Christopher Columbus is believed to have made his first landfall on the island now called San Salvador (formerly Watlings Island) on 12 October 1492, but the Spanish made no permanent settlement there. Spanish traders captured the native Lucayan Indians and sold them as slaves. The first permanent European settlement was established in 1647 by the Eleutherian Adventurers, a group of religious refugees. They and subsequent settlers imported blacks as slaves during the 17th century. The islands were also used as bases for pirates, including the notorious Blackbeard.
The British established a crown colony to govern the islands in 1717. The first royal governor, Captain Woodes Rogers, himself an ex-pirate, drove away the privateers, leaving the slave trade as the main economic enterprise on the islands.
After the end of slavery in 1838, the Bahamas served only as a source of sponges and occasionally as a strategic location. During the US Civil War, Confederate blockade runners operated from the islands. After World War I, prohibition rum-runners used the islands as a base. During World War II, the United States used the islands for naval bases.
Like other former British colonies, the Bahamas achieved independence in stages. After self-government was established in 1964, full independence was granted on 10 July 1973. The country's first prime minister was Lynden O. Pindling, leader of the Progressive Liberal Party. Pindling ruled for nearly twenty years, during which the Bahamas benefited from tourism and foreign investment. By the early 1980s, the islands had also become a major center for the drug trade, with 90% of all the cocaine entering the United States reportedly passing through the Bahamas. Diplomatic relations were established with Cuba in 1974. A decade later, as increased Cuban immigration to the islands strained the Bahamas' resources, Cuba refused to sign a letter of repatriation.
In August 1992, the Bahamas had its first transfer of political power, when Hubert Ingraham became prime minister. Ingraham was reelected in March 1997 for another four-year term. The principal focus of his administration was economic development and job creation. Under Ingraham's watch, a number of government enterprises were privatized. In September 1999, Hurricane Floyd did extensive damage in the Abacos and Eleuthra, causing a significant dip in tourism revenues, but tourism operations in other parts of the Bahamas were able to resume normal operations days after the Category-4 storm. Also during Ingraham's administration, a stock exchange, Bahamas International Securities Exchange, officially opened (15 December 1999); trading in local companies was initiated in May 2000 and in mutual funds in April 2001. In the most recent election (May 2002), the PLP came back to power and its leader Perry Christie became the new prime minister. Christie promised to bring about more economic development to the tourism-dependent economy. He also vowed to further develop the country's fast-growing financial industry. Elections were scheduled for no later than May 2007.