Nelson's early promotions were most definitely not due to "sheer merit."  There is ample evidence of patronage, though not at court.    His uncle, Maurice Suckling, was appointed Comptroller of the Navy Board in 1775.  This was a very powerful position, from which Suckling definitely helped advance Nelson's career.  In fact, when Nelson sat for his Lieutenant's exam in 1777, his uncle was one of the three examining captains.  His brother William later claimed that Suckling, ignoring the time-honored practice of patronage did not acknowledge to his fellow examiners that Horatio was his nephew.  But as biographer John Sugden points out, WIlliam's account makes no sense.  It would have been well known that Nelson was Suckling's nephew.  (Sugden, 109)  

 It was after a series of unfortunate incidents involving Prince William Henry (later William IV) that turned Royal favor against Nelson.  William Henry was out of favor with his father, George III, and also with the Admiralty.  Nelson allowed his subserviance to the royal personage to affect his judgement in several matters regarding William, to the detrminent of his reputation with the King.