In 1525, Portuguese navigators in search of the Spice Islands
(Indonesia) came upon Yap and Ulithi. Spanish expeditions later
explored the rest of the Caroline Islands. The Spanish Empire claimed
sovereignty over the Carolines until 1899 when it sold all of its Pacific
island territories to Germany, except Guam which became a U.S.
The German administration of the Carolines encouraged development
of trade and production of copra. In 1914, German administration
ended when Japanese naval squadrons took over possession of the
Carolines, Marshalls, and Marianas.
Japan began its formal administration under a League of Nations
mandate in 1920. Through extensive settlement the Japanese
population in Micronesia exceeded 100,000 (as compared to an
indigenous population of about 40,000 at the time).
Following U.S. occupation of the islands in World War II, the United
Nations in 1947 created the Trust Territory of the Pacific Islands
(TTPI) with the U.S. as administering authority. The TTPI consisted of
Kosrae, Ponape (now Pohnpei), Truk (now Chuuk), and Yap (which
now are the four states of the Federated States of Micronesia), Palau,
the Marshall Islands, and the Northern Mariana Islands. On November
3, 1986, the FSM became independent and entered into free association
with the U.S.
source: U.S. State Department Background Notes 1996