Spanish explorers first contacted the islands in the sixteenth century, but they were named after the British explorer, Captain John Marshall, who charted the area in 1788. The islands were largely ignored until the early 1800s. At that time, whaling ships began more frequent visits for water and refreshment, and in 1852, American missionaries moved from Hawaii to establish stations there. The Protestant mission legacy remains strong today. Later in the 19th century, the demand for coconut oil and copra (the dried meat of the coconut), brought the Marshalls into a new kind of economy. German trading interests became predominant, resulting in the establishment of a protectorate in 1885. When Germany lost World War I, Japan was given the Marshall Islands and other Pacific islands as a mandate of the League of Nations.
The Japanese have been described as the only committed colonizers of the Marshall Islands, which was one of six districts of Japanese administration. Copra production and education were expanded during the early years, but in the 1930s, Japanese preparations for war became a high priority. World War II had a terrible impact on the islands as fighting killed many of the local population while bombing devastated the landscape. When the Americans established military control in 1944, they found the Marshall Islands to be of strategic importance. For a half-century, this perspective has shaped the political changes which are now clearly visible in the modern RMI.
In 1947, the United Nations (UN) established the Trust Territory of the Pacific Islands (TTPI), including most of the Micronesian islands. The United States was given authority for administration and charged with responsibility for islanders' welfare. The United States's special interest in the Marshalls became clear when nuclear tests were carried out from 1946 to 1956 at Bikini and Enewetak atolls. These tests meant relocation of whole island populations. Except for such military activities, little was done to develop the islands in more constructive ways until the 1960s. In 1961, the first UN visiting mission was critical of U.S. administration in TTPI, and a 1962 polio epidemic in the Marshalls drew further attention to islanders' needs. As a result of these and other developments, U.S. appropriations for the TTPI as a whole went from US $7.5 million to over US $100 million by 1978. Other significant developments included the formation of the Congress of Micronesia, a territory-wide legislature, to press the United States on issues of importance to islanders. In 1966, large numbers of Peace Corps volunteers entered the territory and other social programs associated with U.S. president Lyndon Johnson's "Great Society" were introduced .
In 1979, the Marshall Islands chose to form their own constitutional government, reflecting their special relationship with the United States. Marshallese were reluctant to share with the rest of TTPI the large sums of money they were receiving from the U.S. government. In addition to various kinds of compensation for past nuclear testing, the United States had, since 1959, been leasing Kwajalein Atoll to test missile guidance and antiballistic missile defense systems. As other parts of the TTPI chose separate constitutional arrangements, negotiations began with the goal of ending U.S. administration.
These negotiations eventually produced the Compact of Free Association (CFA) that defined the United States's relationship with the three new nations—the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau—that had formerly been part of TTPI. In 1983, 59% of Marshallese voted in favor of CFA in plebiscites held in these three states and the compact became effective in 1986.
The CFA was a complicated document, and was still subject to interpretation even after its official expiration in 2001. What is significant for the Marshallese are the special financial arrangements connected to nuclear and conventional missile testing. There is very little economic base other than these payments, which began to decrease in the 1990s after the break-up of the Soviet Union, signaling the end of the Cold War. RMI uses the U.S. dollar as currency, and the largest cash employers are the government, followed by the commercial and retail sectors.
The RMI is governed by a legislature (Nitijela) of 33 members who are elected by universal adult suffrage for four-year terms. The Nitijela in turn elects the president, who appoints his cabinet. There is also a council of iroij (chiefs), a consultative body. However, RMI politics have been dominated by iroij and iroijlaplap (paramount chiefs) whose conflicting interests have been more significant than any party affiliations. Amata Kabua, the first president, was iroijlaplap of Majuro. His successor and cousin, Imata Kabua, held a comparable title for Kwajalein. Long-standing conflicts between chiefs in different parts of the islands have been regularly reflected in 60%–40% divisions on such matters as the CFA plebiscite.
In late 1999 and early 2000, two major political changes took place. For the first time, an opposition party, the newly formed United Democratic Party (UDP), gained a majority in Nitijela in the November 1999 elections. Then in January 2000, Kessai Note, the Speaker of the Nitijela, was elected to the presidency, becoming the first president of the Marshall Islands who is a commoner (i.e., not a traditional chief).