But the untimely death of Mansfield nipped in the bud the only rational scheme of settlement which seems at any time to have animated this wild community; and Morgan, now elected commander, swept the whole Caribbean, and from his headquarters in Jamaica led triumphant expeditions to Cuba and the mainland. He was leader of the expedition wherein Porto Bello, one of the best-fortified ports in the West Indies, was surprised and plundered.

This was too much for even the adverse European powers; and in 1670 a treaty was concluded between England and Spain, proclaiming peace and friendship among the subjects of the two sovereigns in the New World, formally renouncing hostilities of every kind. Great Britain was to hold all her possessions in the New World as her own property (a remarkable concession on the part of Spain), and consented, on behalf of her subjects, to forbear trading with any Spanish port without licence obtained.

The treaty was very ill observed in Jamaica, where the governor, Thomas Modyford (1620-1679), was in close alliance with the "privateers," which was the official title of the buccaneers. He had already granted commissions to Morgan and others for a great attack on the Isthmus of Panama, the route by which the bullion of the South American mines was carried to Porto Bello, to be shipped to Spain. The buccaneers to the number of 2000 began by seizing Chagres, and then marched to Panama in 1671. After a difficult journey on foot and in canoes, they found themselves nearing the shores of the South Sea and in view of the city. On the morning of the tenth day they commenced an engagement which ended in the rout of the defenders of the town. It was taken, and, accidentally or not, it was burnt. The sack of Panama was accompanied by great barbarities. The Spaniards had, however, removed the treasure before the city was taken. When the booty was divided, Morgan is accused of having defrauded his followers.

It is certain that the share per man was small, and that many of the buccaneers died of starvation while trying to return to Jamaica. Modyford was recalled, and in 1672 Morgan was called home and imprisoned in the Tower. In 1674 he was allowed to come back to the island as lieutenant-governor with Lord Vaughan. He had become so unpopular after the expedition of 1671 that he was followed in the streets and threatened by the relations of those who had perished. During his later years he was active in suppressing the buccaneers who had now inconvenient claims on him.

From 1671 to 1685 is the time of the greatest daring, prosperity and power of the buccaneers. The expedition against Panama had not been without its influence. Notwithstanding their many successes in the Caribbean and on land, including a second plunder of Porto Bello, their thoughts ran frequently on the great expedition across the isthmus, and they pictured the South Sea as a far wider and more lucrative field for the display of their united power.

In 1680 a body of marauders over 300 strong, well armed and provisioned, landed on the shore of Darien and struck across the country; and the cruelty and mismanagement displayed in the policy of the Spaniards towards the Indians were now revenged by the assistance which the natives eagerly rendered to the adventurers. They acted as guides during a difficult journey of nine days, kept the invaders well supplied with food, provided them with canoes, and only left them after the taking of the fort of Santa Maria, when the buccaneers were fairly embarked on a broad and safe river which emptied itself into the South Sea. With John Coxon as commander they entered the Bay of Panama, where rumour had been before them, and where the Spaniards had hastily prepared a small fleet to meet them. But the valour of the buccaneers won for them another victory; within a week they took possession of four Spanish ships, and now successes flowed upon them. The Pacific, hitherto free from their intrusion, showed many sail of merchant vessels, while on land opposition south of the Bay of Panama was of little avail, since few were acquainted with the use of fire-arms. Coxon and seventy men returned as they had gone, but the others, under Sawkins, Sharp and Watling, roamed north and south on islands and mainland, and remained for long ravaging the coast of Peru. Never short of silver and gold, but often in want of the necessaries of life, they continued their practices for a little longer; then, evading the risk of recrossing the isthmus, they boldly cleared Cape Horn, and arrived in the Indies. Again, in 1683, numbers of them under John Cook departed for the South Sea by way of Cape Horn. On Cook's death his successor, Edward Davis, undoubtedly the greatest and most prudent commander who ever led the forces of the buccaneers at sea, met with a certain Captain Swan from England, and the two captains began a cruise which was disastrous to the Spanish trade in the Pacific.

In 1685 they were joined in the Bay of Panama by large numbers of buccaneers who had crossed the isthmus under Townley and others. This increased body of men required an enlarged measure of adventure, and this in a few months was supplied by the viceroy of Peru. That officer, seeing the trade of the colony cut off, supplies stopped, towns burned and raided, and property harassed by continual raids, resolved by vigorous means to put an end to it. But his aim was not easily accomplished. In this same year a Spanish fleet of fourteen sail met, but did not engage, ten buccaneer vessels which were found in the Bay of Panama.

At this period the power of the buccaneers was at its height. But the combination was too extensive for its work, and the different nationality of those who composed it was a source of growing discord. Nor was the dream of equality ever realized for any length of time. The immense spoil obtained on the capture of wealthy cities was indeed divided equally. But in the gambling and debauchery which followed, nothing was more common than that one-half of the conquerors should find themselves on the morrow in most pressing want; and while those who had retained or increased their share would willingly have gone home, the others clamoured for renewed attacks. The separation of the English and French buccaneers, who together presented a united front to the Spanish fleet in 1685, marks the beginning of the third and last epoch in their history.