These six islands of Utila, Roatan, Morat, Helene, Barbareta and Guanaja were firmly in the grip of the Spanish thanks to the claims of Columbus himself. However it was the English Providence Company in 1638 who tried to make a viable settlement on the island of Roatan thanks to the efforts of William Claibourne from Virginia. The Spanish would destroy it in 1650 but only after serious fighting and outnumbering the English ten to one. The islands were vacated and abandoned by the British for virtually the next century.
The British returned from British Honduras in 1742 and rebuilt the fort in Roatan. The British kept the colony going until the Revolutionary Wars over America where Spain managed to reoccupy the islands in 1782. This change of possession was confirmed by the 1789 Versailles Treaty. However, in 1797, the English removed by force some 5,000 "Black Caribs" (a mixture of African Negro and Carib and Arawak Indians) from the Windward Island of St. Vincent, and marooned them on the then empty beaches of Port Royal on Roatan. Little is known of what became of them - although many of them did survive.
In the 1820s and 1830s, small numbers of settlers from British Honduras did settle again in the islands. On April 11th, 1839, H.M.S. Rover arrived in British Honduras with instructions from Lord Palmerston to proceed to Roatan and haul down any foreign flag which might be hoisted on the island.
In November of 1841, Superintendent McDonald despatched a magistrate to Roatan and Bonacca, with authority to appoint local magistrates and to hoist the Union Jack. By the following May, however, due to complaints from both Honduras and the United States, the British Secretary of State wrote to the Governor of Jamaica that the formation of a British settlement on Roatan was not to be encouraged and that protection to British subjects there could no longer be guaranteed. He also noted that any magistrates appointed by Superintendent McDonald were not to be formally authorized by him, the Governor.
However, even without official sanction the colony did grow and had a population of five to six thousand by 1850. In fact in 1849, these settlers once again petitioned for protection from the British. This grant was finally requested in 1852 when it was recognised that the Governor of Jamaica was also the Governor of the Bay Islands, and the Honourable P.E. Wodehouse, Superintendent of Belize, would be the Lieutenant Governor. It was confirmed by Queen Victoria also. After two centuries, the islands had finally been granted its colony status.
News of this colony quickly reached, and greatly disturbed, officials in the United States. They considered it a direct violation of the Treaty signed at Washington on April 19th, 1850,concerning the construction of a ship canal connecting the Atlantic and Pacific oceans. This document, which later became known as the Clayton Bulwer Treaty, stipulated that neither England nor the United States would seek colonies or possessions (other than those already owned) in the Western Hemisphere. For years a battle of words raged across the Atlantic between Washington and London, during which the United States, backed by the Monroe Doctrine as well as the Clayton-Bulwer Treaty, demanded that Britian relinguish not only the Bay Islands, but her claims to the Miskito Shore of Honduras and other possessions in the Western Caribbean as well.
At a convention held in Guatemala on April 30th, 1859, England, under a great deal of pressure from the United States, agreed to surrender the Bay Islands and the Miskito (Mosquito) Coast. Their primary condition was that they would retain complete freedom of action in British Honduras. However, thanks to the unsettled nature of politics due to the actions of the self-styled King of Nicaragua, William Walker, the islands were not handed over to Honduras until the following year on July 14th, 1860. Although the Hondurans didn't actually get around to receiving their new colony for another year yet...on June 1st 1861.