Rick Steves Iceland

On the far northern fringe of Europe, surrounded by the open Atlantic, Iceland has an epic history that’s been shaped by the sea. Here’s a brief overview.

PREHISTORY

As the North American and Eurasian tectonic plates pulled apart, lava welled up between them. Over many millions of years of eruptions, Iceland was formed. Eruptions continue today in the middle of the island, along a belt running roughly from the north to the south and southwest. This belt, which passes close to (but not through) Reykjavík, contains Iceland’s active volcanoes, as well as its hot springs and geothermal energy sources. The older lava has been pulled east and northwest by the spreading plates, meaning the western and eastern fjords are volcano-free (good) but also have little or no underground hot water for heating (bad). The sea’s waves have eroded the rock to form steep cliffs in some parts of the island, while in others, glaciers flowing down from the Highlands have carved deep valleys and fjords.

For most of human history, Iceland was uninhabited. Egypt, Greece, and Rome rose and fell, but the only creatures here were birds, fish, foxes, and an occasional confused polar bear who drifted over on an iceberg from Greenland.

700-900: THE SETTLEMENT AGE

During the Viking Age, Celtic monks and Scandinavian seafarers began to explore the North Atlantic: first the Faroe Islands, and then Iceland. The innovation of a sturdier keel—spanning the entire length of a ship—allowed the early Scandinavians to sail with confidence on the open ocean. They pickled their foods in fermented whey (to preserve valuable nourishment when far from home) and used birds and whales to help them navigate the seas.

No one knows exactly how, when, or where the first arrivals came to Iceland. Much of the country’s early history was passed down orally over the centuries, then finally recorded for the first time in the “sagas”—a series of tales mixing historical fact and fanciful legend. While the sagas can’t be taken as literal history, they are loaded with stories (rooted in who-knows-how-much truth) that are deeply ingrained in the Icelandic national identity. For more on the sagas, see the sidebar on here.

According to the sagas, the discoverer of Iceland was Hrafna-Flóki Vilgerðarson, who released three ravens when he was under sail; the first two turned back to Norway, but the third flew in the opposite direction—eventually leading him to Iceland. He became known by the nickname Hrafna-Flóki—“Raven Flóki.” The sagas say that Ingólfur Árnarson was the first permanent settler in Iceland, near today’s Reykjavík, around A.D. 874. But archaeologists have found evidence of settlement dating much earlier than that.

Whoever came first, these settlers grew in number around the middle of the ninth century. Once they established a course they could follow with confidence, it took these early Scandinavians just 72 hours to cross from Norway to Iceland. Influenced by political events in Norway and Ireland, a mix of people from both lands brought their livestock and took up permanent residence in Iceland. Most were pagan, following the old Germanic religion of Thor (Þórr) and Odin (Oðinn), and spoke Old Norse.

Interestingly, geneticists believe that many of the female settlers were Celts, while more of the men were Scandinavian. It seems that Ireland and Scotland were good places for Scandinavian men to find wives (willing or unwilling) to bring on the journey. Today, Icelandic history is dominated by the Scandinavian narrative; only faint traces of Celtic culture survive.

Settlement Age Iceland had no towns; everyone lived on farms. The newcomers appreciated Iceland’s abundant fresh water and grazing land for sheep. It was a challenging existence, but early Icelanders tamed the land and made it their own.

900-1300: THE ICELANDIC COMMONWEALTH

The settlers established a primitive government, in which several dozen local chieftains (goðar) held power. The chieftainships could be inherited or sold. As in other Germanic lands, they held regular courts and legislative assemblies (called a þing, like the English “thing”). Beginning around A.D. 930, an island-wide assembly—called the Alþingi (“all-thing”)—convened once a year, at Þingvellir. (For more on this great gathering, see the Þingvellir listing on here.)

Meanwhile, Icelanders began to explore farther and farther into the chilly North Atlantic. Around the 980s, led by an exiled outlaw named Eiríkur Þorvaldsson (“Erik the Red”), Icelanders settled on the west coast of Greenland, and eventually established over 300 farms there. These communities would last until the 1400s, when the weather turned colder. A few years after the settlement of Greenland, an Icelander named Bjarni Herjólfsson was blown off course on his way to Greenland, and sighted the coast of northeastern Canada. Leifur Eiríksson (son of Erik the Red) bought Bjarni’s ship and explored the unknown continent. Another man, Þorfinnur Þórðarson, settled there, possibly at L’Anse aux Meadows in Newfoundland, but the Icelanders’ North American settlements did not last. (For more on “Leif Erikson,” as he’s known stateside, see here.)

Iceland maintained a diplomatic and trading relationship with Norway, whose King Ólafur Tryggvason (r. 995-1000) tried to introduce Christianity to his subjects. He also sent missionaries to Iceland, who succeeded in making some converts, but failed in Christianizing the entire island. To nudge the Icelanders further, the king detained some Icelandic traders. This kicked off a furious debate at the assembly in Þingvellir in the year A.D. 1000. The assembly chose to convert rather than engage in a devastating trade war with Norway, and the entire country accepted Christianity in one fell swoop. (For more on the legend surrounding this mass conversion, see here.) Privately, however, Icelanders continued to follow their pagan faith. Icelandic culture features a blending of Christianity and Old Norse ways, and to this day, many Icelanders have two given names—one with Christian roots, and the other pagan.

Skálholt (near Geysir and Gullfoss) became the religious center of south Iceland, and Hólar (in Skagafjörður) the religious center of the north. Small communities grew up at each place. Otherwise, there were still no towns in Iceland. Farmers who were rich enough built small churches on their property.

All told, there were about 4,000 farms in Iceland during this period. The weather was warmer then, allowing grain to grow. At first there were large stretches of woodland, and the grassy areas (not yet destroyed by overgrazing) extended far inland. The settlers were pastoralists, living off their animals’ meat, milk, and wool. They kept cattle, sheep, and pigs, and used horses for transport and herding. They also did some fishing at certain times of the year.

Although you’ll often hear this period described as a golden age that was later “restored,” and Iceland’s Alþingi is sometimes described as “the world’s oldest parliament,” the commonwealth period was no modern democracy. Society was stratified, with property owners on top, tenant farmers a step down, then landless laborers and slaves at the bottom. Women kept to the home and were mostly shut out of the realms of power, politics, and frontier justice.

The sagas were first written down around the end of this period, in the 12th through 14th century. No one knows exactly why Iceland became such a center of literary activity. Some scholars have suggested that the Celtic element of Icelandic society brought a talent for storytelling.

During these years, the language spoken in Iceland was about the same as in mainland Scandinavia. The archbishop of Iceland was in Norway. Icelanders sometimes thought of themselves as Norwegian, but in some ways emphasized their distinctness. At first, they were not formally subjects of the king of Norway. This changed in the 1200s, as chieftains from different families and parts of Iceland warred against each other inconclusively for control of the country. After decades of fighting, they resolved their differences by swearing allegiance to the king, who was just then trying to consolidate Norwegian power over Greenland and Scotland as well. In 1262, at the annual assembly in Þingvellir, Icelanders agreed to what became known as the “Old Covenant”—unilaterally declaring themselves to be subjects of Norway. The esteemed Alþingi was reduced from a primitive “parliament” to, essentially, an appeals court.

1300-1600: MEDIEVAL TIMES

Although Iceland was part of Norway, it retained its own laws. Aside from a single Norwegian governor (who lived at the farm called Bessastaðir, near Reykjavík), local officials were all Icelanders. Norway, preoccupied by its relations with Sweden and Denmark, showed little interest in Iceland or Greenland. In 1397, Norway joined with Sweden and Denmark in the Kalmar Union. Sweden left the union in the 1520s; meanwhile, Norway (suffering from the cooling climate) effectively became a dependency of Denmark. Thus, it became faraway Copenhagen—rather than Trondheim, Bergen, or Oslo—that Iceland answered to.

During the 1300s, Icelanders began to export fish and set up fishing stations on the coast, where they lived temporarily in the springtime. Christianity, which allowed eating fish on fast days, created a strong market for dried cod in Europe.

But Icelanders were not allowed to live permanently on the coast. Icelandic law required any landless person to live on a farm, for one-year periods starting each May. The farmer had to provide food and shelter in return for labor. If the farmer sent the laborer fishing in the spring, he got all their catch. Landless laborers were not allowed to marry. It was possible for them to buy or lease a farm, but not always easy. This system, called the vistarband—similar in some ways to Russian-style serfdom (if less harsh)—persisted all the way up until the 1890s.

The plague known as the Black Death reached Iceland in 1402, about 50 years after it decimated Europe. Approximately one-third of the island’s inhabitants perished. Scholars and printers turned their attention to more pressing matters—effectively bringing the age of the sagas to an abrupt end. But, because Icelandic society was rural and isolated (rather than urban and interconnected), the country was not as disrupted as many in Europe. In fact, the plague opened up more opportunities for upwardly mobile peasants to buy their own land.

In the 1400s and 1500s, English and German merchants began to fish in Icelandic waters and trade with Icelanders, and they tried to set up permanent settlements on the Icelandic coast. They were, however, kicked out by the Danish government, which slowly began to see Iceland as an economic asset...and wanted its trade for themselves.

Around 1540, the Protestant Reformation reached Iceland by royal decree. The only real resistance came from the bishop of the northern diocese at Hólar, Jón Arason, who saw the Lutheran faith as an unwelcome Danish imposition. He was captured, brought to Skálholt, and executed.

It was during these centuries that the mainland Scandinavian languages developed away from Old Norse, while Icelanders’ speech remained the same. By the end of this time, mainlanders could no longer understand Icelandic—and Icelanders felt themselves more and more separate. After the Reformation, the Bible was translated into Icelandic for the first time and printed in Denmark.

1600-1800: DANISH MONOPOLY

In 1602, King Christian IV of Denmark decreed that only a few specific merchants from Copenhagen and nearby towns would be allowed to trade with Iceland. Twenty harbors around the Icelandic coast were set up as trading points, where these merchants would come each summer to sell grain, timber, fine cloth, and other goods in return for Icelandic fish and woolens, all at fixed prices. Icelanders who had something to sell had no choice but to deal with the local merchant, a similar relationship to the one between the Hudson’s Bay Company and native Canadians.

During these years, Iceland had about 50,000 people—the number rising and falling with famines and epidemics. Since only property-owning men could marry, the rate of marriage was low, and illegitimacy was common—prefiguring Scandinavia’s loose attitude toward marriage today. Infant mortality was high, partly due to the odd belief—prevalent in northern Scandinavia—that babies should be given cow’s milk instead of being breast-fed. Iceland still had no towns and no schools. Children were supposed to learn to read the Bible from others on the farm, under the watchful eye of the local pastor. In the mid-1700s, about half the population was literate. Dancing was banned, and there were very few musical instruments. Pirate raids along the coast were a problem, and the authorities often suspected witchcraft among the population—and meted out punishments as stiff as those in Salem.

Up until the 1700s, Reykjavík was just a large farm, like many others around the country. But around mid-century, Skúli Magnússon, a high Icelandic official, got support from Denmark to set up several businesses in Iceland, including textile manufacturing. He chose Reykjavík as the location, as it was close to the country’s administrative seat at Bessastaðir. A row of workers’ houses was built in what is now downtown Reykjavík, and although Skúli’s enterprises failed, they were enough to seed settlement at what became Iceland’s capital.

Unfortunately, the late 1700s also brought natural catastrophes that demonstrated how fragile settlement on this volcanic island can be. In 1783, on the heels of several cold winters, a huge eruption started along a fissure running southwest from Vatnajökull glacier, creating a set of craters now called Lakagígar. Strong earthquakes destroyed most of the buildings of the southern bishop’s seat at Skálholt. The ash from the eruption was loaded with toxic gases and blocked the summer sunlight. Livestock died and famine struck the land, killing one-fifth of the population.

One bright consequence of the eruption was a loosening of the trade monopoly in 1787. Now any Dane (not just certain merchants with a license) could trade with Iceland. (Germans and English were still excluded.) As part of these reforms, in 1786 the Danish crown selected six Icelandic harbors, including Reykjavík, as official trading locations. That same year, Reykjavík received “town” status. With the decline of Skálholt, Reykjavík emerged as the logical seat of Iceland’s religion (becoming home to both bishops), government (the annual Alþingi gathering), and education system. As Reykjavík took over as Iceland’s administrative center, the Alþingi was abolished in 1800 (it was restored in 1844). Even as Denmark extended more rights to Iceland, change was in the air.

1800-1900: A NATION EMERGES

In the 19th century, Icelanders redefined their relationship with Denmark. They wanted to restart their own legislative assembly and have control over their own affairs, though within the Danish realm. They also wanted the freedom to trade with whomever they wanted—not just Danes—and at whatever price the market would bear. The leader of the fight for these reforms was Jón Sigurðsson, an Icelandic scholar who lived in Copenhagen (now honored by a statue facing Iceland’s parliament). Through persistence, they reached both goals in the 1840s and 1850s. In 1874, the king of Denmark approved a written constitution for Iceland. Icelanders thus gained much more autonomy than their neighbors in the Faroe Islands and Greenland, which are still part of Denmark today.

Iceland remained very poor. As the century drew to a close, most Icelanders still lived in houses made with thick turf walls and a grassy sod roof. The nicer rooms were paneled with timber. The houses often backed up against a hillside for support and insulation. You can see these sod houses today at Árbær Open-Air Museum, just outside Reykjavík; at Skógar, on the South Coast; and—best of all—at Glaumbær near Skagafjörður in North Iceland.

In the late 1800s, about 20,000 Icelanders emigrated to North America (principally Manitoba, Canada; for more on this story, visit the Iceland Emigration Center in Hofsós). Among those who stayed, about a quarter suffered from a debilitating tapeworm called echinococcus, acquired from living in proximity to dogs and sheep. Only in the 20th century was the parasite eliminated by banning meat processing on farms, and limiting contact between people and dogs. Laws against dog ownership in Icelandic towns have only recently been relaxed.

Fishing technology improved, and by the 1870s, Icelanders exported more fish than agricultural products. Defying age-old custom, Icelanders began to settle along the coast and gather into towns, where they built wood-frame homes with corrugated iron roofs.

In the 1880s, Icelandic farmers banded together in cooperatives to challenge the Danish merchants who still dominated Icelandic commerce. Together, they had enough negotiating power to buy consumer goods and sell wool and lamb abroad on better terms than before. Up until about 1990, many of Iceland’s shops still belonged to farmer’s cooperatives.

1900-2000: INDEPENDENCE AND MODERNIZATION

In 1902, the first boat motor came to Iceland—and within a couple of decades, the fishing industry was revolutionized. The country kept urbanizing, and by the 1930s, two-thirds of Icelanders lived in towns (including one-third in Reykjavík). But while the country slowly modernized, it remained poor. Roads were few and bad. Housing in towns was cramped, chilly, and heated with coal. Icelanders, accurately, saw themselves as country cousins to their Scandinavian relatives, who lived in cities with grand architecture, museums, and fine universities. The Great Depression hit hard, and at the outbreak of World War II, Iceland was one of the poorest parts of northern Europe.

Icelanders continued to chip away at Danish control. They created their own flag and currency, and developed their own political parties. In 1918, they negotiated a 25-year agreement to become a separate state under the Danish crown.

One morning in 1940, British soldiers landed in Iceland without asking permission—knowing that Germany would act if they didn’t. The next year, the American and Canadian military relieved the British. Sixty thousand corn-fed North Americans arrived on the island, outnumbering the local men, who naturally saw them as a threat. (Meanwhile, some local women saw them as an opportunity, and started new lives and families behind the white picket fences of American towns with soldier husbands.) Iceland didn’t participate actively in World War II, but 230 Icelanders were killed—mostly on merchant ships sunk at sea. While that sounds minimal, it’s almost the same loss of life, per capita, as in the United States.

For the most part, Icelanders didn’t mind the wartime Allied “occupation,” which left them with improved roads, bridges, and other infrastructure. For example, the Allies built Keflavík Airport and an adjoining base, which American troops ran until 2006.

In 1943 (while Denmark was occupied by the Nazis, and Iceland by the Allies), Iceland declared its complete independence. After the war, Iceland joined NATO (in 1949). The US base at Keflavík, though mostly walled off from Icelandic society, provided income and employment to Icelanders and influenced Iceland culturally. Only after Icelanders started tuning into the base’s TV station in the 1960s did the Icelandic state broadcasting service finally start a local television station of its own.

Icelanders had begun tapping geothermal sources for home heating with hot water in the 1930s. Slowly, coal disappeared as a fuel, and by the 1960s, all of Reykjavík was heated with water piped from underground sources in the countryside. This meant very low energy costs, still today one of the saving graces of living in Iceland. Meanwhile, rivers were dammed for power generation—and soon Iceland had an electricity surplus.

In the 1970s, the first metal smelters were built to make use of the electricity. The fishing industry prospered; each small town had a fishing fleet and freezing plant. The political parties in Iceland dispensed jobs and mortgages to members in return for their fidelity to the cause.

Icelanders maintained close ties to the Nordic countries through the 20th century. In the 1990s, Denmark, Sweden, and Finland chose to join the European Union. Iceland and Norway stayed out of the EU—but they did join the European Economic Area (EEA), a looser alliance that makes Iceland subject to most EU regulations, but keeps local control over fishing, agriculture, and customs policy. Since then, Icelanders have started to see themselves more as Europeans than as Scandinavians.

THE 21ST CENTURY AND ICELAND TODAY

In the first decade and a half of the 2000s, it seemed like Iceland—so long ignored by the rest of the world—was constantly in the international news: First came its financial boom-and-bust cycle, culminating in the 2008 crisis; then the eruption of Eyjafjallajökull in 2010, which left European air travelers cursing this remote island; and most recently its unprecedented tourism boom.

Starting around 2000, Iceland privatized its publicly owned banks. The banks grew tremendously, taking advantage of European rules to accept deposits from other countries. Icelanders flocked to work for the banks, and society prospered. Skeptics were silenced: When a politician questioned some of the government’s banking policies on the floor of parliament, the then-finance minister, a trained veterinarian, famously quipped, “Guys, can’t you see the party?” Driving their Lexuses around Reykjavík, Icelanders finally felt they had arrived; they were Scandinavia’s hillbillies no more.

But the “party” was an illusion. The banks didn’t have enough assets to cover their debts, and collapsed in 2008 in one of history’s largest bankruptcies—a cold shower for the entire country. The Icelandic króna crashed in value, and many people lost their jobs, savings, and homes. Some bankers, exposed as charlatans, received brief prison terms.

Tourism was a saving grace. A relatively minor player in Iceland’s economy for many decades, after 2010 it started to boom and is now the country’s largest source of income. In 2015, tourism surpassed fishing as Iceland’s top industry. In 2016, for the first time, more Americans visited Iceland than the number of people who live in Iceland. And it continues. Icelanders are scrambling to deal with the huge demand by improving infrastructure and discussing what limits they might need to place on visits to their natural wonders—which have always been free and open to all. And while all that tourism may seem like easy money, it’s very seasonal, and jobs in tourism are not lucrative (immigrants hold many of them).

Iceland today is a secure, peaceful, and fairly well-off country, but still lags behind mainland Scandinavia in indicators such as educational achievement, press freedom, government transparency, and health care. Icelanders work longer hours but are less productive per hour than their Scandinavian cousins. It’s difficult to attract businesses to the country, and like any small community, many educated Icelanders leave for jobs in Europe’s big urban centers (where they are free to settle due to Iceland’s EEA membership).

Perhaps the most controversial issue for Icelanders today is the question of control over natural resources. Iceland’s neighbor, Norway, has channeled much of its oil wealth into a fund that the country draws on for everyone’s benefit, and that secures Norway’s prosperity into the future. In contrast, Icelandic fishing “quota” (the right to harvest fish from the sea) is in the hands of private investors who pay society little or no rent for it. Similarly, profits from Iceland’s energy surplus go largely to multinational companies who buy electricity at cut-rate prices. Many Icelanders believe that more of this wealth should be channeled to the public good, and that more investment in health and education would finally bring the country’s standard of living up to a mainland level. Fishing-quota owners have also concentrated fish processing in fewer and fewer places. This is efficient, but has decimated jobs in some formerly flourishing small towns.

The control of retail trade is also a key issue for Iceland today, just as it was in the 1700s and 1800s. Many of Iceland’s wholesale companies are still run by the descendants of those original Danish merchant families. Visitors often assume that the country’s high prices are due to transport costs or the small size of the market. In fact, they have more to do with weak competition, protectionism, inefficient businesses, and the difficulties of keeping the Icelandic króna stable (some favor pegging it to another currency). Also, local retailers have successfully lobbied to make it hard for Icelanders to order from online retailers like Amazon. Many Icelanders, frustrated with the poor selection and high prices in local stores, fly abroad to shop, and bring home clothes and toys in their suitcases. Sensing opportunity, multinational cost-cutters like IKEA, Costco, H&M, and the German DIY chain Bauhaus have recently opened stores in Reykjavík.

There are also unresolved political issues. Iceland’s voting system over-represents rural interests in parliament, and farmers have used their disproportionate power to lobby for import restrictions that inflate the price of meat and dairy products. The Icelandic constitution is outdated—much of it dates from 1874. A committee elected by referendum drafted a new constitution in 2013, but beneficiaries of the status quo blocked any change.

Locals and foreigners alike used to see Iceland as a very honest, transparent country. But since the banking mania ended, Icelanders have realized that what they once thought of as “keeping wealth in the family” or “helping out friends and political allies” could also be described as “corruption.” Some would like Iceland to become a full member of the European Union, seeing regulation from Brussels as a professional, stabilizing influence on a small country that has limited local expertise. Others value Iceland’s partial autonomy, and see the EU as burdensome, bureaucratic baggage.

Environmentally, Icelanders struggle with the effects of hundreds of years of soil erosion and deforestation. The government has worked to increase forest cover and reseed barren land (recently using lupine, whose purple flowers you’ll see along roadsides in early summer). Another perennial environmental debate is whether to build more dams to harvest the country’s remaining hydroelectric potential.

Even as it becomes popular among tourists, Iceland struggles to keep its young people interested in making lives here, rather than going to more dynamic European cities that are better connected with the rest of the world. You may notice that many of the young people you meet in the tourist trade are not Icelandic, but rather recently arrived Eastern Europeans seeking adventure and higher wages. Some politicians say the way forward is to lower the cost of living, improve schools and health care, raise public-sector salaries for jobs like teaching and nursing, and make shopping easier. The vision is to make living in Iceland as appealing as living in Norway or Denmark or Germany (although these priorities often threaten the deeply ingrained interests of the agricultural and fishing lobbies).

Despite the unique challenges this remote island grapples with, one thing remains steady: the ability to impress its many visitors. Icelanders have come a long way from the millennium they spent as hardscrabble peasants on isolated farms. Against all odds, their plucky little country is prosperous, known and respected around the world, and enjoying a moment as everyone’s favorite transcontinental layover.