The defeat of Lempira’s revolt, and the decline in fighting among rival Spanish factions all contributed to expanded settlement and increased economic activity in Honduras.

In late 1540, Honduras looked to be heading towards development and prosperity, thanks to the establishment of Gracias as the regional capital of the Audiencia of Guatemala (1544). However, this decision created resentment in the populated areas of Guatemala and El Salvador.

In 1549, the capital was moved to Antigua, Guatemala, and Honduras and remained a province within the Captaincy General of Guatemala until 1821.

Colonial Mining Operations

The initial mining centers were located near the Guatemalan border, around Gracias. In 1538 these mines produced significant quantities of gold. In the early 1540s, the center for mining shifted eastward to the Río Guayape Valley, and silver joined gold as a major product. This change contributed to the rapid decline of Gracias and the rise of Comayagua as the center of colonial Honduras.

The demand for labor also led to further revolts and accelerated the decimation of the native population. As a result, African slavery was introduced into Honduras, and by 1545 the province may have had as many as 2,000 slaves. Other gold deposits were found near San Pedro Sula and the port of Trujillo.

Mining production began to decline in 1560, and thus the importance of Honduras. In early 1569, new silver discoveries briefly revived the economy, which led to the founding of Tegucigalpa, which soon began to rival Comayagua as the most important city of the province. The silver boom peaked in 1584, and economic depression returned shortly thereafter.

Honduras mining efforts were hampered by lack of capital, labor and the difficult terrain. Mercury, vital for the production of silver was scarce, besides the neglect of the officials.

The Partially Conquered Northern Coast

While the Spanish made significant conquests in the southern half of the area, they had less success in the Caribbean section, on the north. They founded a number of towns on the coast, Puerto Caballos in the east, and on the west, and sent minerals and other exports across the country from the Pacific side to be sent to Spain from the Atlantic ports.

They founded a number of inland towns on the northwestern side of the province, notably Naco and San Pedro Sula. In the northeast side, the “province” of Taguzgalpa resisted all attempts to conquer it, physically in the sixteenth century, and spiritually, by missionaries in the seventeenth and eighteenth centuries.

Among the groups found along the northern coast and in neighboring Nicaragua were the Miskito, who although organized in democratic and egalitarian way, had an institution of king, and hence were known as the Mosquito Kingdom.

One of the major problems for the Spanish rulers of Honduras, was the activity of the British in northern Honduras, a region over which they had only tenuous control. These activities began in the sixteenth century and continued until the nineteenth century.

In the early years, European pirates frequently attacked the villages on the Honduran Caribbean. The Providence Island Company, which occupied Providence Island not far from the coast, raided it occasionally and probably also had some settlements on the shore, possible around Cape Gracias a Dios.

Around 1638, the king of the Miskito visited England and made an alliance with the English crown. In 1643 an English expedition destroyed the city of Trujillo, Honduras’s main port.

The British and the Miskito Kingdom

The Spanish sent a fleet from Cartagena which destroyed the English colony at Providence island in 1641, and for a time the presence of an English base so close to the shore was eliminated. At about the same time, however, a group of slaves revolted and captured a ship on which they were traveling, and ended up wrecking it at Cape Gracias a Dios.

Managing to get ashore, they were received by the Miskito, and within a generation had given birth to the Miskito Zambo, a mixed race group that by 1715 had become the leaders of the kingdom.

Meanwhile the English captured Jamaica in 1655 and soon were seeking allies on the coast, and hit upon the Miskito Zambu, whose king Jeremy visited Jamaica in 1687.

A variety of other Europeans made settlements in the area during this time. An account of 1699 reveals a patchwork of private individuals, large Miskito family groups, Spanish settlements and pirate hideouts along the coast. Britain declared much of the area a Protectorate in 1740, though they exercised little authority as a result of this decision.

British colonization was particularly strong in the Bay Islands, and alliances between the British and Miskito as well as more local supporters made this an area the Spanish could not easily control and a haven for pirates.

Bourbon Reforms

In the early eighteenth century, the Bourbon dynasty, linked to the rulers of France, replaced the Habsburgs on the throne of Spain. The new dynasty began a series of reforms throughout the empire (the Bourbon Reforms), designed to make administration more efficient and profitable, and to facilitate the defense of the colonies.

Among these reforms was a reduction in tax on precious metals and the cost of mercury, which was a royal monopoly. In Honduras, these reforms contributed to the resurgence of the mining industry in the 1730s.

Under the Bourbons, the Spanish government made several efforts to regain control of the Caribbean coast. In 1752, the Spaniards built the fort of San Fernando de Omoa. In 1780, the Spanish returned to Trujillo, who started out as base of operations against British settlements to the east.

During the decade of 1780, the Spanish regained control of the Bay Islands and took most of the British and their allies in the Black River area. They were not, however, able to exapand their control beyond Puerto Caballos and Trujillo, thanks to determined Miskito resistance.

The Anglo-Spanish Convention of 1786, issued the final recognition of Spanish sovereignty over the Caribbean coast.