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.

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.

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.

Recommended

When will interest rates go up?
UK Economy

When will interest rates go up?

New interest rates will be announced this month – we look at whether they will go up and what the impact will be.
5 Dec 2022
Heated airer vs tumble dryer – which is cheaper?
Personal finance

Heated airer vs tumble dryer – which is cheaper?

What is the most cost effective way to dry your clothes – a heated airer or a tumble dryer? We compare the costs.
5 Dec 2022
Best savings accounts – December 2022
Savings

Best savings accounts – December 2022

Interest rates on cash savings are making a comeback. We look at the best savings accounts on the market now
5 Dec 2022
Scottish Mortgage managers reassure investors about its recent poor performance
Investment trusts

Scottish Mortgage managers reassure investors about its recent poor performance

After a spectacular couple of decades, the Scottish Mortgage Investment Trust has fallen by 40% this year. As its managers address shareholder concern…
5 Dec 2022

Most Popular

Is it cheaper to leave the heating on low all day?
Personal finance

Is it cheaper to leave the heating on low all day?

The weather is getting colder and energy bills are rising, but is it really cheaper to leave the heating on low all day or should you only turn it on …
1 Dec 2022
Radiator vs electric heater – which is cheaper?
Personal finance

Radiator vs electric heater – which is cheaper?

We compare the costs, pros and cons of radiators and electric heaters and see which one will help keep your energy bill as low as possible.
28 Nov 2022
State pension errors – why tens of thousands of mothers could be missing out on millions in state pension payments
State pensions

State pension errors – why tens of thousands of mothers could be missing out on millions in state pension payments

LCP launches Mothers Missing Millions campaign amid DWP state pension errors.
3 Dec 2022