He began his friendship with Samuel Taylor Coleridge in June 1794 at Oxford. They soon envisioned the Pantisocracy, a communal society inspired by the works of William Godwin and David Hartley. His plan was for the community to be established in Kentucky, though the destination was later changed to Pennsylvania. The sisters of humble background, Edith and Sara Fricker, whom Southey—against his aunts and uncles' wishes—and Coleridge, respectively, married in 1795, were involved in the project from the very beginning. Throughout 1795, Southey's enthusiasm waned due to differences with Coleridge and familial pressures, particularly from Hill, the chaplain of the British Navy in Lisbon.

Hill persuaded Southey to accompany him on a journey through Spain and Portugal, aiming to distance his nephew from republican and pantisocratic ideals. Hill and Southey arrived in A Coruña on 13 December. They then travelled to Lisbon, arriving on 27 January 1796. Returning to Bristol on 14 May 1796. Shortly after his departure for the Iberian Peninsula, the epic poem Joan of Arc , imbued with strong republican inspiration, was published. The stays and travels around the Iberian Peninsula were pivotal for the publication of Letters Written During a Short Residence in Spain and Portugal in 1797.

The 1797 edition of the Letters comprises 30 letters, detailing the young traveller's impressions of everyday life, customs, and institutions in Spain and Portugal. These are interspersed with poetry by Southey himself, as well as poetry, fables, dialogues, epigrams, statistical tables, and prose texts by Iberian authors. Despite the unsystematic nature of the work, Southey had a clear objective in publishing it: to illustrate how unpleasant touring and living in Portugal and Spain was for a civilised man.

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