It all starts with Andrew Ryan, obviously. Being exposed to Communism from a young age (one audio diary hints he was Russian) he grew a distaste for "parasites" who do nothing and still reap benefits. Eventually Ryan moved to America, upon hearing the government there would be better. Still, even though he obtained enormous amounts of money (for this time period), he wasn't satisfied with the idea of helping the poor. He worked for his money; why should he have to share with the "parasites"?
Ryan gets fed up and decides to build Rapture. In order to protect it from any outside influence (including religion - Ryan believes a man is only capable of doing the effort he puts in himself) he builds it under the sea. Ryan gets all sorts of brilliant people to come, such as artists and scientists, and allows them to work freely and unrestrained. This is how his utopia began. He hoped everyone working to better the society would create peace and harmony
But we know it never works like that right?
Let me quickly intercede here by saying that Ryan banned contact with the surface, and also forbade certain items from entering the city; specifically, weapons and items having to do with religion. There are others, but these two are the main source of problems
So as time goes on, we start to see the emergence of distinct social classes. It quickly becomes apparent that there are the rich, and the "toilet scrubbers" (another audio diary reference). This is when Fontaine comes in. He senses the tension in the lower class and the hatred towards Ryan. Fontaine uses this to his advantage by providing to them what Ryan won't give them. He smuggles in items to please them (such as Bibles), and creates a "charity" for the poor. By doing so, Fontaine begins to build up a following. Ryan, at the time, doesn't suspect much
It is in the following months that ADAM is discovered. Tenenbaum discovers that a specific type of sea slug secretes a substance that can heal, even completely modify, living cells. Tenenbaum wanted to test this, but Ryan would not allow it. Fontaine jumps at this chance by smuggling her in equipment she needs. So soon ADAM is distributed to the public and allows them to modify their natural appearance
Suchong, another scientist, begins the experimentation of ADAM in plasmids. The first few instances of more aggressive plasmids begin to appear (telekinesis and enrage are among the first, but nothing like electrobolt or incinerate yet).
It also becomes apparent that ADAM can be very addicting, and some people start to crave more and more of it. In order to solve this problem, Suchong and Tenenbaum create the Little Sisters to harvest the ADAM from deceased citizens. They also create the Big Daddies to protect the little sisters. The Big Daddy program didn't finish until Ryan finally decided it was absolutely necessary though, which was when Fontaine finally presented a problem
(Interesting tidbit...Suchong was complaining how he couldn't get the Big Daddy connection with the Little Sisters, no matter how hard he tried. Eventually, he gets fed up with a Little Sister pestering him during his research and hits her. Then all we hear is screaming as a Big Daddy lets out a yell and...well, no more Suchong. At least he did finish all his research before joining the Big Daddy program)
Fontaine continues to gain more power, and uses the promise of ADAM to lure even more followers to his cause. By this time, many people have "spliced" so much ADAM that they have begin to go insane. Fontaine continues to support "splicing" so he can build up an army of splicers. He provides them the fix they need, and they do his bidding.
Intermission...Andrew Ryan has an affair with a stripper and the illegitimate son is sold to Tenanbaum and Suchong for research. Suchong experiments with accelerated growth and a mind control plasmid on the child. Obviously, this child is Jack (the main character). In fact, the audio diary where the mind control test is explained has Jack ordered by Suchong to break a dog's neck (this is the only other time in the game we hear Jack's voice)
Fontaine wasn't guaranteed his splicer army would listen to him though, which is why he used Suchong's mind control plasmid. He also sends Jack topside before the civil war breaks out.
Ryan, by this point, sees the problem Fontaine presents, and uses the Big Daddy program to gather ADAM and build up his own splicer army. Ryan also has control of the security system, which gives him a slight advantage.
In the midst of this, aggressive plasmids are developed. I believe Ryan pushed Suchong to create these for his guard, as one audio diary gives the first instance of incinerate being used in public
Now we have a giant arms race, with each side collecting more and more splicers. Rapture is going insane.
Before things totally fall apart, Ryan and a few others raid Fontaine's base and believe they killed him. Fontaine just faked his death and was reborn as Atlas. Ryan nationalized Fontaine's operations and hoped things would soon return to normal. But this is what Atlas was hoping for
Atlas kept growing his army, and smuggled weapons into Rapture. Now things begin to get even worse. Many of the first ADAM users have finally lost it. The war was about to begin.
New Year's, 1959, Atlas gives the signal. A full scale civil war erupts between Atlas' forces and Ryan's forces. The utopia Ryan hoped for had finally crumbled.
Some splicers still can't get enough ADAM, and the first instances of attacks on Big Daddies start here.
Somewhere along the way, Atlas loses his upper hand. Desperate and on the run, he "activates" Jack and brings him to Rapture
This is when Bioshock begins
First off, Atlas' family. Atlas never had a family, he just made that up to play on Jack's emotions. He also made Jack go to the submarine because it was vital to his plans that they obtain the submarine. If Atlas had the submarine, he would be able to go anywhere. The bathyspheres were shut down completely by Ryan, except for anyone with similarities to Ryan's genetic code (basically anyone in his family, or relatives). Meaning Jack was able to use them, but not Atlas. This is why the submarine was vital
The Vita Chambers that are everywhere. Why are they here? Ryan programmed them, again, only to recognize his genetic code. This way, he would be practically immortal. Again, Jack was able to use them, which made him a powerful tool for Atlas. Combine mind control with a person able to use everything Ryan can use, and you have a killing machine.
Ryan's final command. All he says to you is "kill." He wasn't talking about himself. He knew he would die anyway - he even turned off the vita chamber in his room. He left the command ambiguous so Jack would CHOOSE who to kill. Ryan knew Jack had the ability to choose deep down inside and hoped that the command would do this. It also helps that the mind control is broken later
Character stories will come later. Expect Steinman, Cohen, Tenenbaum, and more Suchong ;D