Official hearings were held in 1602 to decide the fate of St. Augustine—keep it, move it or abandon it? The decision was to keep the colony where it was, as a haven for shipwreck victims and a strategic military position against the ever-increasing threat of pirates preying on the Spanish treasure fleets.
The arrival of the energetic Governor Mendez de Canzo inspired several urban improvements, including the formal establishment of a plaza and market, a hospital, a horse-drawn grist mill and a new block of residence lots on the south end of the town. Nevertheless, throughout much of the seventeenth century St. Augustine was even more isolated, impoverished and neglected by the Spanish crown than it has been in the previous century. Wars in Europe, threats from other European powers to Spain’s American holdings, and the loss of several treasure fleets through piracy and disasters made St. Augustine very low on the fiscal priorities of the Spanish crown.
The situado (government subsidy of food, goods and money paid from the Mexican treasury) fluctuated from year to year, and sometimes was interrupted by pirates and shipwrecks. Most of the economic activity in Florida took place outside of St. Augustine, on the Franciscan mission frontier and the large farms and cattle ranches in central and west Florida owned by prominent Spanish and criollo families. The benefits of these endeavors rarely reached the residents of St. Augustine, however, since most of the trade in the goods from these estates was done illicitly with Havana via the Gulf of Mexico.
Mission Indian uprisings, severe epidemics, pirate attacks and the increasing threat of English occupation to the north also beset the beleaguered inhabitants of the town. Life in St. Augustine was still marked by sharp social and material divisions – government officials for example suffered less than the enlisted soldiers, farmers and their families. But in the atmosphere of isolation and neglect, most people turned increasingly to a way of life that was adapted to local Florida conditions.