After futile negotiations on selling the islands to the U.S., the Danes launched a range of reforms. But they were fairly half-hearted and insufficient to relieve the social distress.
A sale agreement is reached in 1916
The Americans were still interested in taking over the islands. They were increasingly afraid that the Germans would beat them to the punch and establish a naval base there. When World War 1 broke out in the summer of 1914, the challenges in the colony only worsened. The international trade and shipping on St. Thomas was almost stopped, and that also applied to the connection with Denmark.
The neutral U.S. approached Denmark yet again and made it clear this time that now they wanted the colony. After intense negotiations, they agreed on a sale treaty in 1916. The price was high: 25 million dollars in gold. In the U.S., the deal went through Congress at record speed. But in Denmark, new intense discussions began again between those in favor and those against. In this unsettled situation, the Parliament chose to leave the matter to the population in a referendum. This was a new opportunity that the Danish constitution of 1915 had made possible.
Thus, in 1916 the question about whether or not to sell the islands in the West Indies became the first-ever referendum in Denmark. The Danes emphatically said yes to the sale: 64 percent in favor. Then the Parliament could approve the agreement, and the islands were transferred to the U.S. on March 31, 1917. Most Danes quickly left the old colony and returned home to Denmark.
Why did Denmark decide to sell the Danish West Indies to the USA in 1917?
In short, because the islands were already an economic drain and their renewed strategic importance made them as likely to be captured by the Germans as they were likely to turn a profit. The US was the best candidate for a sale, and so Denmark had been negotiating just such a sale since at least 1902.
In more detail, financial ruin had characterized most of the West Indies since the slaves were freed in 1848. The sugar plantations had been the only source of revenue and growth for the islands, and without the cheap workforce, those plantations weren’t viable. The workers on the islands demanded wages too high to compete, and the economic conditions led to general dissatisfaction, manifesting in several successive strikes and revolts.
The only exception was the port of Charlotte Amalie, and the port in particular became relevant again when the Panama Canal was finished in 1914. At this point, however, the islands had already been a drain on the kingdom’s budget for a few decades, so any advantage to be derived from them had not yet appeared.