Historical Sketch

Christopher Columbus discovered the main island for the Europeans in 1493 and named them "Islas de once mil virgines". In the early 17th century, the islands came under Dutch authority until 1672, when they were passed to Denmark (western part) and England (eastern part). The Danish territory was initially administered by the West Indian Guinean Company, created for this purpose. After its failure in 1754, the Danish state took over. In 1917, Denmark sold its colony to the United States. The 1936 and 1954 Organic Acts have constituted the United States Virgin Islands as an unincorporated territory.

Monetary History Overview

The Danish West Indies Company obtained the right to issue silver and copper subsidiary coins in 1740. SInce they were intended for domestic circulation only, the rate against the Danish currency was fixed only in 1770. Thus, the Danish West Indian Thaler got defined at 80% of the Danish Thaler and, at the same time, the local subsidiary coins were devalued by one sixth. The Danish state bank Danish paper money as well as notes in local currency. The Danish state bankruptcy of 1813 did not affect the West Indian economy. In the 19th century, the Danish West Indies’ economy began orienting towards the United States rather than to the far away colonial power. In 1837, the Bank of St. Thomas, the dominant commercial bank of the islands, began issuing paper money in US currency. Local merchants put pressure on the colonial government to abandon the Danish accounting. In 1849, the currency was therefore reformed. The Danish West Indian Dollar was on par with the US Dollar, and US banknotes and coins were admitted in payments. Towards the end of the 19th century, the island economy collapsed. As a reaction to the economic crisis, the ties to the European economy should be reinforced. Since the adoption of the Scandinavian monetary standard was considered unpractical, the Danish West Indian Franc of 1905 adopted the gold standard of the Latin Monetary Union. The Thaler remained an auxiliary monetary unit equal to 5 Francs. The state-owned Danish West Indian National Bank began operations and issued paper money. The use of US currency remained tolerated. When the United States took over in 1917, the currency situation remained unchanged until the expiry of the National Bank's issuing privilege in June 1934. At that moment, United States Virgin Islands adopted the US Dollar, and Danish West Indian currency got demonetized within a year.

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