Pitt’s father, Thomas “Diamond” Pitt, had worked for the East India Company in Calcutta and had come into the possession of an extremely valuable 410 carat diamond, “The Regent”. It weighed close to four ounces and made Pitt a hefty sum of £135,000. In 1732, using his inheritance from the diamond, William, then age 37, founded a wood cutting settlement on the Miskito Coast. His fortunes further improved, when he rescued a beautiful Spanish noblewoman from a shipwreck. They married and her connections to influential businessmen and politicians in Tegucigalpa allowed Pitt to start a lucrative smuggling business. The colony thrived on smuggling and on the export of hardwoods, turtle shell, plant medicines, sugar and sarsaparilla.
A census taken in 1769 showed the town to have 200 settlers of white or mixed origin, 600 black slaves and around 3,000 Mosquito Indians. The town was twice the size of the other two towns of importance on the coast, Trujillo and Puerto Caballos, and boasted two shipyards and 12 lumber mills. That year alone over 800,000 board feet of mahogany, 10,000 pounds of turtle shell, and 200,000 pounds of sarsaparilla were exported to London and New York. All of this illegal commerce came to the attention of King Charles of Spain who ordered the trespassers to be expelled.
The colony thrived on smuggling and on the export of hardwoods
On April 13,1781, Galvez, accompanied by 800 soldiers from Roatan and 600 from Trujillo sailed for Black River. The area was mostly abandoned as the British and their Miskito allies had left to assist a young captain, Horatio Nelson, in his disastrous mission to invade Nicaragua. The meager force of 20 soldiers manning the defenses of Fort Dalling fled into the jungle.
Galvez knew that the British would return, and waited for them. Upon hearing of the loss of Black River, the Governor of Jamaica sent a 500 man relief force of Jamaican Rangers. They joined up with members of the Roatan and Black River Volunteer Militia, led by Captains Richard Hoare and James Ferral of Roatan, and their Miskito mercenaries. A force of 1,300 men arrived back in Black River to find the Spanish forces depleted with 400 men dead to tropical disease, snake bites, and alligators. The Spanish were soon defeated in a rout, losing 120 men to Miskito sniper archers. The last 23 officers and 715 men surrendered giving up ships, 33 cannons, and three Royal Standards. The men were shipped back to Omoa, under oath not to take up arms again against the British, and the town returned to normal commerce.
In 1786, Britain and Spain signed the Convention of London where Britain relinquished its control over the Miskito Coast in exchange for rights to settle Belize. 2,650 British settlers left Black River for Belize and Jamaica. The town was formally handed over to the Spanish by William Pitt’s grandson, William Pitt Lawrie.
The town of Black River boasted some fine houses and hence the Spaniards renamed it Palacios (Palaces) and 240 settlers arrived from the Canary Islands to re-colonize the town. The Spanish forbade any trading with the Miskitos, and this, combined with the new colonists total lack of knowledge of agriculture, caused the town to fail completely.
The final nail in the coffin came on the dawn hours of September 3, 1800, when the Miskito general Perquin Tempest silently paddled down the river by canoe accompanied by 200 warriors. The Miskitos killed every Spaniard they could find and only 80 survivors managed to flee to Trujillo, leaving the community abandoned for the next century.