First settled by the Dutch in 1648, the islands were annexed in 1672 by the English. The economy is closely tied to the larger and more populous US Virgin Islands to the west; the US dollar is the legal currency.
The Virgin Islands were discovered by Columbus in his second voyage, in 1494, and named Las Virgenes, in honor of St. Ursula and her companions. He also gave Virgin Gorda (Fat Virgin) and Anegada (Sunken Island) the names that remain today. Prior to European discovery, both Arawak and Caribs Indians had been on the islands with the Caribs having possession when Columbus arrived.
The Spanish did little with the Virgin Islands. They concentrated their efforts on Virgin Gorda where they mined silver in the early 17th Century. They were attacked repeatedly by Indians and pirates. Famous pirates who frequented the waters of the Virgin Islands included Henry Morgan and Blackbeard.
In 1666, the British established themselves on Tortola, which has ever since remained in their possession. The Dutch established a settlement on Tortola in 1648 but they were removed by the British in 1672. The Danish (now American) islands of St Thomas and St John were taken by the British in 1801, but restored in the following year. In 1807 they surrendered to the British, and continued in their hands till 1815, when they were again restored.
The British established a plantation system on the islands growing sugar cane with the assistance of slave labor. Products produced included sugar, cotton, rum, indigo and spices. Slavery was abolished on the islands in 1830 and all slaves were set free. The slave emancipation was hard on the economy and the islands suffered for almost a century thereafter.
In June 2003, Orlando Smith led the National Democratic Party to election victory, ending 17 years of rule by the Virgins Islands Party.
The economy, one of the most stable and prosperous in the Caribbean, is highly dependent on tourism, generating an estimated 45% of the national income. An estimated 350,000 tourists, mainly from the US, visited the islands in 1998. Tourism suffered in 2002 because of the lackluster US economy. In the mid-1980s, the government began offering offshore registration to companies wishing to incorporate in the islands, and incorporation fees now generate substantial revenues. Roughly 400,000 companies were on the offshore registry by yearend 2000. The adoption of a comprehensive insurance law in late 1994, which provides a blanket of confidentiality with regulated statutory gateways for investigation of criminal offenses, is expected to make the British Virgin Islands even more attractive to international business. Livestock raising is the most important agricultural activity; poor soils limit the islands' ability to meet domestic food requirements. Because of traditionally close links with the US Virgin Islands, the British Virgin Islands has used the dollar as its currency since 1959.
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