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The story begins in June of 1808 , with Hornblower in command of the 36-gun Frigate HMS ''Lydia'' and sailing off the Pacific coast of Nicaragua . His orders are to assist a local landowner desiring to revolt against the Spanish (at this time Spain was allied with Napoleon ), supplying him with muskets and powder. Upon meeting with the landowner, Hornblower discovers he has gone mad and goes by the title El Supremo (the Almighty) and views himself as a deity. While Hornblower replenishes his supplies, the 50-gun Spanish ship ''Natividad'' is sighted off the coast and headed towards the harbor where ''Lydia'' is located. Following Hornblower's daring nighttime capture of the ''Natividad'', El Supremo demands that the captured vessel be turned over to him so he may begin building a Navy. Hornblower does so (after hiding the captured Spanish officers from their inevitable murder at El Supremo's hands).

After completing his mission to El Supremo, Hornblower sails south aiming for Cape Horn and a return to England. But, off the coast of Panama, a Spanish lugger contacts him and informs him of a peace between Spain and England, and their new alliance against Napoleon.
Simultaneously, Lady Barbara Wellesley comes on board. The packet ship she was on in the Caribbean was captured some time ago, there is now a yellow fever epidemic in Panama, and she asks for transportation back to England.

Although he takes Lady Barbara aboard to save her from yellow fever, Hornblower must first take the ''Natividad'' back from El Supremo before he ravages the entire Pacific coast.

After a desperate fight to the death, ''Lydia'' manages to sink the ''Nativdad'' taking heavy damage herself. Limping back to Panama to effect repairs, Hornblower (now that there is no danger from ''Natividad''} is curtly informed that he is not welcome in any Spanish-American port. Hornblower manages to find a natural harbor on the island of Coiba, where he repairs the damages.

After completing the repairs, Hornblower sets sail for England. On the long cruise, a mutual desire grows under the surface between Hornblower and Lady Barbara. However, when it starts to break out into the open, Hornblower backs off. Hornblower's explanation to Barbara is that he is married. (While true, and while he has some loyalty to his wife, athough no great love for her, this is only part of the reason. As a man of no great standing, he is also in no position to risk offending the Wellesley clan by dallying with Lady Barbara.) After the rejection, which may have ''really'' offended Lady Barbara, they see little of each other for the remainder of the voyage. The book ends with their formal good-byes.