The Acquisition of the Virgin Islands: A $25 million US-Denmark Gold Deal

Unveiling the $25M US-Denmark Gold Deal: And American Expansion

The Virgin Islands are located in the Caribbean, which spans a wide expanse of islands extending from the coast of Florida to the islands just north of Venezuela. This sprawling region encompasses hundreds of islands and cays, forming a captivating landscapes. The Virgin Islands are shared between the United States and the United Kingdom, resulting in the United States Virgin Islands (USVI) and the British Virgin Islands (BVI). The USVI consists of four main islands: St. Croix, St. Thomas, St. John, and Water Island, along with approximately 50 smaller islets and cays. The total land area of the USVI is 133 square miles. 

According to the definition provided in section 101(a)(38) of the Immigration and Nationality Act (INA), the U.S. Virgin Islands are considered part of the United States. Therefore, people born in the U.S. Virgin Islands acquire U.S. citizenship in the same way as those born in any of the 50 states.


Charlotte Amalie St.Thomas, USVI from "Mariner of the Seas"
Image Source: Google, Charlotte Amalie St.Thomas


The U.S. Virgin Islands are an unincorporated territory of the United States (not a separate country). As such, they are under the sovereignty of the United States government. While the U.S. Virgin Islands have their own local government, they are not considered an independent nation.

Prior to the transfer to the United States, Denmark held a colony in the Caribbean called the Danish West Indies from 1672 to 1917. This colony encompassed the islands of St. Thomas, St. John, and St. Croix. 

The acquisition of the U.S. Virgin Islands in 1917 marked a significant turning point in the territorial expansion of the United States. Amidst the turmoil of World War I, this strategic purchase from Denmark not only secured American interests in the Caribbean but also set the stage for the islands' modern development. In this article, we delve into the historical context, motivations behind the acquisition, and the subsequent impact it had on the U.S. Virgin Islands.

💻 Table of Contents:

  1. Historical Background: Danish West Indies and Early Settlements
  2. American Interests and Motivations
  3. Negotiations and The Treaty of the Danish West Indies
  4. Impact on the U.S. Virgin Islands
  5. Economic Development and Tourism
  6. Modern Status and Future Prospects


Historical Background: Danish West Indies and Early Settlements

Similar to numerous other islands in the Caribbean, the history of the Virgin Islands is marked by the presence of native Amerindian communities, European colonization, and the significant impact of the Atlantic slave trade. For nearly 250 years, Denmark held colonial power in the West Indies, including the Virgin Islands. The Danish West India Company established the colony between 1672 and 1733, eventually leading to the islands being known as the Danish West Indies from 1754 under the direct control of the King of Denmark. 

The Høgensborg estate on St. Croix, Danish West Indies drawn by Frederik von Scholten June 1838.
Image Source: Google, Danish West Indies


In 1848, a slave rebellion prompted the abolition of slavery in the Danish territories, resulting in the collapse of the plantation economy. Due to mounting deficits, the Danish government made several attempts to sell the islands. Finally, in 1917, after extensive negotiations, the United States purchased the islands, which officially became an unincorporated U.S. territory in 1927.

To understand the acquisition of the U.S. Virgin Islands, we must delve into their colonial past. The islands—St. Thomas, St. John, and St. Croix—were initially inhabited by the Ciboney, Taino, and Carib indigenous peoples.  In the late 17th and early 18th centuries, Norwegian explorers, scientists, and Danish merchants established control over the Danish West Indies, comprising present-day U.S. Virgin Islands. Colonies were established on St. Thomas in 1665, St. John in 1683, and St. Croix in 1733 (was acquired from France).

The economy thrived on sugar cane production, fueled by slave labor. Despite the abolition of the slave trade in 1803, slavery continued until 1848. The islands also served as a base for pirates. British and Dutch settlers became prominent, leading to the predominance of their languages.

In 1814, Norway was ceded to Sweden, but Norwegians maintained ties to the islands. Economic downturn led to population decline from the 1840s onwards. Denmark's attempts to sell the colony to the United States were initially rebuffed, but in 1917, the United States purchased the islands, marking the end of Danish rule.


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American Interests and Motivations:

The United States purchased the U.S. Virgin Islands from Denmark in 1917 for several key reasons. One of the primary motivations was strategic military interests. The U.S. government recognized the islands' strategic location in the Caribbean, providing a valuable outpost for naval operations and defense.

Charlotte Amalie, St Thomas, US Virgin Islands
Image Source: Google, St. Thomas, US Virgin Islands

Additionally, the acquisition was fueled by economic considerations. The U.S. saw the potential for economic development and trade opportunities in the Caribbean region. The islands' natural resources, including their agricultural potential and natural harbors, were attractive to American business interests.

Furthermore, the United States aimed to secure its influence in the Western Hemisphere and protect its interests in the Caribbean. By acquiring the U.S. Virgin Islands, the U.S. asserted its presence in the region, ensuring stability and safeguarding against potential European encroachment.

Overall, the purchase of the U.S. Virgin Islands was driven by a combination of strategic, economic, and geopolitical factors, reflecting the United States' desire to expand its influence and protect its national interests in the Caribbean.

Negotiations and The Treaty of the Danish West Indies:

Every on March 31st, the U.S. Virgin Islands of Saint Thomas, Saint John, and Saint Croix observe "Transfer Day," which commemorates the significant sale of the islands from Denmark to the United States. It is the only U.S. territory that the country acquired through a purchase from another imperial power, following over 50 years of negotiations before the transfer of power in 1917.

Efforts intensified during World War I, as fears of German aggression heightened. In 1915, President Woodrow Wilson and Secretary of State Robert Lansing initiated negotiations with Denmark, concerned that German control of the islands could threaten American interests in the Caribbean.

After protracted discussions, a treaty was finally signed in 1916, meeting Danish demands for a local plebiscite, U.S. citizenship for islanders, and free trade. The treaty was ratified by both Danish and U.S. legislatures, culminating in the formal transfer of the islands on March 31, 1917, for a sum of $25,000,000 in gold coin (equivalent to $672 million in 2024).


Signing of the check for the purchase of Danish West Indies, March 1917. Secretary of Treasury William McAdoo, Secretary of State Robert Lansing, and Ambassador Constantin Brun. Vice-Admiral James H. Oliver, the first American governor, is pictured at the extreme left.
Image Source: Google, Signing check to Danish Gov't.for purchase of Danish West Indies, March 1917


Under U.S. administration, the islands initially fell under the governance of the U.S. Navy until 1931. In 1932, full citizenship rights were granted to residents, and further autonomy was established in 1936, although a locally elected governor wouldn't be installed until 1970.

The acquisition marked a significant chapter in the history of the U.S. Virgin Islands, bringing forth a new era of governance and identity within the American territorial framework and renaming the territory the United States Virgin Islands.

Impact on the U.S. Virgin Islands:

The acquisition of the U.S. Virgin Islands brought about significant changes for the local population. The islands experienced a shift from Danish to American governance, leading to alterations in legal, political, and economic systems. The U.S. government introduced reforms, such as establishing English as the official language and implementing American-style education. The islands' infrastructure was also improved, including the construction of roads, schools, and healthcare facilities.

Economic Development and Tourism:

Under American administration, the U.S. Virgin Islands underwent a transformation from an agrarian economy to one focused on tourism. The islands' natural beauty, pristine beaches, and favorable climate attracted visitors from around the world. The U.S. government invested in tourism infrastructure, including hotels, resorts, and airports, to capitalize on this potential. Today, tourism remains a vital sector of the U.S. Virgin Islands' economy.

In 2023, the U.S. Virgin Islands (USVI) played a significant part in the Caribbean's tourism growth, which was in the double digits. The USVI also had strong tourism revenue, totaling $343.4 million in 2023. Although this was slightly lower than the record-breaking $360.53 million achieved in 2022. Across the territory, hotel occupancy stood at 61.8%, and the average daily rates were $463.23. These rates are much higher than the regional average of $318.81.


Michael Jordan's modest vacation residence is located on the island of St. Thomas, where he shares a neighborhood with Madonna and Michael Jackson.
Image Source: Google, Michael Jordan's St.Thomas home


Modern Status and Future Prospects:

Since 1917, the U.S. Virgin Islands have remained an unincorporated territory of the United States. Although residents are U.S. citizens, they do not have voting representation in Congress. The islands have faced challenges such as economic disparities, natural disasters, and environmental concerns. However, efforts are being made to diversify the economy, promote sustainable development, and address social issues.

Conclusion:

The acquisition of the U.S. Virgin Islands in 1917 was a pivotal moment in the history of both the United States and the islands themselves. This strategic purchase solidified American influence in the Caribbean and set the stage for the islands' modern development. Today, the U.S. Virgin Islands stand as a testament to the complex dynamics of territorial expansion, colonial legacies, and the aspiration for self-determination.

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