This fact, as well as the information (no doubt much exaggerated) about the Philippines and Borneo and the gold to be met with in these islands, made a deep impression on the Court of Spain, and not many years elapsed before further attempts were made to reach Malaysia across the Pacific from Spanish America, the Spaniards being precluded by their agreement with Portugal from adopting the more convenient route round the Cape of Good Hope.

As already related, the Spaniards and Portuguese were out of their reckoning in regard to longitude when they supposed that any part of the Philippines or the Moluccas lay to the east of 130° of E. longitude, and consequently within the domain of Spain. They believed that the Moluccas did come within the Spanish sphere, while the Philippines were, by the same reckoning, Portuguese. After a good deal of wrangling the matter was settled in 1529. A considerable sum of money was paid by Portugal to Spain, the Spanish claim to the Spice Islands was withdrawn, and nothing was said about the Philippines. This archipelago, a few years afterwards, was tacitly recognized as within the Spanish sphere, which also included the lands afterwards to be styled New Guinea.

Borneo thus became part of the Portuguese "sphere of influence" (as it would now be called), though this large island had first been visited by Magellan in Spanish ships. The Portuguese attempted to enter into relations with the then powerful Muhammadan sultanate of North Borneo (Brunei), but (according to the Portuguese chronicler, Barros) their efforts came to nothing through a very curious mischance. Realizing that the Sultan of Brunei was a very powerful prince, a Muhammadan, and therefore much in touch, through Arab and Persian traders, with the civilized world, it was resolved to send him, by the embassy dispatched from Ternate to Brunei in 1528, a selection of really superior and costly presents. Amongst these was a large piece of tapestry illustrating in a most lifelike manner the marriage of Catherine of Aragon (afterwards the unhappy wife of Henry VIII) to Arthur, Prince of Wales—the first link, possibly, in the long history of the relations between the British and North Borneo. But the figures thus portrayed by the needles and wool of industrious Spanish women seemed to the superstitious Malay sultan a work of subtle magic. He believed them to be real persons sent to sleep by the spell of a magician, and that some night they would be released from their enchantment, come to life, and slay him as he slept. So the Portuguese envoy was dismissed, the presents declined, and no political relations entered into between North Borneo and the Portuguese. This was one reason, probably, why the Dutch, not having been preceded by the Portuguese, got no foothold in North Borneo, and therefore left this side of the island open to British administrative enterprise in the first half of the nineteenth century.

Spanish research in the Pacific was resumed five years after the return of Sebastian de Elcano in the Victoria in the autumn of 1522. In 1528 two Spanish ships, intending to sail from Mexico to the Philippines, were blown out of their course in a storm and accidentally discovered the Hawaii Islands. They were wrecked there, and such of the crews as were saved from drowning—amongst them were several Spanish women—could not get away from Hawaii, and settled down there for the rest of their lives, marrying the people of the country, and no doubt leaving a strain of Castilian blood in the ruling classes of these cannibal islands.

Hawaii was, however, again visited by Spanish ships in the middle of the sixteenth century; and when, long afterwards, the archipelago was rediscovered by Captain Cook, the people were found to be practising several Spanish customs. The real fact is that Spain knew a good deal about the Oceanic islands in the sixteenth century, but out of jealous dread that her monopoly of the Pacific Ocean might be invaded by other European nations she kept this geographical knowledge, set forth in her charts and logbooks, hidden in her State archives, only to be revealed in the latter part of the eighteenth century, when there was no longer anything to conceal from the adventurous French and English.

In 1542 the Philippines were again visited by Spanish ships under the command of Lopez de Villalobos, who penetrated to the large northern island of Luzon. On his return to Mexico he named this archipelago after Philip, the heir to the Spanish throne. In 1564 an expedition under Lopez de Legaspi was dispatched from the west coast of Mexico to the Philippines for their conquest and their conversion to Christianity. Four ships conveyed 400 Spanish soldiers and a few friars or missionaries. Between 1565 and his death in 1572 Legaspi had actually achieved the wonderful feat of founding the city of Manila in the large island of Luzon, and making the Spanish power predominant over all this large archipelago. A number of the natives became converted to Christianity, and only the Sulu Islands and Palawan remained Muhammadan.

In 1579 a new portent appeared in the Far East. In the month of November there arrived at the Island of Ternate, from nowhere, as it seemed, an English ship, the Golden Hinde, commanded by Francis Drake. This most remarkable English adventurer—then only thirty-four years old—had been purser to a ship trading to the north of Spain when he was only eighteen, and by the age of twenty-two had not only made a voyage to Guinea, but was commanding a ship as captain in an attack on the Spaniards off the coast of Mexico. In 1577 he had navigated the Straits of Magellan in the Golden Hinde (originally the Pelican, which he renamed thus as a remembrance of the heraldic device of Sir Christopher Hatton and a mark of joy at having safely reached the Pacific Ocean), had sailed up the west coast of South America, attacking and plundering Spanish ships and towns "till his men were satiated with plunder"; and, failing to find another Magellan's Straits in North-west America to take him back to the Atlantic, had boldly sailed from the coast of New Albion (the modern State of Washington) aslant the Pacific Ocean and steered a straight course for the Moluccas.

The Portuguese, of course, were then predominant in the Spice Islands and elsewhere in Malaysia, and with them Drake had no quarrel. He therefore sailed on to Java (after nearly coming to grief by striking a rock off the coast of Celebes), and from Java made his way round the Cape of Good Hope to the Guinea coast, and thence to the Azores and England. He was knighted by Queen Elizabeth on board the Golden Hinde at Deptford, after the queen had partaken of a banquet on board the famous ship which had sailed round the world in two years and ten months.

His voyage was a splendid answer to the Spaniards, who believed themselves perfectly safe from interference in the waters of the "great Southern Ocean", and who forbade the rest of the world to trade with America and Australasia. Within eighteen years it was to be followed up by Dutch and British attacks, by way of the Cape of Good Hope, on the Portuguese and Spanish monopoly of intercourse with the East Indies and Malaysia. It is, however, only fair to mention that in the matter of commercial morality the British, French, and Dutch were no more enlightened than the Spaniards. Each sought in turn to make their oversea dependencies regions closed to the trade of other nations than themselves, and even to restrict the commerce of their Asiatic, African, and American colonies to privileged persons or companies.