In 1492, Italian Christopher Columbus discovered the new world while in the service of Spain. In 1494, the Pope divided up the discoveries of the New World based on a longitude. West of the line belonged to Spain, East of the line belonged to Portugal. This gave Portugal the east coast of Brazil and most of New Foundland, while the Spanish gained the majority of North & South America and the main Carribean islands.
When Spain conquored the Aztecs and began bringing home vast sums of treasure, there were small colonies scattered about the Caribbean. For the Spanish, the islands of the Caribbean were listed on the maps as "Islas Inutiles" - the useless islands.