Editing History of Iceland (section)

=== World War I ===
In the quarter of a century preceding the war, Iceland had prospered. However, Iceland became more isolated during [[World War I]] and suffered a significant decline in living standards.<ref name=":0">{{Cite book|title = Þegar siðmenningin fór til fjandans. Íslendingar og stríðið mikla 1914–1918|last = Bjarnason|first = Gunnar Þór|year = 2015|page = 16}}</ref><ref name=":2">{{Cite book|title = Hagvöxtur og iðnvæðing. Þjóðarframleiðsla á Íslandi 1870–1945|last = Jónsson|first = Guðmundur|year = 1999}}</ref> The treasury became highly indebted, and there was a shortage of food and fears over an imminent famine.<ref name=":0" /><ref name=":2" /><ref>{{Cite book|title = Þegar siðmenningin fór til fjandans. Íslendingar og stríðið mikla 1914–1918|last = Bjarnason|first = Gunnar Þór|year = 2015|chapter = Ch. 12}}</ref>

Iceland was part of neutral Denmark during the war. Icelanders were, in general, sympathetic to the cause of the Allies. Iceland also traded significantly with the United Kingdom during the war, as Iceland found itself within its sphere of influence.<ref>{{Cite book|title = Þegar siðmenningin fór til fjandans. Íslendingar og stríðið mikla 1914–1918|last = Bjarnason|first = Gunnar Þór|year = 2015|page = 148}}</ref><ref name=":6">{{Cite book|title = Ísland á bresku valdssvæði 1914–1918|last = Jensdóttir|first = Sólrún|year = 1980}}</ref><ref>{{Cite journal|last1=Thorhallsson|first1=Baldur|last2=Joensen|first2=Tómas|date=15 December 2015|title=Iceland's External Affairs from the Napoleonic Era to the occupation of Denmark: Danish and British Shelter|journal=Icelandic Review of Politics & Administration|language=en|volume=11|issue=2|pages=187–206|issn=1670-679X|doi=10.13177/irpa.a.2015.11.2.4|doi-access=free|hdl=1946/23454|hdl-access=free}}</ref> In their attempts to stop the Icelanders from trading with the Germans indirectly, the British imposed costly and time-consuming constraints on Icelandic exports going to the Nordic countries.<ref name=":6" /><ref>{{Cite book|title = Þegar siðmenningin fór til fjandans. Íslendingar og stríðið mikla 1914–1918|last = Bjarnason|first = Gunnar Þór|year = 2015|pages = 173–75}}</ref> There is no evidence of any German plans to invade Iceland during the war.<ref name=":6" />

1,245 Icelanders, Icelandic Americans, and Icelandic Canadians were registered as soldiers during World War I. 989 fought for Canada, whereas 256 fought for the United States. 391 of the combatants were born in Iceland, the rest were of Icelandic descent. 10 women of Icelandic descent and 4 women born in Iceland served as nurses for the Allies during World War I. At least 144 of the combatants died during World War I (96 in combat, 19 from wounds suffered during combat, 2 from accidents, and 27 from disease), 61 of them were Iceland-born. Ten men were taken as prisoners of war by the Germans.<ref>{{Cite book|title = Þegar siðmenningin fór til fjandans. Íslendingar og stríðið mikla 1914–1918|last = Bjarnason|first = Gunnar Þór|year = 2015|pages = 236–38, 288–89}}</ref>

The war had a lasting impact on Icelandic society and Iceland's external relations. It led to major government interference in the marketplace that lasted until the post-World War II period.<ref name=":1">{{Cite book|title = Þegar siðmenningin fór til fjandans. Íslendingar og stríðið mikla 1914–1918|last = Bjarnason|first = Gunnar Þór|year = 2015|page = 15}}</ref> Iceland's competent governance of internal affairs and relations with other states—while relations with Denmark were interrupted during the war—showed that Iceland was capable of acquiring further powers, which resulted in Denmark recognizing Iceland as a fully sovereign state in 1918.<ref name=":1" /><ref>{{Cite book|title = History of Iceland|last = Karlsson|first = Gunnar|year = 2000|pages = 283–84}}</ref> It has been argued that the thirst for news of the war helped ''[[Morgunblaðið]]'' to gain a dominant position among [[List of newspapers in Iceland|Icelandic newspapers]].<ref>{{Cite book|title = Þegar siðmenningin fór til fjandans. Íslendingar og stríðið mikla 1914–1918|last = Bjarnason|first = Gunnar Þór|year = 2015|pages = 141–42}}</ref>