Cabo de Santa Maria Faro Portugal

War between Spain and the United Kingdom is triggered by the battle between four British warships (the Indefatigable, the Medusa, the Amphion and the Lively) and four Spanish frigates (Medee, Fama, Clara and Mercedes), all carrying treasure and merchandise.

Under the terms of the secret Second Treaty of San Idelfonso, Spain had agreed to pay seventy-two million francs annually to France, until it declares war on Britain.

The British had learned of the treaty, and know it is likely that Spain will declare war soon after the arrival of the treasure ships.

As the British also know that by law the fleet can only land at Cádiz, as well as its place and approximate time of departure from South America, it is not difficult to position a squadron to intercept it.

Spanish Admiral Jose Bustamante had set sail from Montevideo on August 9, 1804 with four frigates loaded with gold and silver, as well as much other valuable cargo.

On September 22, Vice Admiral Lord Collingwood had ordered Captain Graham Moore, commanding the forty-four-gun frigate HMS Indefatigable, to intercept and detain the Spanish ships, peacefully, if possible.

Moore's ship had arrived off Cadiz on September 29 and had been joined on October 2 by HMS Lively, and by HMS Medusa and HMS Amphion the day after.

In line abreast, they patrol the approaches to Cádiz.

Captain Graham Moore of the Indefatigable informs Bustamente of his orders to detain the treasure-laden ships and, "not receiving a satisfactory answer, an Action commenced"; La Mercedes is sunk and the other three ships surrender.

In practical terms, the British interception of the four Real Armada frigates represents the end of an era for Bourbon Spain and regular specie shipments from the Spanish Empire's New World mines and mints.

The squadron to which Mercedes had belonged is the last of its kind that the world will see: a Spanish treasure fleet moving bullion from the New World Viceroyalties to the Iberian kingdoms.

Under the terms of the Cruizers and Convoys Act of 1708, ships captured at sea are "Droits of the Crown" and become the property of their captors, who receive the full value of the ships and cargo in prize money.

However, since technically Britain and Spain are not at war at the time of this action, the Admiralty Court will rule that the three ships are "Droits of the Admiralty", and all revenues will revert to them.

The four Spanish ships carried a total of 4,286,508 Spanish dollars in silver and gold coin, as well as 150,000 gold ingots, seventy-five sacks of wool, 1,666 bars of tin, 571 pigs of copper, seal skins and oil, although 1.2 million in silver, half the copper and a quarter of the tin had gone down with the Mercedes.

Still, the remaining ships and cargo will be assessed at a value of £900,000 (equivalent to £69,103,000 in 2016).

After much legal argument an ex gratia payment will be made amounting to £160,000, of which the four Captains will receive £15,000 each (equivalent to £1,152,000 in 2016).