In the thread "Black Velvet Band- Again," B V B , and Malcolm's reference to threads with old and other versions of Black Velvet Band: Black V B , Black Velvet Band first appears in broadsides and collections in the British Isles is early 19th Century (Ian C, posting on Bodleian material, and ship data). It could be late 18th century.

The first appearance of the American "Girl in the Blue Velvet Band" is about 100 years later. In this thread, Malcolm Douglas points to a version in the Max Hunter Collection, sung in 1958. A very similar version was collected in Voices From The Dustbowl- the Todd and Sonkin Migratory Worker Collection, 1940-1941. The two versions must have come from the same source. It was recorded in Porterville or Woodsville, CA, in 1941. Audio on this song can be found by putting Blue Velvet band in the Search box of American Memory.

Spaeth was the first to note "Blue Velvet Band" in 1927. Vance Randolph collected the song in 1933, sung by Fred Barbee. Several versions were collected in the 1930s, including one by John A. Lomax who made a phonographic recording in 1938 in Michigan.
Speculation- it is possible that the song was brought into popularity in North America by soldiers returning after WW1, and later added to by hoboes and migrant workers. It appeared in a hobo song collection in 1930 ("Hobo's Hornbook"). Cowboys also liked the song; Johnson (1935) said it had been a favorite for "a quarter century or more." (Quoted from Randolph, Ozark Folk Songs, vol. 4, p. 115). Some versions run to many verses.

Here are the lyrics from the Migrant Worker Collection and comparisons with the version on Max Hunter. Several mis-hearings are evident in the Max Hunter version, so possibly Mr. Stilley took his version from this 1941 recording. The singer is unknown (no notes accompany the recording except date and approx. location).

THE GIRL IN THE BLUE VELVET BAND.

In the city of riches and fashion,
In Frisco where I first saw the light,
There were numerous adventures and frolics,
So rich in my memory tonight.

One evening while out on a ramble,
The hour was just about nine,
When I met a young maiden in Frisco,
On the corner of Perry (Peary?) and Pine.

On her face there was beauty of nature,
Her eyes they seemed to expand,
Her hair so rich and so brilliant
Entwined in a blue velvet band.

We walked down the old street together,
In my pocket she placed her small hand,
She planted the evidence on me,
O, the girl in the blue velvet band.

We heard the wild scream of the siren,
O, the girl in the blue velvet band,
She left me to face all the trouble,
For a diamond that was worth ten grand.

That night when bedtime was nearing,
I was strolling right close to the park(?),
I fancied I heard a voice calling,
Far out on the ocean of stars.

They sent me to San Quentin prison,
God knows I'm an innocent man.
I spent ten years in that prison,
For the girl in the blue velvet band.

I'll be out in a week, then I'm leaving,
But I carry the name of a man,
Who served ten years in that prison,
For the girl in the blue velvet band.

But when I get out I'll endeavor,
To live in some other land,
I'll bid farewell to old Frisco
And the grave of my blue velvet band.

There is no lead-up th the last sentence about the grave. In the Stilley version, one verse is:
They sent me to prison for stealin',
God knows, I'm an innocent man,
The guilty one is dying
O, the girl in the blue velvet band.

The audio may be heard at Search Box Enter blue velvet band.

The Stilley song lacks the verse "That night when bedtime was nearing, ...."
The first three verses are similar to those of the extended paste-up "The Blue Velvet Band" in the DT.