Year 1000: July Crisis and Collapse.
The most generally agreed date which was assigned to mark the beginning of the Collapse is the 22nd of June of the year 1000 After Banishment, when, despite the raising of the sun, Princess Celestia went missing. While this is true, the great importance of this event not only in national, but world history, we need to study the causes of the dismemberment of Equestria, and thus, the previous context the country was before that date.
The year 1000 marked, as the calendar points, the tenth century since Nightmare Moon, spirit of the night, was banished by Princess Celestia. This event, which ponies of that time represented as the triumph of light over darkness and the defeat of evil. This date coincided with the date of the Summer Solstice (June 21th) and was celebrated by the name of the Summer Sun Celebration. On that day, at the beginning of morning, Princess Celestia herself went to the designated zone of which then she raised the sun, to the awe and devotion of the ponies witnessing the event.
In 998, the small village of Ponyville was the settlement chosen for the celebration of the year 1000. The town wasn't very far from the then capital city of Canterlot, and along with the train station which was the last stop before Canterlot's one, posed a prime location for the hosting of the event.
Village authorities graciously accepted the offer from the Crown, in hopes of raising the tourist attraction for their little settlement, bringing funds for the betterment of the town.
While the celebration of 999 was hosted in Maresheim, and like it's predecessors was generally a locally attended event, the festivities of the year 1000 were going to be the Summer Sun Celebration, the commemorating of ten centuries of good's ultimate victory over evil, and the beginning of Celestias' thousand year reign which was the golden age of Equestrian politics, technology, economy and general state. This period of history was characterized by the everlasting peace, the thawing of relations with foreign powers, growth of the economy, and perhaps most importantly, the Industrial Revolution of the 800's which apart from revolutionizing the means of production, the birth of new social classes and ideologies and the appearance of a new transportation method, the train.
Because of that, the thousandth celebration marked the end of a millenium and the start of another, and, which in the eyes of not ponies alike, but the majority of the worlds' citizens, was going to be even better than the last one. If one could describe the emotions Equestria felt at that moment, it would certainly be optimism for the future.
The pony which was chosen to supervise said year's festivities was Twilight Sparkle, Princess Celestia's personal protege and student. But, days before she could depart for Ponyville, fell sick with the flu. Thus, she couldn't be present for the celebration and another pony, September Blossom was to be the one to inspect the preparations.
According to Blossoms' writings, there is nothing that suggested that the arrangements for the Summer Sun Celebration were in any way sabotaged, mismanaged or overlooked, and that the town could handle the extra inflow of ponies from different regions of Equestria.
After talking and inspecting with the distinct ponies that have been assigned to their roles in the Celebrations, I have come to the conclusion that the town is in fact more than ready to handle the extra flow of attenders coming. I must say that this one of the most well-prepared festivities I have seen in my career as an inspector.
This declaration of approval marked the beginning of the thousandth anniversary and in the 21th of June, officially began. At first, in the hours of day, everything went smoothly, and there was nothing suggesting a catasthrope was going to happen. But, when Mayor Mare, the mayor of Ponyville at that time declared the beginning of the Summer Solstice and the appearance of Princess Celestia, Her Highness was missing, and in her place, Nightmare Moon appeared.
Due to the confusing and panic-inducing events that night, little is know of what happened, but the only things we know is that Princess Celestia managed to defeat her sister a second time and restoring the day cycle, but at a great cost; The intense magical usage that the battle and the daytime spell demanded put it's toll on the Alicorn, and it is believed that she simply disappeared.
What immediately followed was a political crisis never seen before. Princess Celestia, monarch of Equestria for a thousand years was gone and there was no pony capable to successfully replace her.
Of course, this didn't stop a succession from happening; In the 28th of June and after a week-long discussion, Prince Blueblood, descendant of Princess Platinium of Unicornia and one of the founders of the First Equestria was named King by the Supreme Council of Canterlot, formed by the most powerful nobles of the city after Celestia's dissapearance. While this was accepted by the aristocracy and elite of Canterlot, it didn't sit well with the majority of the Equestrian population. In fact, Blueblood was seen as nothing more than an usurper to the throne. At this time, several cities and ponies alike protested the naming of the Prince, as it was done without any consent from the rest of Equestria.
However, the situation escalated gravely when Cloudsdale announced it's decision to not comply with any orders from the capital;
the floating city had always enjoyed more autonomy from the government in Canterlot due to it's mobile nature and the largely independent nature of pegasi. In 784, the Cloudsdale Senate was created, which had a deegre of self-rule so large that the only body that could override it's powers was the Equestrian Crown, headed by Princess Celestia.
Naturally, when Prince Blueblood was named King of Equestria, it meant that he could veto any position, law or motion put forward by the Senate. This did not sit well with the Pegasi, which heavily disliked the thought of an Unicorn governing them. When the Senate announced that it would not follow any decision made by Blueblood on the 3rd of July, it sparked another political crisis after other, this one named the July Crisis.
Both parties agreed to negotiate on Manehattan, but the negotiations were at a deadlock. While the Cloudsdale representatives demanded to Blueblood that he step down and create a provisional government; the opposing diplomats insisted that the Senate was to back down on it's accusations to "Preserve stability in these times of trouble."
The already volatile and heated state of the country did not help in the negotiations, and in the 28th of July, one month after Blueblood was named King, diplomacy broke down.
The same day, after the diplomats returned from Manehattan empty-hoofed, the Supreme Council of Canterlot, was left with no choice but to send the Royal Guard to restore peace, at any cost.
On this day, 28th of July of the year 1000, We, the representants at the Supreme Council of Canterlot, presided by H.R.H King Blueblood, have decided, with no easy agreement, that to preserve peace and stability in our country, the Royal Guard must intervene in the City of Cloudsdale to stop a possible seccession from our Union.
When the Royal Guard was given the orders to effectively attack the city, immediate discontent broke out among the units. It is important to note, that at the time the main forces of the Guard were mainly composed of Pegasi, and with a large minority of them born in Cloudsdale. As such, they had no intention or will to attack what was considered "The capital of all things Pegasus." The vanishing of Princess Celestia had also demoralised the guardponies already.
When the forces began to move towards the location of the flying city, approximately two hundred and fifty kilometers northwest from Canterlot, words of mutiny and desertion were already heard. At the pace they marched, the force of around ten thousand ponies, which represented most of Canterlot's standing garrison would take 3 days to reach destination.
The notice of the Canterlonian attack reached the Cloudsdale Senate and hours later it decided in an unanimous vote the formation of a provisional government to the newly created Cloudsdale State; it's first head of state being Aurora Borealis, the city's mayor for three years prior to the events of the year 1000.
Apart from the effective separation of Cloudsdale from the rest of Equestria, the new government ordered that all production at the weather factory to be halted for the moment.
The Cloudsdale City Guard, which at the time consisted of three thousand standing ponies was ordered to be mobilized and set up defensive positions at the city; And although rushed, six hundred ponies signed up as volunteers of the Air Militias.
At the same time Canterlot's forces were less than six hours from Cloudsdale, a massive mutiny occurred followed by mass desertion of the Pegasi forces which formed up to eighty percent of the Royal Guard. At the end, the army was forced to retreat back to Ponyville, and it's numbers shrunk down to two thousand and nine hundred ponies.
This greatly humilliated Bluebloods' government, and made it lose even more legitimacy than before. On August 5th, Manehattan's mayor, Orangegrove, announced that that city would not longer follow Canterlot's policy after the "appalling" attempt of the capital city's government to attack another one without valid justification. Orangegrove, together with the mayors of Baltimare and Fillydelphia made this a joint declaration on the next day.
While Canterlot's move against Cloudsdale was certainly a reason for the cities' declaration, it goes deeper than that. The three coastal cities followed a very different system of government that the capital; This form consisted of the election of city officials to power positions, most notably the mayors and the representatives to the Equestrian Cities' Parliament, which at this time was already dissolved. With this evidence, the city authorities believed that the new government would try to centralize power, centering all of it into Canterlot, and in that way installing royally-appointed representatives in all of Equestria's settlements.
This secession destroyed any of Bluebloods' hopes for a easy end to this conflict, not only did three cities secede from Equestria, but they were the ones that made up a large amount of Equestria's population, industry and economical power. This also cut off the country from access to the Celestial Sea, preventing the shipping of goods from the country's trade partners in Stirroupe, as the port in Applelanta wasn't big enough to handle the flow of material. At this point, the only thing Canterlot could do was to move the remnants of the Royal Guard loyal to their government and place them in the newly-created borders. The rest of Equestria that didn't decide what to do was essentially left on their own.
On the 10th of August, a small force of approximately seven hundred pegasi loyal to Cloudsdale captured the city of Maresheim, at the banks of the Neighara River. This city served an important strategic purpose, as it's train station was the junction of the Vanhoover-Manehattan line and the Canterlot-Manehattan line; the capture of Maresheim meant that the Cloudsdale State could now trade with the newly formed Commonwealth of Eastern Equestria, as the union of the three cities decided to name itself. The two countries quickly established bilateral relations, Cloudsdale trading it's weather for the Commonwealth's agricultural goods.
After this, the rest of Equestria that didn't decide it's course declared their independence. The city of Applelanta, along with the frontier settlements of Appleloosa and Dodge Junction formed the Southern Confederacy, later also uniting with Las Pegasus.
Vanhoover, the largest city in Northwestern Equestria declared with the town of Tall Tale the creation of the Hayscadian Republic, this particular country having initial border conflicts with Cloudsdale and the Kingdom of Yakyakistan; while the former was solved rapidly, the latter wasn't, and thus formed a point of tension between the two states.
All of this meant that by the Hearthswarming Eve of the year 1000, the Principality of Equestria no longer existed.