Misty of Chincoteague is a work of fiction, but the characters are based on real people and horses. The background about Chincoteague Island, Assateague Island, and Pony Penning Day is largely accurate to historic reality. Assateague is a long barrier island off the coast of Maryland and Virginia, and Chincoteague is a smaller piece of land sheltered by Assateague to the east and mainland Virginia to the west. For hundreds of years, wild ponies have lived on Assateague. There is much debate about how they got there; Marguerite Henry describes one possibility—that the original horses were lost off a sinking Spanish galleon and found their way to Assateague. Others speculate that the original herd escaped from early Virginia colonies on the mainland, while some believe they were intentionally hidden on Assateague so their owners would not have to pay taxes on them. The galleon story remains the most popular locally and is the history that the Chincoteague Fire Department stands by to this day. Supporters of this theory cite the multiple shipwrecks off the coast of Assateague and the unlikelihood that colonists would allow their valuable livestock to escape or intentionally make them live in the rugged climate of the island.