The town, which consists of a maze of tiny streets, has a tradition of smuggling, and there is reputed to be a network of subterranean passageways linking the houses. During the late 18th century smuggling was rife on the Yorkshire coast. Vessels from the continent brought contraband which was distributed by contacts on land and the operations were financed by syndicates who made profits without the risks taken by the seamen and the villagers. Tea, gin, rum, brandy and tobacco were among the contraband smuggled into Yorkshire from the Netherlands and France to avoid the duty.

In 1773 two excise cutters, the Mermaid and the Eagle, were outgunned and chased out of the bay by three smuggling vessels, a schooner and two shallops.   A pitched battle between smugglers and excise men took place in the dock over 200 casks of brandy and geneva (gin) and 15 bags of tea in 1779.

http://en.wikipedia.org/wiki/Robin_Hood%27s_Bay