The island's early development was shackled by Spain's insistence on a centrist economy. All goods exported from or imported to Puerto Rico had to pass through Spain itself, usually through Seville. In effect, this policy prohibited any official trade between Puerto Rico and its island neighbors.
In response, a flourishing black market developed. Cities such as Ponce became smuggling centers. This black market was especially prevalent after the Spanish colonization of Mexico and Peru, when many Spanish goods, which once would have been sent to Puerto Rico, ended up in those more immediately lucrative colonies instead. Although smugglers were punished if caught, nothing could curb this illegal (and untaxed) trade. Some historians estimate that almost everyone on the island -- including priests, citizens, and military and civic authorities -- was actively involved in smuggling.
By the mid-1500s, the several hundred settlers who had immigrated to Puerto Rico from Spain heard and sometimes believed rumors of the fortunes to be made in the gold mines of Peru. When the island's population declined because of the ensuing mass exodus, the king enticed 500 families from the Canary Islands to settle on Puerto Rico between 1683 and 1691. Meanwhile, an active trade in slaves -- imported as labor for fields that were increasingly used for sugar-cane and tobacco production -- swelled the island's ranks. This happened despite the Crown's imposition of strict controls on the number of slaves that could be brought in. Sugar cane earned profits for many islanders, but Spanish mismanagement, fraud within the government bureaucracy, and a lack of both labor and ships to transport the finished product to market discouraged the fledgling industry. Later, fortunes were made and lost in the production of ginger, an industry that died as soon as the Spanish government raised taxes on ginger imports to exorbitant levels. Despite the arrival of immigrants to Puerto Rico from many countries, diseases such as spotted fever, yellow fever, malaria, smallpox, and measles wiped out the population almost as fast as it grew.
