As the seat of the largest Spanish garrison, Montevideo naturally became the centre of pro-Spanish feeling and influence in the Plate and the home of families who boasted distinguished Castilian descent and conservative principles. In the interior settlements Creole influences predominated, and the population was substantially homogeneous with that of the Argentine provinces on the other side of the Uruguay River. Between the aristocratic Montevideans and the gauchos of the country districts there was little sympathy.
In 1806, the English captured Buenos Aires, and many Spanish officials and officers fled to Montevideo for refuge. The garrison of Montevideo furnished troops and arms for the expedition which soon went across the Plate and triumphantly recaptured Buenos Aires. Late that same year, British troops from the Cape of Good Hope seized Maldonado harbour in eastern Uruguay. As soon as re-enforcements arrived a movement was made against Montevideo. On the 14th of January, 1807, the city was besieged by sea and land. The attacking and defending forces were about equal in number, although the British regulars were far superior in discipline and effectiveness to their opponents, half of whom were militia. A sortie in force was completely defeated, with a loss of one thousand men, and after eight days of bombardment the British effected a breach in the wall and took the town by assault, the Spaniards losing half their force and the remainder scattering. A great fleet of merchant vessels had accompanied the British expedition, and as soon as the town surrendered their goods were landed, and the English traders took possession of the shops almost as completely as the British soldiers did of the fortifications. Uruguay was opened up to free trade, the gauchos were soon selling their hides and horsehair for higher prices than they had ever received, and buying clothes, tools, and the comforts and luxuries of civilised life at rates they had never dreamed possible.
A few months later the English attacked Buenos Aires, but were overwhelmingly defeated, and the British general found himself in such an awkward situation that, in order to obtain permission to withdraw his army, he had to agree to evacuate Montevideo. The convention was carried out and the British soldiers left the Plate forever, but the British merchants remained behind. Although the English occupation of the city had lasted so short a time, it created an unwonted animation in Montevideo by the establishment of a great number of mercantile and industrial houses. From this time, Montevideo's commerce assumed greater proportions and it became a place of real commercial importance, as well as a military post. Both city and country had tasted the delights of commercial freedom, and material civilisation had received its first great impulse.