The transaction in which the United States purchased the Virgin Islands from Denmark involved a careful consideration of geopolitical interests. In the context of World War I, American leaders were increasingly concerned about the possibility of German expansion in the Caribbean and the threat it posed to U.S. security. The islands were strategically located, allowing the U.S. to monitor maritime activities and ensure the safety of shipping routes. Negotiations culminated in the signing of a treaty on August 4, 1916, but required ratification by both the U.S. Senate and the Danish parliament which was eventually obtained by early 1917.

Danish officials, notably Foreign Minister Peter Munch and the Danish government, recognized the necessity of the sale. The islands had been a part of the Danish colonial empire since the 17th century but had become increasingly expensive to maintain. The sale amount of $25 million was considered profitable for Denmark, given its historical investment in the territory. The U.S. officially took possession of the islands on March 31, 1917, marking a significant expansion of its influence in the Caribbean.

The transaction was also emblematic of the shifting power dynamics in the Western Hemisphere, particularly in light of the American policy, termed 'Dollar Diplomacy', which emphasized economic interests and territorial expansion. This purchase was not only about acquiring land; it signified a calculated move by the United States to secure its maritime borders and enhance its strategic military positioning in a time of global conflict.