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Not the dummest AH scenario by any means. In 1543 Captain Blasco De Garay an officer in the Imperial Navy demonstrated a steam powered ship which was a merchant ship which sailed round the harbour. However more sernior naval officers felt threatened by the invention and the use of a steam kettle was reported to the inquisition and De Garay was ordered to dismantle the engine. The Emporer Charles V endorsed the invention but had been recalled on urgent business to deal with a protestant rebellion in the Netherlands and the conservative Prince Philip of Spain endorsed the order.

However what if he hadn't endorsed it? By 1572 steam powered ships could have been in use at Lepanto resulting in an even greater victory.

By 1588 the Armada could have been powered by steam and no longer reliant on wind. The earlier stages of inconclusive harrying by smaller more manouverable British warships might have been avoided and steam ships could have manouvered out of the way of the fireships at Gravelines. There would however been a limiting factor in that wooden paddle boxes would have been vulnerable to canon fire in the channel skirmishes but once the ship reached the Netherlands they could have loaded up the troops and come across irrespective of the wind direction.

Another what if could have been suppose De Blasco hadn't accepted his promotion and pension in return for dismantling his machaniery and had taken his invention to the Moors and the Moors had used steam at Lepanto? Science and learning flourished in the Moslem World unlike in Europe under the Inquisition. Arguably Philip like many despots was restricted by his own bigotry. Or what if he had taklen his invention to Protestant Northern Europe to Germany or the Dutch rebels?
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