The Straits Settlements were the collection of four distinct colonies, each acquired for its naval and commercial possibilities and opportunities. The respective settlements were Penang (1786), Malacca (1795), Singapore (1819) and finally Labuan (1907). They each allowed for commercial and naval shipping to take advantage of the rich spice and trading opportunities in the area. They were in no way contiguous, rather they were linked by the sea lanes as they converged on this natural choke point. They were initially controlled by the English East India Company before being transferred to the Crown.
The English East India Company had long been desperate to try and muscle into the commercial territories dominated by the Dutch East India Company. Throughout the Seventeenth and much of the Eighteenth Century the English had been successfully kept at bay. However, the success of their Indian colonies and the relative decline of the Dutch Company meant that the English were again keen to muscle their way into the lucrative spice islands. Captain Francis Light identified the port of Penang as being a suitable harbour for ships interested in trading in the area from 1786. By 1791 an agreement had been signed with the Sultan of Kedah and the island was dubbed Prince of Wales Island and ceded to the British. In 1800, more land was added to the territory from the mainland. This port would become the starting point of what grow into the Straits settlements. The all but deserted island soon attracted migrant workers from neighbouring Malaya, Burma, China and India to take advantage of the opportunities for loading and unloading the ships with their valuable cargoes.
The port of Malacca would be seized by the Royal Navy thanks to the disruption caused by the Napoleonic and Revolutionary Wars. The Dutch were usurped by the French early on in the war and the British felt little option but to seize Dutch overseas territories in order to forestall them falling into French hands. When the war ended, the Dutch asked for the colony to be returned (along with others) but the issue was only finally settled in 1824 with the Anglo-Dutch Treaty of London which formally swapped it for Benkulen on the island of Sumatra.
Singapore was a colony built from scratch by Sir Thomas Stamford Raffles on behalf of the East India Company. He had long been searching for a suitable port only to be thwarted by the local rulers, often with Dutch encouragement to do so. In 1819, Raffles sidestepped the intransigent Dutch backed ruler of Abdul Rahman over the island of Singapore and installed Rahman's brother, Hussein, in his place in order to accept and legitimate his purchase of the land there. The Dutch protested vehemently on behalf of their client, but the London directors of the East India Company chose to look the other way and Raffles got the port that he so desperately wanted.
These three separate commercial posts would form the foundation of the Straits Settlements. They officially came into being in 1826 largely as a result of the Anglo-Dutch Treaty which recognised British pre-eminence in the North and West of the archipelego and Dutch to the South and East. Originally, Penang was designated as the primary settlement, but this was soon transferred to Singapore in 1832 as it became clear that Singapore was becoming the more important trading entrepot.
In 1833, the East India Company was stripped of its monopoly of the trade from China. This seriously reduced Company interest in running the settlements as the settlements did not have a large enough population of farmers and landowners to extract taxation from. The settlements would pass to the governor-general of India in 1851 which itself was transferred to British rule as a result of the 1857 Mutiny. In 1867, the settlements were formally turned into a Crown Colony to be administered from the Colonial Office in London.
Labuan was added to the straits settlements much later. It had been ceded to the British in 1846 by the Sultan of Brunei in order to help suppress piracy in the area. It was later passed to North Borneo for administration before being moved to the Straits Settlements in 1907.
All parts of the Straits settlements were occupied by the Japanese in World War Two. When the war finished the Straits Settlements were broken up as various arrangements were made to link these colonies with the Malayan States.