The people of Marstal were very active which often made them fall out with the authorities. All trade was supposed to pass through the priviliged market towns - which Marstal was not - and thiscircumstance resulted in vivid illicit traffic.

Also there was the odd consequence of the nationality of the island that the ships from Ærø were regarded Danish in the duchies - and Slesviger duchy in the Kingdom. That meant something in relation to harbour fees and customs duties, and in fact placed Ærø in an unfortunate position to the Dutchmen who were permitted equal terms with the Danes. As far as the town privileges were concerned they were comparatively easy to evade. The privileges made goods expensive, and the farmers were more than willing to by-pass regulations that cost themselves money. So Ærøskøbing with its monopoly often complained about the trade of Marstal, and so did at one time all the market towns of the islands Lolland and Falster. Understandably as the tonnage of their towns were decreasing at the speed Marstal increased theirs. The illicit trade was the foundation of Marstal and thus both recognised and accepted by the people themselves. A circumstance that lasted until 1729 when the two points Gudsgave and Søbygård passed on to the King.
The central part of the island followed in 1750, and from that year Ærø was united. Again Marstal exploited the situation of being recognised as royal vessels some twenty years before Ærøskøbing obtained the same privilege.
Around 1750 Ærø appeared much different from today. The farms were joined in villages as in the days of Arild, and the land was cultivated by inexpedient methods that did not reach the standards of the rest of the country. The peasants were impoverished by the war with Sweden in 1658- 59, when the occupying armies had exploited and looted the population. A catastrophe that it took years to overcome. Most of the old forests were felled, including Gudsgave, and what was left a.o. at Borgnæs the Swedes chopped up as firewood. They left a ruined landscape and did not even spare the timber of the buildings and houses.
A major part of the farmland was managed by four estates through villeinage, but in the 1760'es the government parted with them and they were divided into smaller lots - with the exception of a couple of larger farms. These smaller lots were hired to the local population against annual fees. In 1767 the estates of Gråsten and Voderup were sold, the farms demolished and the same year Gudsgave burned down to the ground and the land was leased the following year. In 1772 the same leasing system happened to Søbygård, leaving only part of the land to the farm itself.
The next decade brought the reformation of agriculture in Denmark, which meant that the island could support a larger population. On the 10th of January 1787 the King donated the copyhold farms of the island to the copyholds themselves free of charge!
The name of the King was Christian the VIIth who was openly considered insane from 1768 onwards. His personal physician Struensee conducted the government 1770-72, but the significant occurrence took place during the administration of Ove Høegh-Guldberg (1772-84). The favourable conditions of trade and shipping towards the turning of the century meant simultaneous prosperity to Marstal and Ærøskøbing, both expanded their commercial fleets. In Ærøskøbing the town square and the church were placed in the centre of the town by the Brandenburger margraves.
Through the years its many merchants and high officials added beautiful town houses to the city. Many of which are protected today and adds to the unique atmosphere of Ærøskøbing.
Somewhat different was the ground-plan - or rather the lack of it - in the rapidly expanding naval community on the eastern corner of the island. The harbour was the centre of building activities, and in itself protected by banks of sand and natural leeward.
For years it was left at that, but as the fleet of sailing ships and schooners grew, a giant mole building began in 1825. Founded on voluntary labour it featured dock space and quays and created the profile Marstal displays today. The town did not grow around a square or a church, its houses were simply erected along the paths leading upwards from the jetties. As the town grew transverse ring-roads were added, and the narrowness of the settlement often meant that the houses were placed somewhat coincidentally.
The frugal naval population did not erect resplendent buildings, a consequence of which none of the houses in Marstal are protected by law today. The significance of the town is the manyfold, uncivilised, colourful charm of it. In naval respects Marstal became the dominating factor.