Denmark was the dominant power in the loose Scandinavian union that was established at the end of the fourteenth century, known as the Kalmar Union. Its power increased in the following centuries, but it never went unchallenged by its neighbors, first by the German Hanseatic League (led by the city of Lubeck) and then increasingly by Sweden, which broke definitively from the union in 1521. By the middle of the seventeenth century, Denmark was in continuous retreat as Swedish, Russian, and Prussian power rose in northern Europe. Norway was lost in 1814, and after 1864 the Duchies of Schleswig and Holstein were incorporated into the newly united Germany. The latter event brought a significant number of Danes under German rule, but shortly after World War I (1914–1918), the northern third of Schleswig (Slesvig) was returned to Denmark in 1920 under referendums supervised by the victorious western Allies.
Denmark's sole remaining tropical colony, the Virgin Islands, was sold to the United States in 1917. Iceland's independence, which was received in stages, was completed by 1944. By the mid-twentieth century, Denmark was a highly homogeneous small country, with only its north Atlantic territories (Greenland and the Faeroe Islands) serving as a reminder of its modest imperial past.
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