The Naval government was dictated by the Act of March 3, 1917. Basically, the system of colonial government introduced by Denmark through the Colonial Law of 1906 was retained. The American government believed that this would allow the local residents feel secure, being that they were familiar with the laws. The U.S. congress was unwilling to establish a permanent government without more knowledge of the islands. This new government had a strict hierarchy. The President of the United States with the Senates approval appointed the governor. The responsibility for the islands fell under the Secretary of the Navy. This is not unusual for the time considering America's policy of gunboat diplomacy. The U.S. Navy had a huge influence in the Caribbean at the time especially in Haiti, Dominican Republic and Central America. Second in command on the islands was the Government Secretary, whom would act as Governor in the Governors absence. The chain of command went to the Dispatching Secretary and the then the Department Heads.
Admiral James H. Oliver is officially considered the first governor of the United State Virgin Islands. One of his first actions as governor was to send the President a report describing the conditions of the islands and its populace. Admiral Oliver reported that the islands were in a disgraceful condition. Admiral Oliver noted that roads, sanitation, education, hospitals, social conditions, fire protection, infant mortality, and agriculture were in desperate need of reorganization and repair. This might have reached the President as a surprise but it should not have. The islands experienced a number of inhibiting factors in the preceding fifty years under Danish rule. There had been a hurricane, earthquake, labor riots, and a neglect of Danish investment partially due to Denmark's economic problems but also because of the islands anticipated sell. The islands had been running at a loss and costing the Danish government for years.
