This was done in order to counter the English and French corsairs who preyed on the Spanish treasure fleet.
One notable action was the destruction of the fleet during Henry Morgan's raid on Lake Maracaibo in 1669.
Already in the 17th century, prior to the increase in piracy in the Caribbean, Spain had formed a large armada, at considerable economic cost, paid for in part by new taxes in the Indies.
The armada was important to Spanish politics in America, playing a crucial defensive and logistical role.
In particular it protected the trade and the coasts of the Spanish territories in America, even as they began to coveted by other European powers.