Navies are not always capable of meeting the requirements placed upon them in wartime, either due to budgetary, material, or manpower shortages. A common practice was for a country to commission private individuals to finance the outfitting, and sometimes even building, of their own ships, which they would then take to sea in the pursuit of shipping of the enemy. Theoretically, these privateers would only target sanctioned shipping, leaving alone neutral or allied vessels, though sometimes this was not adhered to.
Privateers were issued letters of marque, giving them authorization to outfit a ship for war, and detailing what their permitted targets were. The first recorded use of the term 'letter of marque' is from 1354, issued by King Edward III of England, but the practice was certainly much older. The heyday of the privateers was from the mid-1500s through 1815. The English privateers under Queen Elizabeth I scored considerable success against the shipping of the Spanish Empire, and even as navies became increasingly professional, with ships and crews remaining on active duty constantly, the practice would prove economical for governments, particularly smaller ones. The young United States made good use of them during its first half century, and they are still permitted under the Constitution.
However, by the mid-1800s, major naval powers began trying to regulate war at sea, in an attempt to make it more civilized. In 1856, in the wake of the Crimean War, an international delegation met in Paris, and part of the resulting agreement forbade the use of privateers. Interestingly, the United States did not participate, and never signed the agreement, but they did announce that they would follow the regulations during the American Civil War of 1861-65, and the Spanish American War of 1898. The last major issuance of letters of marque was in 1879, by Bolivia during the War of the Pacific, when they needed to be able to resist the Chilean Navy, with none of their own.