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In 1914 German administration ended when the Japanese navy took military possession of the Marshall, Caroline and Northern Mariana Islands. 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 while the indigenous population was 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."
On May 10, 1979, four of the Trust Territory districts ratified a new constitution to become the Federated States of Micronesia. The neighboring trust districts of Palau, the Marshall Islands, and the Northern Mariana Islands chose not to participate. The Honorable Tosiwo Nakayama, the former President of the Congress of Micronesia, became the first President of the FSM and formed his Cabinet. The FSM signed a Compact of Free AssociationThe Compact of Free Association COFA defines the relationship that three sovereign states—the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI) and the Republic of Palau—have entered into as Associated States with the United with the U.S., which entered into force on November 3November 3 is the 307th day of the year (308th in leap years) in the Gregorian Calendar, with 58 days remaining. Events 1755 The colony of Massachusetts offers a bounty of 20 British pounds for the scalps of native american boys and girls under the age of, 1986, marking Micronesia's emergence from trusteeship to independence. Under the Compact, the U.S. has full authority and responsibility for the defense of the FSM. This security relationship can be changed or terminated by mutual agreement. The Compact provides U.S. grant funds and federal program assistance to the FSM. Amended financial assistance provisions came on-line in FY 2004. The basic relationship of free association continues indefinitely.