The Portuguese, seeking to expand Brazil's frontier…

The Portuguese, seeking to expand Brazil's frontier in 1680, had founded Colonia del Sacramento on the Rio de la Plata, across from Buenos Aires.

Forty years later, the Spanish monarch orders the construction of Fuerte de San Jose, a military fort at present-day Montevideo, to resist this expansion.

With the founding of San Felipe de Montevideo at this site in 1726, Montevideo becomes the port and station of the Spanish fleet in the South Atlantic.

The new settlement includes families from Buenos Aires and the Canary Islands to whom the Spanish crown distributes plots and farms and subsequently large haciendas in the interior.

Authorities are appointed, and a cabildo (town council) is formed.

Montevideo is on a bay with a natural harbor suitable for large oceangoing vessels, and this geographic advantage over Buenos Aires is at the base of the future rivalry between the two cities.

The establishment of the Viceroyalty of the Rio de la Plata in 1776, with Buenos Aires as its capital, aggravates this rivalry.

Montevideo is authorized to trade directly with Spain instead of through Buenos Aires.