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The Spanish ships of the sixteenth and seventeenth centuries were notoriously clumsy and unseaworthy. With short keel and towering poop and forecastle they were an easy prey for the long, low, close-sailing sloops and barques of the buccaneers. But this was not their only weakness. Although the king expressly prohibited the loading of merchandise on the galleons except on the king's account, this rule was often broken for the private profit of the captain, the sailors, and even of the general. The men-of-war, indeed, were sometimes so embarrassed with goods and passengers that it was scarcely possible to defend them when attacked. The galleon which bore the general's flag had often as many as 700 souls, crew, marines and passengers, on board, and the same number were crowded upon those carrying the vice-admiral and the pilot. Ship-masters frequently hired guns, anchors, cables, and stores to make up the required equipment, and men to fill up the muster-rolls, against the time when the "visitadors" came on board to make their official inspection, getting rid of the stores and men immediately afterward. Merchant ships were armed with such feeble crews, owing to the excessive crowding, that it was all they could do to withstand the least spell of bad weather, let alone outmanœuvre a swift-sailing buccaneer.³²

By Spanish law strangers were forbidden to resort to, or reside in, the Indies without express permission of the king. By law, moreover, they might not trade with the Indies from Spain, either on their own account or through the intermediary of a Spaniard, and they were forbidden even to associate with those engaged in such a trade. Colonists were stringently enjoined from having anything to do with them. In 1569 an order was issued for the seizure of all goods sent to the colonies on the account of foreigners, and a royal cedula of 1614 decreed the penalty of death and confiscation upon any who connived at the participation of foreigners in Spanish colonial commerce.³³ It was impossible, however, to maintain so complete an exclusion when the products of Spain fell far short of supplying the needs of the colonists. Foreign merchants were bound to have a hand in this traffic, and the Spanish government tried to recompense itself by imposing on the out-going cargoes tyrannical exactions called "indults." The results were fatal. Foreigners often eluded these impositions by interloping in the West Indies and in the South Sea.³⁴ And as the Contratacion, by fixing each year the nature and quantity of the goods to be shipped to the colonies, raised the price of merchandise at will and reaped enormous profits, the colonists welcomed this contraband trade as an opportunity of enriching themselves and adding to the comforts and luxuries of living.

From the beginning of the seventeenth century as many as 200 ships sailed each year from Portugal with rich cargoes of silks, cloths and woollens intended for Spanish America.³⁵ The Portuguese bought these articles of the Flemish, English, and French, loaded them at Lisbon and Oporto, ran their vessels to Brazil and up the La Plata as far as navigation permitted, and then transported the goods overland through Paraguay and Tucuman to Potosi and even to Lima. The Spanish merchants of Peru kept factors in Brazil as well as in Spain, and as Portuguese imposts were not so excessive as those levied at Cadiz and Seville, the Portuguese could undersell their Spanish rivals. The frequent possession of Assientos by the Portuguese and Dutch in the first half of the seventeenth century also facilitated this contraband, for when carrying negroes from Africa to Hispaniola, Cuba and the towns on the Main, they profited by their opportunities to sell merchandise also, and generally without the least obstacle.

Other nations in the seventeenth century were not slow to follow the same course; and two circumstances contributed to make that course easy. One was the great length of coast line on both the Atlantic and Pacific slopes over which a surveillance had to be exercised, making it difficult to catch the interlopers. The other was the venal connivance of the governors of the ports, who often tolerated and even encouraged the traffic on the plea that the colonists demanded it.³⁶ The subterfuges adopted by the interlopers were very simple. When a vessel wished to enter a Spanish port to trade, the captain, pretending that provisions had run low, or that the ship suffered from a leak or a broken mast, sent a polite note to the governor accompanied by a considerable gift. He generally obtained permission to enter, unload, and put the ship into a seaworthy condition. All the formalities were minutely observed. The unloaded goods were shut up in a storehouse, and the doors sealed. But there was always found another door unsealed, and by this they abstracted the goods during the night, and substituted coin or bars of gold and silver. When the vessel was repaired to the captain's satisfaction, it was reloaded and sailed away.

There was also, especially on the shores of the Caribbean Sea, a less elaborate commerce called "sloop-trade," for it was usually managed by sloops which hovered near some secluded spot on the coast, often at the mouth of a river, and informed the inhabitants of their presence in the neighbourhood by firing a shot from a cannon. Sometimes a large ship filled with merchandise was stationed in a bay close at hand, and by means of these smaller craft made its trade with the colonists. The latter, generally in disguise, came off in canoes by night. The interlopers, however, were always on guard against such dangerous visitors, and never admitted more than a few at a time; for when the Spaniards found themselves stronger than the crew, and a favourable opportunity presented itself, they rarely failed to attempt the vessel.

Thus the Spaniards of the seventeenth century, by persisting, both at home and in their colonies, in an economic policy which was fatally inconsistent with their powers and resources, saw their commerce gradually extinguished by the ships of the foreign interloper, and their tropical possessions fall a prey to marauding bands of half-piratical buccaneers. Although struggling under tremendous initial disabilities in Europe, they had attempted, upon the slender pleas of prior discovery and papal investiture, to reserve half the world to themselves. Without a marine, without maritime traditions, they sought to hold a colonial empire greater than any the world had yet seen, and comparable only with the empire of Great Britain three centuries later. By discouraging industry in Spain, and yet enforcing in the colonies an absolute commercial dependence on the home-country, by combining in their rule of distant America a solicitous paternalism with a restriction of initiative altogether