By the end of the sixteenth century, the volume of silver and gold coming out of the New World was causing rampant inflation not just in Spain, but also across western and central Europe, and even as far off as China. This inflation caused a great deal of economic instability, which in turn helped add fuel to the fire that was the increasingly violent schism between the Catholic church and the new Protestant sects. In other words, it was a crazy ass time to be alive. For their part, the ruling Hapsburg monarchs of Spain largely tried to use their new wealth to assert their power across Europe, ostensibly to support the Catholic church, but more just because that’s the kind of shit rich monarchs did. This often put Spain in conflict with the other nations of western Europe, who in turn cast a jealous eye westward towards the source of Spain’s wealth.
As early as 1540, the French began sending ships out into the Atlantic, even as far as the Caribbean, to attack Spanish ship carrying gold and silver back to Spain. With the Spanish unable to stop these attacks, the raiders grew more bold, looting and burning the city of Havana on the island of Cuba in 1555. Seeing the early success of the French, the Protestant nation of England began sending out their own raiders by 1560, disguising them as pirates in order to avoid open warfare. The most successful of these were the Sea Dogs, a group of English captains who conducted raids as far west as Panama, with one of their number, Francis Drake, even making the first non-Spanish circumnavigation of the globe in 1577 in order to raid Spanish shipping in the Pacific. The raids became so bad that the Spanish began adopting a convoy system to protect the flow of precious metals. These treasure fleets often included 50 or more vessels, moving an entire year’s worth of collected riches across the Atlantic in a single sailing.
Beyond the damage done by the raiders, Spain also faced increasing problems with smugglers from its three rivals. In order to better profit from the New World, Spain required that all trade between the Old World and the New World go through Spanish ports, which of course taxed the shit out of everything. The resulting high prices created a lucrative black market trade in even mundane goods, providing further incentive for French and English ships to make the dangerous voyage into the Atlantic. The French even went as far as trying to create their own colony in what is today South Carolina in 1562 to act as a base of operations, but it was quickly destroyed by the Spanish only a year later.
Despite these setbacks, the sheer volume of gold and silver allowed Spain to prosper. In 1556 the Spanish crown came into possession of what is today called the Netherlands and in 1580 they forcefully laid claim to the vacant Portuguese throne, giving Spain control over both sea routes to East Asia. However, this penultimate position was not to last for long. Both France and England did everything in their power to check the rise of Spanish power, with the English burning multiple towns in the Caribbean, sinking most of the Spanish fishing fleet operating in the area of Newfoundland, and establishing the colony of Roanoke in what is today North Carolina, though the colony was short lived. Both nations also supported a Protestant revolt in the Spanish Netherlands, leading to the creation of the first Dutch Republic in 1581, which in turn resulted in eighty years of warfare to control the region. This was all too much for the king of Spain, who decided to respond by building a massive naval fleet and invading England.
In 1588, the Spanish assembled an armada of 130 ships and 26,000 men to invade England. They were met by a ragtag force of English and Dutch ships which not only managed to scatter the armada, but also forced it to sail north around Britain rather than returning directly home. Severe storms along the west coast of Ireland sunk many vessels, and more than a third of the armada never made it back to Spain. It was a disaster for Spain, but one that the English were not able to capitalize on. The following year the English sent their own armada to attack Spain and invade Portugal, but they met with a similar disaster as the Spanish version. As a result, the war dragged on for more than a decade, largely focused on raiding shipping in the Atlantic, activity largely paid for by private investors. Though little to no territory traded hands, the war did create a much greater sense of the New World outside of Spain and weakened the sense of Spanish supremacy, two factors that led to many other nations looking to establish a foothold in the New World in the coming century.
