4 August 1916: The United States buys the Danish Virgin Islands

On this day in 1916, the United States bought a group of Caribbean islands from Denmark, renaming them the Virgin Islands of the United States.

US Secretary of State Robert Lansing hands Constantin Brun a draft for $25,000,000 © Bettmann Archive/Getty Images
US Secretary of State Robert Lansing hands Constantin Brun a draft for $25,000,000
(Image credit: © Bettmann Archive/Getty Images)

Most of us can only dream of following in the sandy footprints of Sir Richard Branson by buying a slice of paradise in the Virgin Islands. But the Virgin Group founder was by no means the first: 99 years ago, the United States bought a whole bunch of islands in the Caribbean archipelago from Denmark, but for very different reasons.

The Danes had settled the two big islands east of Puerto Rico – Saint Thomas and Saint John – by the 1710s, and bought Saint Croix, the larger island to the south, from France in 1733.

For the rest of the century, the islands flourished by growing tobacco, indigo, cotton, ginger, and, of course, sugar cane, with Saint Croix becoming the sixth most productive sugar island in the Caribbean. In Saint Thomas, Denmark gained a trading post in the Americas, which also, sadly, became a focal point for the slave trade.

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But as the decades wore on, the economy declined. Slavery was eventually swept away, and sugar could be grown more cheaply elsewhere, including in Europe, where sugar beet was now produced. By the middle of the 19th century, the Danish Virgin Islands had started to weigh on the exchequer in Copenhagen.

Yet, despite enquiries made by the Americans, Denmark decided to hang on to their islands until 1867, when Denmark accepted an offer from Secretary of State William Seward for $7m. But due to domestic politics back in Washington, the deal fell through.

The opening of the Panama Canal in 1914 gave the United States another reason to want to get their hands on the islands, believing they would be better able to protect the canal's approaches. The eruption of the First World War that year made the matter all the more urgent. Washington feared that if Germany invaded Denmark, then the islands would become a base for German submarines in the Caribbean.

This gave the Americans all the leverage they needed. If Denmark wouldn't sell the islands, they would simply take them. Preferring the first option, the Danes agreed to a price of $25m, the equivalent of just over half a billion dollars in today's money.

Secretary of State Robert Lansing and the Danish minister to the United States, Constantin Brun, signed the transfer on 4 August 1916 in New York. The following year, on 31 March, the United States took formal possession of the islands.

Chris Carter

Chris Carter spent three glorious years reading English literature on the beautiful Welsh coast at Aberystwyth University. Graduating in 2005, he left for the University of York to specialise in Renaissance literature for his MA, before returning to his native Twickenham, in southwest London. He joined a Richmond-based recruitment company, where he worked with several clients, including the Queen’s bank, Coutts, as well as the super luxury, Dorchester-owned Coworth Park country house hotel, near Ascot in Berkshire.

Then, in 2011, Chris joined MoneyWeek. Initially working as part of the website production team, Chris soon rose to the lofty heights of wealth editor, overseeing MoneyWeek’s Spending It lifestyle section. Chris travels the globe in pursuit of his work, soaking up the local culture and sampling the very finest in cuisine, hotels and resorts for the magazine’s discerning readership. He also enjoys writing his fortnightly page on collectables, delving into the fascinating world of auctions and art, classic cars, coins, watches, wine and whisky investing.

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