Lord Proprietor of the Isles of Scilly
In 1834, Smith was informed by the Duchy of Cornwall that they had won a lawsuit against the Commissioner of Woods and Forests, and that the Isles of Scilly were again available for lease. At this time, the Islands were administrated by a body known as the Council of Twelve, who derived their authority from the Duke of Leeds. The 6th Duke, George Osborne, had since given up the lease to the Islands, so the Council lacked its claimed authority. Due to this, as well as the lack of magistrates due to the absence of any local property owners, the Islands had become increasingly lawless. Moreover, due to the then-popular local practice of parents dividing their land between all of their children, farm holdings had become increasingly smaller and confusing, with many of the individual holdings being too small to sustain those who occupied them.
Smith signed a 99-year lease for the Islands for £20,000 (equivalent to £2,000,000 in 2025) on 20 November 1834, and became the Lord Proprietor of the Isles of Scilly, having visited the islands himself to assess them. In return, Smith was to pay a £40 a year rent to the Duchy, as well as spend £5,000 on building a new church and quay for St Mary's. He was also to be responsible for selecting and employing the Island's teachers and clergy. Smith gave himself the title of Lord Proprietor when he took on the lease for the islands.
In March 1835, Smith, along with five others, became Magistrates for the Islands. Smith did not allow any clergy members onto the magistrates bench, due to their perceived "propensity for causing trouble". Smith employed W.T. Johns as his agent.
After becoming the Lord Proprietor, Smith began to introduce numerous Benthamist reforms to the Isles of Scilly. Smith's proposed reforms were included in four main points. Firstly, he wanted all local children to have an education. Secondly, he would consolidate all the local farms to form larger, more sustainable holdings. Thirdly, he would eliminate the common practice of smuggling by providing better employment to all. Fourthly, he would encourage tenants an incentive to improve their holdings by giving them security of tenure. These reforms were very unpopular with the local population. Smith's consolidation of all the smaller holdings necessitated the eviction of many tenants, while his other reforms regarding smuggling and education were met with much scorn from the local residents.
By 1836, Smith had completed the first stage of his new residence on Scilly, Tresco Abbey. Smith did not build his residence on St Mary's as many expected, instead building it on Tresco, on a ridge which had a view over all the Isles of Scilly. During the late 1830s, Smith was also able to complete construction on both the new church on St Mary's and the new quay.
In 1840, after the missionary organization Society for Promoting Christian Knowledge, who had been the primary providers of education, left the Islands, Smith took responsibility for providing education and schools. He allegedly introduced a one penny charge for attending school, but a two penny fine for those who did not attend, effectively introducing compulsory education to the Islands thirty years before it was introduced on the mainland; however, there is no evidence for this claim. Regardless, Smith had much success in promoting education on the islands, with both adults and children attending school.
During the 1850s, Smith started an Ostrich farm, and exported the feathers to London for use in feathered hats.
In 1855, Smith depopulated the island of Samson. He then started a deer park on the island, but they escaped their enclosure and traveled to the less barren Tresco. Following this, he introduced black rabbits to the island.
