Iceland was first settled, albeit temporarily, by Irish monks in the seventh century. The monks fled the island once the more permanent settlers, the Norse, started arriving in the ninth century. Ingolfur Arnarson, who arrived in 874, is credited with being the first permanent settler of Iceland. Arnarson came ashore at a place he named Reykjavik (Smoky Bay), so named after steam coming from thermal springs in the area.
Settlement is considered complete by 930, at which point the settlers recognized the need for a common code of law and some form of government, which had been nonexistant until then. A general assembly, called the Alþing, was set up as a venue for the most powerful men in the country to gather and issues rulings and dispense justice. Delegates would meet at Þingvellir for two weeks every year where new laws were decreed, judgements were passed, ciminals were punished and claims settled. It also became a venue for social activities where marriages were arranged and business deals made. At the Alþing on the year 1000, it was decreed that Icelanders should be a Christian nation rather than a pagan one.
This arrangement worked well for about two hundred years, until power struggles between chieftains and ineffective government led to violent feuding between private armies and the country started descending into chaos. It is also in that era that the Sagas were written about the feuding and settlement of Iceland among other things. While the writing of the Sagas is a cultural high point in the history of Iceland, it also marks the beginning of a long, dark period in the country's history. Following the violent feuding, Icelanders relinquished control of the Alþing and swore allegience to the Norwegian king. A string of natural catastrophies followed in the fourteenth century as the volcano Hekla erupted a number of times folloed by a mini-ice age and the Black Death, which killed two-thirds of the population. In 1380, both Norway and Iceland came under Danish rule. At the beginning of the 17th century, Swedish and Danish firms were given exclusidve trading rights in Iceland, which resulted in a system of corruption and importation of low-quality and damaged goods. The suffering continued in the 18th century with a deadly smallpox outbreak and many natural disasters, the most notable of which is the Laki eruption of 1783, which created the largest lava field of historical times as well as producing a poisonous haze, resulting in a famine that killed close to a quarter of the human population as well as the majority of the country's livestock.
In the 19th century, Iceland started moving towards independence. In 1874, Denmark granted Iceland a constitution and limited home rule, which was expanded in 1904. An agreement with Denmark signed on 1 December 1918, recognised Iceland as a fully sovereign state in a personal union with the King of Denmark. The Government of Iceland took control of its foreign affairs and established an embassy in Copenhagen. However, it requested that Denmark implement Icelandic foreign policy toward countries other than Denmark. On 20 May 1944, Icelanders overwhelmingly voted in favor of terminating the personal union with the King of Denmark and establishing a republic. Iceland declared itself an independent republic on 17 June 1944.
Following WWII, during which Iceland was occupied first by British and then American troops, Iceland joined the United Nations and in 1949 was a founding member of NATO. Iceland started expanding its exlusive fishing zone in the 1950s, which resulted in the so-called "Cod Wars" with the British, ending in 1975 with Iceland having established a 200-mile fishing zone.
More recently, Iceland has made the news for its economic collapse, which started in the fall of 2008 and looks like it will have repercussions for years to come.
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