Spanish ships had brought goods from the New World since Christopher Columbus's first expedition of 1492. The organized system of convoys dates from 1564, but Spain sought to protect shipping prior to that by organizing protection around the largest Caribbean island, Cuba and the maritime region of southern Spain and the Canary Islands because of attacks by pirates and foreign navies. The Spanish government created a system of convoys in the 1560s in response to the sacking of Havana by French privateers. The main procedures were established after the recommendations of Pedro Menéndez de Avilés, an experienced admiral and personal adviser of King Philip II. The treasure fleets sailed along two sea lanes. The main one was the Caribbean Spanish West Indies fleet or Flota de Indias, which departed in two convoys from Seville, where the Casa de Contratación was based, bound for ports such as Veracruz, Portobelo and Cartagena before making a rendezvous at Havana in order to return together to Spain. A secondary route was that of the Manila Galleons or Galeón de Manila which linked the Philippines to Acapulco in Mexico across the Pacific Ocean. From Acapulco, the Asian goods were transhipped by mule train to Veracruz to be loaded onto the Caribbean treasure fleet for shipment to Spain. To better defend this trade, Pedro Menéndez de Avilés and Álvaro de Bazán designed the definitive model of the galleon in the 1550s.
Spain controlled the trade through the Casa de Contratación based in Seville, southern Spain. By law, the colonies could trade only with the one designated port in the mother country, Seville. Maritime archaeology has shown that the quantity of goods transported was sometimes higher than that recorded at the Archivo General de Indias. Spanish merchants and Spaniards acting as fronts (cargadores) for foreign merchants sent their goods on these fleets to the New World. Some resorted to contraband to transport their cargoes untaxed. The Crown of Spain taxed the wares and precious metals of private merchants at a rate of 20%, a tax known as the quinto real or royal fifth.
Spain became the richest country in Europe by the end of the 16th century. Much of the wealth from this trade was used by the Spanish Habsburgs to finance armies to protect its European territories in the 16th and 17th centuries against the Ottoman Empire and most of the major European powers.
The flow of precious metals also made many traders wealthy, both in Spain and abroad. The increase in gold and silver on the Iberian market sometimes caused high inflation in the 17th century, affecting the Spanish economy. As a consequence, the Crown was forced to delay the payment of some major debts, which had negative consequences for its lenders, mostly foreign bankers. By 1690 some of these lenders could no longer offer financial support to the Crown. The Spanish monopoly over its West and East Indies colonies lasted for over two centuries.
The economic importance of exports later declined with the drop of production of the American precious metal mines, such as Potosí. However, the growth in trade was strong in the early years. Numbering just 17 ships in 1550, the fleets expanded to more than 50 much larger vessels by the end of the century. By the second half of the 17th century, that number had dwindled to less than half of its peak. As economic conditions gradually recovered from the last decades of the 17th century, fleet operations slowly expanded again, once again becoming prominent during the reign of the Bourbons in the 18th century.
The Spanish trade of goods was sometimes threatened by its colonial rivals, who tried to seize islands as bases along the Spanish Main and in the Spanish West Indies. However, the Atlantic trade was largely unharmed. The English acquired small islands like St Kitts in 1624; expelled in 1629, they returned in 1639 and seized Jamaica in 1655. French pirates established themselves in Saint-Domingue in 1625, were expelled, only to return later, and the Dutch occupied Curaçao in 1634. In 1739, British Admiral Edward Vernon raided Portobello, but in 1741 his campaign against Cartagena de Indias ended in defeat, with heavy losses of men and ships. Temporary British seizures of Havana and Manila (1762-4), during the Seven Years' War, were dealt with by using more, smaller fleets visiting a greater variety of ports.
Charles III began loosening the system in 1765. In the 1780s, Spain opened its colonies to free trade. In 1790, the Casa de Contratación was abolished, bringing to an end the great general purpose fleets. Thereafter small groups of naval frigates were assigned specifically to transferring goods or bullion as required.
Despite the general perception that many Spanish galleons were captured by foreign privateers, few fleets were actually lost to enemies in the course of the flota's two and a half centuries of operation. Only Piet Hein managed to capture the fleet in 1628 and bring its cargo to the Dutch Republic. In 1656 and 1657 Robert Blake also attacked the fleet in Cadiz and Tenerife, but the Spanish officers saved most of the silver and the English admiral managed to capture only a single galleon. The 1702 West Indies fleet was destroyed in the Battle of Vigo Bay during the War of the Spanish Succession, when the fleet was surprised at port unloading its goods, but the Spanish sailors had already unloaded most of its cargo. None of these attacks took place in open seas. In the case of the Manila galleons, only four were ever captured by British warships in nearly three centuries: the Santa Anna by Thomas Cavendish in 1589, the Encarnación in 1709 by Woodes Rogers, the Covadonga by George Anson in 1743, and the Santísima Trinidad in 1762. Two other British attempts were foiled by the Rosario in 1704 and the Begonia in 1710. These losses and those due to hurricanes were important economic blows to trade when they occurred. The fleets, however, must be counted as among the most successful naval operations in history. Moreover, from a commercial point of view, some key components of today's world economic system were made possible by the success of the Spanish West and East Indies fleets.
The Spaniard Amaro Pargo
, a corsair and merchant, participated in the West Indies Fleet.
Every year, two fleets left Spain loaded with European goods in demand in Spanish America, which were guarded by military vessels. The silver from Mexico and Peru were the valuable cargo from the Americas. Fleets of fifty or more ships sailed from Spain to the Mexican port of Veracruz and other to Panama and Cartagena. From the Spanish ports of Seville or Cádiz, the two fleets bound for the Americas sailed together down the coast of Africa, and stopped at the Spanish territory of the Canary Islands for provisions before the voyage across the Atlantic. Once the two fleets reached the Caribbean, the fleets separated. The New Spain fleet sailed to Veracruz in Mexico to load not only silver and the valuable red dye cochineal, but also porcelain and silk shipped from China on the Manila galleons. The Asian goods were brought overland from Acapulco to Veracruz by mule train. The Tierra Firme fleet, or galeones, sailed to Cartagena to load South American products, most especially silver from Potosí. Some ships went to Portobello on the Caribbean coast of Panama to load Peruvian silver that had been shipped from the Pacific coast port of Callao. The silver had then been transported across the isthmus of Panama by mule. Other ships went to the Caribbean island of Margarita, off the coast of Venezuela, to collect pearls which had been harvested from offshore oyster beds. After loading was complete, both fleets sailed for Havana, Cuba, to rendezvous for the journey back to Spain. In Mexico in 1635, there was an increase of the sales tax levied to finance the fleet, the Armada de Barlovento.
Between 1703-1705 began the participation of Spanish corsair Amaro Pargo in the West Indies Fleet. In this period in which he was the owner and captain of the frigate El Ave María y Las Ánimas, a ship with which he sailed from the port of Santa Cruz de Tenerife to that of Havana. He reinvented the benefits of the Canarian-American trade in his estates, mainly destined to the cultivation of the vine of malvasía and vidueño, whose production (mainly the one of vidueño) was sent to America.
Wrecks of Spanish treasure ships, whether sunk in naval combat or by storms (those of 1622, 1715, 1733 and 1750 being among the worst), are a prime target for modern treasure hunters. Many, such as the Nuestra Señora de Atocha, and the Santa Margarita have been salvaged. In August 1750, at least three Spanish merchantmen ran aground in North Carolina during a hurricane. The El Salvador sank near Cape Lookout, the Nuestra Señora De Soledad went ashore near present-day Core Banks and the Nuestra Señora De Guadalupe went ashore near present-day Ocracoke.
The wreck of the cargo ship Encarnación, part of the Tierra Firme fleet, was discovered in 2011 with much of its cargo still aboard and part of its hull intact. The Encarnación sank in 1681 during a storm near the mouth of the Chagres River on the Caribbean side of Panama. The Encarnación sank in less than 40 feet of water. The remains of the Urca de Lima from the 1715 fleet and the San Pedro from the 1733 fleet, after being found by treasure hunters, are now protected as Florida Underwater Archaeological Preserves.
The Capitana (El Rubi) was the flagship of the 1733 fleet; it ran aground during a hurricane near Upper Matecumbe Key, then sank. Three men died during the storm. Afterward, divers recovered most of the treasure aboard.
The Capitana was the first of the 1733 ships to be found again in 1938. Salvage workers recovered items from the sunken ship over more than 10 years. Additional gold was recovered in June 2015. The ship's location: is 24° 55.491' north, 80° 30.891' west.