As a free port designed with inspiration from the Italian porto Franco and declared in 1775 by King Gustav III, it became an urban centre of commerce both legal and illegal, refuge of political and religious dissidents, and hideout of wanted criminals.

[4] King Charles XII, who spent most of his time in power waging the Great Northern War with all neighbouring states, received an offer from pirates sailing off Madagascar to resettle some them in Sweden in return for compensation, their ships joining the Royal Navy, with those remaining behind forming a Swedish colony.

[5] The very first proposal for a Swedish free port ("porto franco", based on the original Italian model, later developed throughout Western Europe) came in 1712, likewise during the reign of Charles XII, in regards to Slite (on the Baltic Sea coast of the island Gotland).

In 1747, amid the parliamentary chaos of the Age of Liberty when the rivalling Hats and Caps battled for supremacy in the Riksdag, some of the burghers of Marstrand made their own first proposal, asking that their town be given free port privileges.

In the process leading up to this, the burghers had attempted to build support for their idea, for example trying to persuade of the famous naturalist Carl Linnaeus (a noted proponent of autarky), at the time travelling through the area, to lobby for their cause.

In 1775 the plan finally bore fruit, in part due to the efforts of King Louis XV in previous years towards influencing the young Crown Prince Gustav in favour of the idea, as it was beneficial to France's economic interests.

In 1772, with French backing, the newly crowned Gustav III launched the Revolution of 1772, a bloodless coup d'état that overthrew the Riksdag and established the rule of would-be enlightened absolutism.

When visiting Marstrand in 1784, the autocratic king, who faced significant political resistance from many in Sweden, was warmly welcomed by Colonel Müller (Commandant of Carlsten Fortress), Mayor Ekström, the Council of Burghers, and many wealthy merchants.

[1] In 1784, as a consequence of commercial agreements with France, Gustav III gained the Caribbean island colony Saint Barthélemy and engaged in the slave trade to which the Bohuslän herring industry had ties as well.

[1] Judicial matters in the Marstrand Free Port were overseen by a set of Magistrates, while order was maintained by the Commandant of Carlsten Fortress, who held the title of Governor-General in the colonial fashion.

The Magistrates, tasked with ensuring Swedish law was followed, had no power to decide any measures without the co-operation of the Council of Burghers, and in more important matters, decisions had to be reviewed by Marstrand's inhabitants.

Immigration from both Sweden and all over Europe was encouraged, to bring in financial capital – if a person brought property in Marstrand, and resided there for two years, they received citizenship.

After permission was granted by Gustav III, part of Carlsten Fortress was rented out to the newly formed Jewish congregation for religious purposes.

[6][7] Many political refugees also came to Marstrand, especially hailing from the French Revolution, the outbreak of which in 1789 (and subsequent events) caused a large community of expatriate Frenchmen, both exiled aristocrats and dissident republicans, to form abroad.

There was some truth tin that since the Free Port's charter, in Gustav III's own words, stipulated that it was to be a safe haven for all manners of criminals.

Sometimes, employees of prominent herring trading houses would arrive in Marstrand while they carried a large sum of money intended for use in local investments, promptly signed up for a certificate and freely walked away with the funds.

Given the penal use of Carlsten Fortress, often for political prisoners, many of those convicted of participation of the 1788 Anjala conspiracy in which military officers plotted to force an end to the Russo-Swedish War (1788–90), and possibly to create an independent Finland were interned in Marstrand.

In 1792, the Free Port's royal creator and benefactor was assassinated by disgruntled noblemen, and the young Gustav IV Adolf was crowned.

At the same time, fears grew that the Free Port was being misused for personal (and above all, foreign) gain rather than royal (and local) profits, and the fight against smuggling became quite hopeless.