In 1525 Portuguese navigators in search of the Spice Islands (Indonesia) came upon Yap and Ulithi. Spanish expeditions later made the first European contact with the rest of the Caroline Islands. Spain claimed sovereignty over the Caroline Islands until 1899. At that time, Spain withdrew from its Pacific insular areas and sold its interests to Germany, except for Guam which became a US insular area.
Japan began its formal administration under a League of Nations mandate in 1920. During this period, extensive settlement resulted in a Japanese population of over 100,000 throughout Micronesia. The indigenous population was then about 40,000. Sugar cane, mining, fishing and tropical agriculture became the major industries.
World War II brought an abrupt end to the relative prosperity experienced during Japanese civil administration. By the War's conclusion most infrastructure had been laid waste by bombing, and the islands and people had been exploited by the Japanese Military to the point of impoverishment.
The United Nations created the Trust Territory of the Pacific Islands (TTPI) in 1947. Ponape (then including Kusaie), Truk, Yap, Palau, the Marshall Islands and the Northern Mariana Islands, together constituted the TTPI. The United States accepted the role of Trustee of this, the only United Nations Trusteeship to be designated as a "Security Trusteeship," whose ultimate disposition was to be determined by the UN Security Council. As Trustee the US was to "promote the economic advancement and self-sufficiency of the inhabitants."
The President of the US appointed a High Commissioner of the TTPI, and he, in turn, appointed an administrator for each of the "Districts" mentioned above. The TTPI remained under the civil administration of the US Navy Department until 1951, when authority passed to the Department of the Interior. In 1979, upon implementation of the FSM Constitution, the US recognized the establishment of the FSM national and state governments. Self- sufficiency, however, remained a dim prospect, in part because private-sector growth had never been encouraged by the TT Administration.
On July 12, 1978, following a Constitutional Convention, the people of four of the former Districts of the Trust Territory, Truk (now Chuuk), Yap, Ponape (now Pohnpei) and Kusaie (now Kosrae) voted in a referendum to form a Federation under the Constitution of the Federated States of Micronesia (FSM). United Nations observers certified this referendum as a legitimate act of self- determination. Thereby, the people reasserted their inherent sovereignty which had remained dormant, but intact, throughout the years of stewardship by the League of Nations and the United Nations.
Upon implementation of the FSM Constitution on May 10, 1979, the former Districts became States of the Federation, and in due course adopted their own State constitutions. Nationwide democratic elections were held to elect officials of the National and four State governments. The Honorable Tosiwo Nakayama, the former President of the Congress of Micronesia, became the first President of the FSM and formed his Cabinet. The new Congress of the FSM convened, elected the Honorable Bethwel Henry as Speaker, and began to enact laws for the new Nation. A judicial system was established pursuant to the National and State constitutions. Thereupon, the United States entered upon a period (1979-86) of orderly transfer of governmental functions consistent with the terms and intent of the UN Trusteeship Agreement.
The Compact of Free Association with the US was signed on October 1, 1982, and entered into force on November 3, 1986.
The Federated States of Micronesia became a member of the United Nations on September 17, 1991.