Having now definitely obtained possession of the enormous territories of South America, it was equally the policy of both Spain and Portugal to retain the enjoyment of the new lands and of their produce for themselves alone. In order to effect this, stringent laws were laid down from the very inception of the colonization of the Continent. In a nutshell, they amounted to this: none but Spaniards might trade with the Spanish possessions of South America, and none but Portuguese with the Colony of Brazil. In the case of the latter country the regulations were by no means so strictly carried out as in the former. One of the chief reasons for this, no doubt, was the old-standing and traditional friendship existing between Portugal and England. With so many interests in common, and such strong sentimental bonds uniting the pair in Europe, it was difficult to shut out the English commerce altogether from Brazil.

In the Spanish colonies the enactments of the Court of Spain were far more rigorously carried out. Here, since the laws were so strict, the rewards for their breaking were naturally all the greater. Tempted by the magnitude of these latter, a great number of the officials made a lucrative profession of giving clandestine assistance to foreign commerce in direct contravention of the regulations laid down.

It is rather curious to remark that at the very height of her colonial commerce, when the riches of South America were pouring at the greatest rate into her coffers, how little actual wealth was accumulated by the Mother Country. Indeed, a monumental proof of the inefficiency of her organization is that, although she bled the filial nations with an almost incredible enthusiasm, Spain remained in debt. The influx of gold from her colonies demoralized and ruined such industries as she had possessed, and such goods as she sent out to South America and elsewhere were now almost devoid of any proportion of her own manufactures. The merchandise which she sent to the New World she purchased from other countries, principally from Great Britain, and the English merchants saw to it that their profit was no small one. Thus Spain at this period, from a mercantile point of view, was very reluctantly serving as a general benefactor to Europe.

All this, of course, was in spite of most extraordinary efforts to effect the contrary. As early as 1503 the Casa de Contratacion de las Indias had been established in Spain. This institution was practically the governing body of the colonies. It possessed numerous commercial privileges, since it held the monopoly of the colonial trade. These privileges were continued until as late as 1790.

The Casa de Contratacion, although in many respects a purely mercantile body, was endowed with special powers. So wide was its authority that to be associated with this body was wont to prove of enormous financial benefit. Thus, it was entitled to make its own laws, and it was specially enacted by Royal Decree that these were to be obeyed by all Spanish subjects as implicitly as any others of the nation.

So far as the commercial world was concerned, the powers of the Casa de Contratacion were sheerly autocratic. The institution, in fact, held the fortunes of all the colonials in its hand. It possessed, in the first place, the privilege of naming the price which the inhabitants of the New World should pay for the manufactured goods of the Old. In addition to this, it lay within its domain to arrange the rates at which the produce sent from the colonies was to be sold in the Spanish markets. From this it will be evident that, commercially speaking, its powers were feudal.

It was inevitable that frequent evils should have sprung from the inauguration of a system such as this. It became almost a religion to every Spanish official and trader to batten upon the unfortunate colonial, quite regardless of the fact that the pioneer settler was being strangled during the process. Since the hapless dweller in South America was not allowed to bargain or haggle, and was forced to take whatever was graciously sent out to him at a rate condescendingly fixed, it frequently happened that this latter was five or ten times the legitimate price.

The disadvantages endured by the humble oversea strugglers, however, did not end here, for their own produce received the coldest of financial greetings in Europe, and the prices realized from these frequently left the agriculturalists in despairing wonder as to whether it was worth while to continue with their various industries. Added to all these were further regulations which proved both irksome and costly to the men of the south. Twice a year the Casa de Contratacion sent out a formidable fleet from Cadiz, escorted by men-of-war. It was this fleet which carried the articles of which the colonials were in urgent need. Now, the main settlements of the Spanish merchants and officials, as distinguished from the colonial, were in Panama and the north, and it was largely in order to benefit these privileged beings that the ridiculous regulations were brought into force which made the fleet of galleons touch at the Isthmus of Panama alone. By this means it was insured that these goods should pass through the commercial head-quarters, and leave a purely artificial profit to the Spaniards concerned, instead of being sent direct to the various ports with which the coasts of the Continent were now provided.

In these circumstances it was necessary for colonial merchants and traders from all parts of South America to journey to this far northern corner in order to carry out their negotiations, and to attend to the fresh transport of the wares. The hardships and the added cost brought about by regulations such as these may be imagined, and, as was only to be expected, a system such as this recoiled upon the heads of those who were responsible for its adoption.

Occasionally circumstances arose in connection with these official fleets which bore with almost equal hardship upon Spaniard and colonial alike. Thus, when the English, Dutch, and French buccaneers took to harassing the South American coast in earnest, there were periods when the galleons of the Indies were kept within their harbour for a year and more. Then the Spaniards went perforce without the South American gold, and the colonial's life was shorn of the few comforts which the wildly expensive imported articles had been wont to bring.

The home authorities invariably appeared loth to take into account the possibility of human enterprise. It was not likely that the colonials would submit tamely to such tremendous deprivations as those intended by Spain. Foreign traders, moreover, notwithstanding the ban and actual danger under which they worked, were keenly alive to the situation, and to the chances of effecting transactions in a Continent where so handsome a profit was attached to all commerce. The result was the inception of smuggling on a scale which soon grew vast, and which ended in involving officials of almost all ranks. The Governors of the various districts themselves were usually found perfectly willing to stand sponsors for all efforts of the kind, and, viewing the matter from the modern point of view, they are scarcely to be blamed for their complaisant attitude.

Here is a narration written in 1758 of the manner in which these transactions were carried on. The author, referring to it in an account of the European settlements in America, asserts that the state of affairs was one likely to prove extremely difficult to end—

From all this, the shortcomings of the Spanish attempts at a protective system are sufficiently evident.

In view of the hostile reception extended to them in all parts of the Continent by the Spanish officials, it was only to be expected that foreigners, whenever they had the opportunity, should have rendered a whole-hearted assistance to this business of smuggling. Moreover, since there was seldom peace between the Portuguese and the Spaniards, the former were only too glad to foster this trade, and thus defeat the object of the Spanish authorities, and incidentally line their own pockets. It was all the more difficult for the Spanish Colonial Government to maintain a consistent attitude when the introduction of the slaves, on whom the welfare of so many districts depended, was in the hands of foreigners.

This state of affairs applied in a far lesser degree to Brazil, since that country was frequently able to obtain its human consignments in Portuguese vessels from its fellow-colony of Portuguese West Africa. The Spaniards, on the other hand, were dependent upon other nations for the importation of their slaves, and they were from time to time accustomed to grant special licences for this purpose. It was the reverse of likely that men of a temperament which urged them to raid the African shores in search of their human quarry, and to sail their black cargoes through the tropics, would abstain from making the fullest and most general use of an opportunity thus offered, as the Spanish officials invariably found was the case to their cost, and occasionally, as has been said, to their profit!

The rivalry which characterized the relations between Spain and Portugal did not fail to be carried across the ocean, nor, when transferred to the colonies of either nation, did the mutual jealousies grow less bitter. Indeed, scarcely had the colonization of Brazil and of the Spanish territories commenced in earnest when the struggle between the two nationalities began.

The area of the strife, fortunately, was confined. The enormous territories of tropical Brazil forbade anything in the nature of thorough exploration on the part of the few and slender bands of the pioneers, to say nothing of any attempt at expansion. It was in the south, where the narrow strip of Brazil projected itself downwards into the temperate latitudes, that the desire for aggrandizement raged. The Portuguese considered that the natural southern frontier of their great colony was the River Plate. The Spaniards, having already possession of the northern bank, fiercely resented any such pretension, with the result that the Banda Oriental, by which name the Republic of Uruguay is still locally known, as well as the southern part of the Province of Paraguay, became the scene of many battles. It may be said that the warfare between the two nations continued here, with but rare and short peaceful interludes, for centuries.

The fortified town of Colonia, on the north bank of the Uruguay River, represented one of the chief bones of contention. Its possession constituted a strategic advantage of no small importance, and Spanish and Portuguese flags waved alternately over its shattered ramparts. The situation was accentuated by the characteristics of the inhabitants of the Portuguese city of SÃo Paolo. These people, who lived in the town loftily placed upon its rock, had acquired for themselves, almost from the inception of the colony, a somewhat sinister and reckless reputation. The Portuguese and half-breeds here, their vigour unimpaired by a temperate and bracing climate, would sally out to the west and to the south on slave-raiding expeditions, which they conducted with extraordinary ferocity and enterprise. Matters of boundaries and frontiers possessed no interest whatever for these Paolistas or Mamelucos, by which latter name the swashbuckling members of this community were better known.

In the first instance, these forays were responsible for comparatively little friction, since the number of Indians near at hand was as plentiful as the neighbouring white men were rare. When the nearer land became depopulated, however, it began to be necessary to extend the expeditions farther afield from SÃo Paolo, and it was then that the Mamelucos came into contact with the growing numbers of the Spanish settlers, and with the Indians who now resided beneath the protection of the Spanish power. When the Jesuit missionaries arrived in Northern Uruguay and in Southern Paraguay their advent had the effect of embittering the feud between the frontiersmen; for the Jesuits, forming the Indians into companies of their own, withdrew them still farther from the onslaughts of the Paolistas. These latter determined at all costs to capture and to drive back their gangs of slaves, became more and more emboldened, and pushed forward to the south and west well into the Spanish territories, harrying the missionary settlements, and laying waste the countryside.

For years the GuaranÍ Indians, unarmed, were helpless in the face of such attacks. Eventually, however, the influence of the Jesuits obtained permission from the Court of Spain for these latter to be provided with firearms, and after this the Indian regiments, trained and disciplined, offered such effective resistance to the Mamelucos that these were forced to cease their slave-raids.

In 1574, when the importation into Brazil of negro slaves from West Africa had become a regular affair, the demand for slaves on the part of the Paolistas naturally became less active. Even with this item of discord removed, such intervals of peace as were patched up between the rival Powers were of short duration. The fertile and temperate lands to the north of the River Plate still remained in dispute, and although the Spaniards succeeded in retaining the possession of the bulk of these, there were times when the Portuguese penetrated as far as the waters of the great river, and in the end they managed to detach several of the most northerly districts from Spanish control, and in adding these to their own colonies.

It was consistent with the curious irony of fate which seemed to direct the operations of the Continent at that period, that while the Portuguese and Spaniards, actual lords of the soil, were at daggers drawn, the foreign seawolves, who had been gathering together, surveying with longing eyes the fold of riches so rigorously banned from them, were now making preparations for active aggression. But the history of the expeditions on the part of these formidable rovers is worthy of more than one chapter to itself.