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“Iceland got its modern name from another visitor, the Norwegian Viking Flóki Vilgerðarson. The Landnámabók makes it clear that Flóki chose the uninviting name ísland (”ice land”) for the view of a distant fjord full of sea-ice that he glimpsed from a tall mountain. No doubt his choice was influenced by the fact that he was not at first taken with the land, and he bad-mouthed the place after his return to Norway. But eventually he changed his mind about it and moved there himself. The Landnámabók account is at odds with the common notion that Iceland was named for its glaciers, some of which are bigger than any in Europe.

You sometimes hear the story that Iceland was so named to discourage excessive immigration, but there seems to be no basis for this claim. Even if it’s true, it didn’t work very well. Between about 870 and 930, a period called the landnám, productive land in Iceland was free for the taking to all comers, and thousands of people immigrated from Norway, which was in political upheaval at the time. Landnám is usually translated “settlement,” but “land grab” is a more literal translation and comes closer to the point. Incidentally, the Irish priests disappeared around the beginning of the landnám, probably muttering to themselves, “There goes the neighborhood.”

Greenland got its name because its inhabitants sported blue-green skin from living near the sea. At least that’s what Adam of Bremen wrote (in Latin) in the eleventh century. As the old proverb says, “A fool, unless he knows Latin, is never a great fool.” I think it’s safe to say that Adam of Bremen was a great fool, at least on this point.

The real story behind the name is given in Erik the Red’s Saga, based on oral tradition and written down in the early thirteenth century in Iceland. After the Icelandic landnám was over, Erik the Red and his father Thorvald were forced to leave Norway because one or both of them was involved in killings (details are not given). After Thorvald died, Erik was involved in yet more killings, for which his punishment was three years’ vacation—er, I mean banishment from Iceland. (And you thought O. J. got off easy.)

He used the time to explore the rumored lands to the west. When his term of banishment expired, he returned to Icleand to invite his neighbors and friends to settle the new country with him. He purposely chose the pleasant name Grænland (”green land”) to attract settlers, but the choice wasn’t exactly misleading. Some parts of Greenland, especially the parts the Norse settled, really are green, as these pictures from the tourist board attest (www.greenland-guide.dk/outdoor_life_photo.htm). He may have been a killer, but at least he wasn’t a real-estate scam-artist. He didn’t have that much to gain by lying anyway, since he didn’t charge anyone for the land. As in Iceland a century before, the land was free for the taking. Natives had lived in the area in the past, but at the time of Erik’s voyage, only the northern part of Greenland was occupied by the Inuit (Eskimos).”

Here’s the source link:

http://www.straightdope.com/columns/read/1965/shouldnt-greenland-be-known-as-iceland-and-vice-versa