Editing History of Iceland (section)

===Founding of the republic===
[[File:Sveinn Björnsson.jpg|thumb|120px|[[Sveinn Björnsson]], the first [[President of Iceland]].]]
{{See also|Founding of the Republic of Iceland}}
On 31 December 1943, the Act of Union agreement expired after 25 years. Beginning on 20 May 1944, Icelanders voted in a four-day plebiscite on whether to terminate the personal union with the King of Denmark and establish a republic. The vote was 97% in favour of ending the union and 95% in favour of the new republican constitution.<ref>Hardarson, (1974) p. 56</ref> Iceland became an independent republic on 17 June 1944, with [[Sveinn Björnsson]] as its first president. Denmark was still occupied by Germany at the time. Danish King [[Christian X of Denmark|Christian X]] sent a message of congratulations to the Icelandic people.

Iceland had prospered during the course of the war, amassing considerable [[currency reserve]]s in foreign banks.  In addition to this, the country received the most [[Marshall Plan|Marshall Aid]] per capita of any European country in the immediate postwar years (at US$209, with the war-ravaged [[Netherlands]] a distant second at US$109).<ref>{{cite web|url=http://visindavefur.hi.is/svar.asp?id=3411|title=Vísindavefurinn: ''Hversu há var Marshallaðstoðin sem Ísland fékk eftir seinni heimsstyrjöld?''|work=Vísindavefurinn|access-date=30 September 2014}}</ref><ref>[https://books.google.com/books?id=zdXTV8xO3xQC&dq=most+marshall+aid+per+capita+iceland&pg=PA385 Margrit Müller, ''Pathbreakers: Small European Countries Responding to Globalisation and Deglobalisation''], p. 385</ref>

The new republican government, led by an unlikely three-party majority cabinet made up of [[conservativism|conservatives]] (the [[Independence Party (Iceland)|Independence Party]], ''Sjálfstæðisflokkurinn''), [[social democracy|social democrats]] (the [[Social Democratic Party (Iceland)|Social Democratic Party]], ''Alþýðuflokkurinn''), and [[socialism|socialists]] ([[People's Unity Party – Socialist Party]], ''Sósíalistaflokkurinn''), decided to put the funds into a general renovation of the fishing fleet, the building of fish processing facilities, the construction of a cement and fertilizer factory, and a general modernization of agriculture. These actions were aimed at keeping Icelanders' [[standard of living]] as high as it had become during the prosperous war years.<ref>{{Cite book|title=Developmental Entrepreneurship: Adversity, Risk, and Isolation|last1=Jónsson|first1=Örn D.|last2=Saemundsson|first2=Rögnvaldur J.|date=1 January 2006|publisher=Emerald Group Publishing Limited|series=International Research in the Business Disciplines|volume=5|pages=217–33|doi=10.1016/s1074-7877(06)05012-4|chapter = Isolation as a Source of Entrepreneurial Opportunities: Overcoming the Limitations of Isolated Micro-States|isbn = 978-0-7623-1358-7}}</ref>

The government's [[fiscal policy]] was strictly [[Keynesian economics|Keynesian]], and their aim was to create the necessary industrial infrastructure for a prosperous [[developed country]]{{citation needed|date=November 2022}}. It was considered essential to keep unemployment down and to protect the export fishing industry through [[currency manipulation]] and other means{{citation needed|date=November 2022}}. Because of the country's dependence both on reliable fish catches and foreign demand for fish products, Iceland's economy remained unstable well into the 1990s, when the country's economy was greatly diversified{{citation needed|date=November 2022}}.