Economic pressures led Britain to unilaterally withdraw from many overseas settlements in 1774, and they left Port Egmont on 20 May 1774, leaving a plaque asserting their continuing sovereignty over the islands.

In 1823, after its war of independence against Spain, the United Provinces granted land on East Falkland to Luis Vernet, who first travelled to the islands the following year.

In 1828, the United Provinces government granted Vernet all of East Falkland, including all its resources, with exemption from taxation if a colony could be established within three years.

In 1831, Luis Vernet with his newly created authority, used the services of a Captain Brisbane in the ship Betsy to capture three US vessels (Breakwater, Superior and Harriet) that were hunting seals in Falklands waters.

[6] Vernet returned to the mainland, bringing senior officers of the US vessels to stand trial for violating restrictions on seal hunting.

[7] The islands were declared free from all government, the seven senior members of the settlement were arrested for piracy[8] and taken to Montevideo,[3] where they were released without charge on the orders of Commodore Rogers.

The Buenos Aires government commissioned Major Esteban Mestivier as the new governor of the islands, to set up a penal colony, but when he arrived at the settlement on 15 November 1832 his soldiers mutinied and killed him.

[3] Under the command of Captain John James Onslow, the brig-sloop HMS Clio, previously stationed at Rio de Janeiro, reached Port Egmont on 20 December 1832.

[10]Pinedo entertained plans for resisting, but did not because of his obvious numerical inferiority and the allegiance of enough nationals among his crew (approximately 80% of his forces were British mercenaries who refused to fight their countrymen).

Onslow persuaded them to stay by paying them in silver for provisions and promising that in the absence of Vernet's authority they could earn their living from the feral cattle on the islands.

The British vessels did not stay long and departed two days later, leaving William Dickson (Vernet's storekeeper) in charge of the settlement.

Argentina claims that the population of the islands was expelled in 1833;[11] however, both British and Argentine sources from the time, including the log of the ARA Sarandí, suggest that the colonists were encouraged to remain under Vernet's deputy, Matthew Brisbane.

Meeting with Captain Fitzroy of the Beagle, he was encouraged to continue with Vernet's enterprise provided there was no attempt to further the ambitions of the United Provinces.

[12] Like Onslow before him, Fitzroy was forced to use his powers of persuasion to encourage the gauchos to continue working in Vernet's establishment: During the month we remained in Berkeley Sound, I had much trouble with the crews of whaling or small sealing vessels, as well as with the settlers, who all seemed to fancy that because the British flag was re-hoisted on the Falklands, they were at liberty to do what they pleased with Mr. Vernet's private property, as well as with the wild cattle and horses.

Instead of the cheerful little village I once anticipated finding – a few half-ruined stone cottages; some straggling huts built of turf; two or three stove boats; some broken ground where gardens had been, and where a few cabbages or potatoes still grew; some sheep and goats; a few long-legged pigs; some horses and cows; with here and there a miserable-looking human being – were scattered over the fore-ground of a view which had dark clouds, ragged-topped hills, and a wild waste of moorland to fill up the distance.

In 1834 on his second visit Charles Darwin commented that: After the possession of these miserable islands had been contested by France, Spain, and England, they were left uninhabited.

In Buenos Aires, Vernet was effectively bankrupt and attempts to obtain compensation from the US Government for losses from the Lexington raid proved fruitless.