Spain's best commanders.

By 1638, enough improvement had been added to the fortifications and fleet, that another Dutch expedition into the Caribbean in 1639 was unsuccessful. The Dutch were able to inflict heavy damages on the Spanish Naval forces but the fortifications, prevented a total disaster and protected the treasures. The Dutch used two new weapons in this battle against the Spanish. They used a new type of ship, the frigate, which was half the size of the Galleon, twice has fast, and carried the same number of guns. The also employed a new naval maneuver, which was to aligned the ships and depending on cannons, rather then boarding a ship. This formation also minimized the exposure of the most vulnerable parts of their ships, the bows and sterns. This new battle formation became the standard for naval warfare for the next 200 years.

The Dutch were able to severely weaken Spain's navy, and it was now all down hill. In 1640, Catalonia and Portugal revolted. It took 20 years to recover Catalonia and in 1668 granted Portugal's independence. Between 1650 and 1670's, the English, un Cromwell, rebuilt their fleet, and turned it into a professional navy. In 1652, Cromwell sent a fleet under the command of William Penn, father of the founder of Pennsylvania, to capture Santo Domingo. He failed in this effort, but was able to keep the Treasure Fleet in port, and they did not go to Spain that year. The English did not return empty handed, because they were able to capture Jamaica. For the next couple of years, no Treasure Fleets sailed to Spain, for fear of capture by the English. In 1656, the English navy, under the command of Robert Blake, captured the Treasure Fleet off the coast of Spain. Blake captured the Treasure Fleet the next year, off of the Canary Islands. In 1668 and 1671, Henry Morgan commanded expeditions in Panama and Maracaibo.

Spain's power continued to decline, as the French started to move into the Caribbean in the 1660's with the capture of the western side of Española. In 1683, French buccaneers' attacked Veracruz and carried off over 800,000 pesos in silver and other merchandize. In 1697, French regulars and buccaneers' attacked Cartagena, and the people of Cartagena paid 8,000,000 pesos to spare the city.

Spain's power was further eroded with the decline in silver production. The silver production at Potosí peaked to about 9,000,000 pesos per year in 1600. After that, the production started declining for the next 100 years. By 1700, the total production of silver in the New World was down to 11,000,000 pesos, from a high of 16,000,000 pesos one hundred years before. At the same time, exports of silver to Asia was up to 4,500,000 pesos a year, further diminishing what was shipped to Europe.

In 1698, Spain was now politically, financially and strategically weak. The War of Spanish Succession, finally brought about the collapse of the Spanish Empire.

In 1739, the English fleet, commanded by Admiral Edward Vernon, captured Porto Bello, and attacked Cartagena. In 1748 the British attacked the Treasure Fleet, off Cuba, capturing and sinking several ships. One ship, that was grounded, was blown up by its crew, scattering 10,000,000 pesos all over the place.

In 1761, the Treasure Fleet, from Nueva España, arrived in Spain with 16,000,000 pesos. In 1762, Britain declared war on Spain, and King Charles III, was eager to flex his muscles, which was a mistake, since the British Navy, was now the most powerful navy in Europe. The Seven Years' War was a disaster, with England capturing Havana and Manila in 1762. The Treaty of Paris, signed in 1763, further weakened Spain, and strengthen England.

After 1763, Spain renewed its efforts to improve the defenses of the colonies. Instead of depending on local militias, used to defend the colonies, Spain now used Spanish troops to man the garrisons. This was used not only to control foreigners; but, also to better control the extraction of precious metals and merchandise from its colonies. As a result of these changes, silver production rose to 12,000,000 pesos a year in the 1770's and almost 30,000,000 pesos by 1780. Spain also tried to restore the Treasure Fleets and the convoys, in the 1760's, but this enterprise failed.

When the American War of Independence started between the American Colonies, and England in, France sided with the American Colonies. Spain tried to keep out of the war, although it favored France. Once the Treasure Fleet arrived safely in  1779, King Charles III, joined the French, in their battle against the British. Even though the American Colonies were able to defeat the British with the help of the French and the Spanish, they were not able to take advantage of England's weakness. Under the Treaty of Versailles, in 1783, Spain was able to regain Florida and Minorca

After the war, Spain continued its reforms, and removed all trade barriers in the colonies. All of the rules that helped keep the colonies totally dependant on Spain, were rescinded. It was the hope that free trade, would encourage more trade with Spain. In the Pacific, Spain turned over the management of the Manila Galleons to a private company in 1785. In 1790, Spain closed the Casa de Contratación, and this also terminated the Treasure Fleets.

 

Spanish Galleon

 
Panama History Home Reference: "The Spanish Treasure Fleets" by Timothy R. Walton; Pineapple Press, Inc.

Bruce C. Ruiz
October 17, 2001