An ambitious idea, but it could've backfired very easily, like a 15th century Darien scheme; one thing's for sure, if the canal gets built Venice will have to defend it against... pretty much the whole of Europe, really. And there's not much else that can help them in that case except for Marco Polo's ghost, a very generous amount of grappa, and more than a few greased palms.
Well Venice had very few rivals in the Mediterranean and was still in possession of a good fleet and army (and attacking them or their possession would be a very bad idea for France, England is outside the Mediterranean while Austria, Spain and Portugal share the same enemy and the latter two have their independent commercial routes outside the Med)
Venice and Genoa has fallen a lot but only because they were flying in the sky earlier...
 
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Genoese finance honestly makes less sense the more I dig into it. The Republic evidently had a very low rate of borrowing for the public debt, averaging at just over 2% for this period, because despite its commercial decline Genoa remained a very important center of international finance in the 18th century. But if you're paying 65% of your state revenue to service a low-interest loan, the principal must be huge. An annual interest of 3.24 million livres on a 2% loan means a principal of 162 million livres, which is a staggering amount. TTL's 15 million livre buyout for Corsica makes only a slight dent, representing less than 10% of the overall debt. Sure, France's debt prior to the SYW was 1.2 billion, but France was also a vastly larger and more populous country.

The Republic's debt was held by the Casa di San Giorgio (Genoa's autonomous state bank), which converted it into bonds. The last of these bonds was redeemed in 1777, meaning that it took them about 30 years to get out from under the debt burden from the WAS. But it's hard to see how, even in 30 years, the state would pay back 162 million livres when over 60% of the state revenue is just paying interest. That amount of debt is more than 30 times the state's annual revenue; by comparison, today's USA has a debt of only about 6 times its annual revenue. The most likely explanation is that my numbers are wrong.

Things did eventually get better for Genoa. As mentioned, the last of the WAS debt was paid off by 1777 and in the 1780s the republic enjoyed a considerable economic boom. I think people have a tendency to overstate the decline of Genoa and Venice - certainly they had fallen from their position as great powers, but this was a process of transformation, not death. Genoese banking flourished in the 18th century, it remained a significant producer of silk and paper, and the Republic's efforts to reinvent itself as a regional free port went reasonably well. Venice's share in international trade had declined precipitously from its heyday, but in the late 18th century Venetian domestic industry was enjoying considerable growth. Yes, they had grown militarily weak and relied too heavily on their neutrality, but they were not "dead republics walking" which Napoleon merely put out of their misery.
 
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Was there ever a possibility of Genoa defaulting on its debt? What would a state defaulting on their debt look like in the 18th cent.?
 
Genoese finance honestly makes less sense the more I dig into it. The Republic evidently had a very low rate of borrowing for the public debt, averaging at just over 2% for this period, because despite its commercial decline Genoa remained a very important center of international finance in the 18th century. But if you're paying 65% of your state revenue to service a low-interest loan, the principal must be huge. An annual interest of 3.24 million livres on a 2% loan means a principal of 162 million livres, which is a staggering amount. TTL's 15 million livre buyout for Corsica makes only a slight dent, representing less than 10% of the overall debt. Sure, France's debt prior to the SYW was 1.2 billion, but France was also a vastly larger and more populous country.

The Republic's debt was held by the Casa di San Giorgio (Genoa's autonomous state bank), which converted it into bonds. The last of these bonds was redeemed in 1777, meaning that it took them about 30 years to get out from under the debt burden from the WAS. But it's hard to see how, even in 30 years, the state would pay back 162 million livres when over 60% of the state revenue is just paying interest. That amount of debt is more than 30 times the state's annual revenue; by comparison, today's USA has a debt of only about 6 times its annual revenue. The most likely explanation is that my numbers are wrong.

Maybe you're carrying an extra zero with the above?
 
An ambitious idea, but it could've backfired very easily, like a 15th century Darien scheme; one thing's for sure, if the canal gets built Venice will have to defend it against... pretty much the whole of Europe, really. And there's not much else that can help them in that case except for Marco Polo's ghost, a very generous amount of grappa, and more than a few greased palms.

One could argue that any one power trying to seize the canal would paint the bullseyes of any and all other interested powers on their backsides. A succession of brilliant doges could successfully play other contenders for the channel against one another to the point that everyone agrees that while ny side having the channel is obviously the best idea ever, Venice having it is vastly better than any of those bastards.
 
Was there ever a possibility of Genoa defaulting on its debt? What would a state defaulting on their debt look like in the 18th cent.?

Broadly speaking, a "default" is just a failure to fulfill an obligation, and that happened all the time. One of the mildest ways to default is a suspension, when you stop making payments on a loan or annuity but don't actually scratch out the debt. The Casa di San Giorgio did this in 1745 when the Genoese government forcibly loaned itself virtually all the bank's capital, but eventually resumed payments after the war. France defaulted on short-term debt payments multiple times in the 18th century - in 1759 (lasting until the end of the war in 1763), in 1770 (supposed to be an 8-year suspension but became permanent), and in 1788 (for two years).

You can also default by reform, which is when a state unilaterally renegotiates an obligation - "You know that 8% loan you gave me? Yeah, it's 5% now. Deal with it." France did this in 1770 on certain kinds of government tontines (a type of annuity) to convert them into lower-paying annuities. This was also done extensively during the French Revolution, in which the revolutionary government argued that their high-interest debt was illegitimate because of the incompetence of the Ancien Régime and slashed the returns on all bonds and annuities to 5%.

The most drastic default, of course, is repudiation - when you simply write a loan off the books, never to be repaid. (You can also have a partial repudiation, in which you write off some but not all of a loan's principal.) Although this happened with some frequency in the Early Modern era, most famously with Spain in the 16th and 17th centuries (causing massive bank failures, particularly in Genoa), it was relatively rare in the 18th century. France repudiated some debt in the default of 1770 but preferred to suspend/reform, as this was less damaging to the state's reputation than outright cancelling the debt. After he came to power in 1774, Louis XVI refused to consider repudiation - laudable, perhaps, but the alternative turned out to be calling the Estates General, and we all know how that ended up.

So the answer is that Genoa (or more precisely, Genoa's bank) did default on its debt, first by temporarily suspending payments and then by reforming its debts into bonds which were gradually retired over the next 30 years. But to repudiate the debt would have been exceptional, and probably disastrous. At this point banking was one of the Republic's major "industries," and for the state bank to repudiate its debts would probably have had a ruinous effect on the state's reputation as a trustworthy financial center. Moreover, much of the bank's debt was held by the Genoese themselves, particularly the nobility and merchant class; repudiating this debt would involve not merely soaking anonymous foreign creditors, but destroying the invested wealth of Genoese society.
 
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You can also default by reform, which is when a state unilaterally renegotiates an obligation - "You know that 8% loan you gave me? Yeah, it's 5% now. Deal with it."

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Changing of the Guard
Changing of the Guard


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The French evacuate San Fiorenzo under British bombardment, 1759

The surrender of the French army at Patrimonio appeared to put Corsica securely in the grip of Brigadier-General James Wolfe. Only Calvi remained in French hands, garrisoned by a single battalion. With Ajaccio under his control and Bastia just a day’s march from his army encampment at Patrimonio, General Wolfe was in a strong position to dictate terms to the Corsicans. Wolfe, however, would not take on the role of a conqueror, for he and the ministry knew very well that the conduct of the British forces on Corsica would have repercussions far beyond that little island’s shores.

One of the most controversial aspects of Britain’s strategy in their war with France was her treatment of neutral states. British warships and privateers had crippled the French merchant marine in the early years of the war, not only stifling French commerce with other nations but severing the flow of goods and supplies between France and her colonies. In 1758 the French government responded by ending France’s trade monopoly with her West Indies colonies, allowing merchants of neutral states to participate. Foreign merchants - in particular, the Spanish and Dutch - were happy to oblige, enticed by the prospect of breaking into the lucrative West Indies trade.

When diplomacy failed to stop this neutral participation, the British decided to change the rules. Henceforth, the British government declared that it would “not allow in war what was not allowed in peace;” that is, if foreign merchants had been unable to carry commodities to or from French ports prior to the war, they would not be allowed to do so during the war. To enforce this decree, the British authorized both their warships and privateers to detain and search neutral shipping at will. Although the British maintained that they were closing a “loophole,” these inspections and seizures gave great offense to foreign powers who perceived Britain’s policy as a violation of their neutrality and sovereignty. The French government, keen to isolate the British and turn international opinion against them, used this policy to portray Britain as an arrogant, lawless, predatory state, and France herself as the champion of neutral rights and free commerce. A French victory, they claimed, would be a victory for the rights of all nations; a British victory would benefit only Britain, to the detriment of everyone else. This war of words was about more than just rhetorical points, for the adherence of neutral powers to one side or another might sway the course of the war.

Initially, the French occupation of Corsica had elicited little opprobrium in Britain. Certainly the French had gone about their occupation in a brusque and forceful way, but in 1756 Corsica was still viewed in Britain as a satellite of France. Only from late 1757, as unrest in Ajaccio and disquiet at the consulta were spun into the makings of a rebellion by Pasquale Paoli, did this ambivalence begin to change. After the British landing in 1758, the “Corsican crisis” was catapulted into the popular newspapers. The turbulent consulta of 1758, the seizure of Bastia, the alleged “indignities” against the royal family, the outbreak of violence in the Nebbio, and every rumored skirmish or raid of the “machiars,” “machyars,” or “machiaros” were all extensively covered by the London gazettes. As they had in the 1740s, the British press once more praised the simple and honest Corsicans, a people “brave and free” fighting for their liberty against “Bourbon despotism.” King Theodore, whose reputation in Britain had been damaged by the “betrayal” of the Treaty of Monaco, was fully rehabilitated after the “Rout of Borgo” (as the English called it) and his defiant repudiation of the French occupation of Bastia.

One reason the “Corsican crisis” received so much attention in Britain was that the French occupation of the island rovided a useful counter-narrative to France’s portrayal of itself as the champion of neutral states. The British gleefully pointed out the rank hypocrisy of France claiming to be the selfless defender of the rights of minor powers while simultaneously oppressing the poor Corsicans, cutting off their trade, and plundering their country. To what extent this actually changed any minds in foreign courts is unclear, but the British could not resist making an argument which played so well into their self-image as a bastion of liberty opposed to the odious tyranny of Versailles. In keeping with this narrative, it was politically necessary for General Wolfe to treat Corsica not as a conquered foe, but as a liberated friend.

In fact secret negotiations in Turin between the British and Theodore’s private agents had resulted in a favorable “understanding” long before Wolfe’s landing at Saleccia Beach. Theodore - still seeking to preserve the veneer of neutrality - could not possibly sign anything while the French controlled Bastia, but Concador had been so decisive that the king was now free to move his secret diplomacy into the open. Instead of a betrayal, Theodore could portray any treaty with the British as forced upon him by necessity.

On the 15th of June, British and Corsican representatives signed the Convention of Bastia.[1] In this document, the British agreed to recognize and respect Corsican neutrality, to evacuate their forces from Capraia and the Nebbio within 60 days, and to surrender all Corsican nationals in their custody to the Corsican government (specifically, the Greeks of the Busacci squadron). The Corsican government agreed to withdraw from the Convention of Ajaccio of 1756 and nullify all of its provisions, to suspend all payments on their debt to the French government, to abide by the rules of conduct for maritime commerce as dictated by Britain, and to repatriate all French nationals in their custody as soon as they were well enough to travel.

The most strategically important clause, however, concerned Ajaccio. Britain, after all, still had a war to win. To justify their continued use and occupation of the port, the British insisted upon leasing Ajaccio from the Corsican government at a price of £10,000 per annum “until the conclusion of the present hostilities.” This was presented at the negotiations in Bastia as a non-negotiable forced lease, but one suspects that the terms had already been privately discussed in Turin. It is now known from correspondence within the British foreign ministry that the British envoys further contrived to put a “sweetener” of £5,000 directly in Theodore’s pocket. The French had tried to secure Corsica’s loyalty with debt; the British preferred credit.


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Ajaccio in the early 19th century

The British did not have to worry about the security of their position on Corsica for very long. Less than two months after Conchador the British won another victory at the Battle of Cape Nao. The stunning defeat of Monti had only further convinced the French ministry that the Mediterranean was a waste of resources, and further strengthened their resolve to send the Toulon squadron to another theater where they could be of more use. When the ships fitting out at Toulon was deemed ready, the French took advantage of advantageous weather to slip through the British blockade. The British, however, doggedly pursued them, and the French fleet - undoubtedly slowed by the scarcity and inexperience of their crews - was forced to engage the British off Cape Nao, not far from Ibiza. Although the French had a small advantage in numbers, the British ships boasted more skilled crews and heavier armaments. After a sustained clash, the French fleet managed to withdraw and seek shelter at the Spanish port of Cartagena.

On paper, the Battle of Cape Nao was only a narrow British victory; the French merely lost two ships, only one of which was usable by the British (as they were forced to scuttle the other). Yet the battle effectively neutralized the French Mediterranean squadron for the remainder of the war. It had taken an extraordinary effort over more than a year to repair, outfit, and crew the fleet in Toulon so it would be ready to sail; the heavily damaged squadron would now need another such overhaul. In 1760, however, the French government dramatically slashed the navy’s budget. As the French ships languished in Cartagena under a smothering British blockade, desertion skyrocketed, robbing the fleet of irreplaceable experienced sailors. A few French frigates would slip out of the port to harass British trade, but the squadron was broken as a fighting force.

Together, Concador and Cape Nao ended the war in the Mediterranean. The French evacuated their troops from Calvi in August 1759, managing to sneak through British patrols and return their garrison to Antibes. By 1760, British patrols and privateers - many operating from Ajaccio and other Corsican ports - had virtually extinguished French Mediterranean trade. In Marseilles, naval insurance could not be bought at any price. The French Barbary outposts at Cape Negre and La Calle, abandoned by their operators, were razed by the British. The Western Mediterranean was now a British lake.

The French still held Minorca with a strong garrison and would keep it for the rest of the war, but the British did not consider its recovery to be a priority. Ajaccio was sufficient for their present needs, and Corsica itself was perceived as a bargaining chip of equal or greater value. Notwithstanding Britain’s public commitment to Corsican “neutrality,” British policymakers quietly discussed using the threat to remain on Corsica indefinitely as a means to force France to relinquish Minorca at the peace table. In the meantime, Wolfe and his men were withdrawn from Corsica by October of 1759, leaving only a single British battalion at Ajaccio.

The role of Corsica in the larger war is often downplayed. Modern historians have correctly pointed out that Concador, though much celebrated in Britain, was strategically insignificant. The French presence in northern Corsica did not threaten the British at Ajaccio, and French losses were slight. Most of Monti’s army was ultimately exchanged or returned to France under parole; ostensibly these parolees were prohibited from fighting the British for one year, but this did not really diminish French manpower. The French government simply assigned them to coastal defense and internal policing duties which freed up other troops for the front lines. Unlike Wolfe’s “vanity campaign” (in the words of one highly critical historian) in the Nebbio, however, British control of Ajaccio had more strategic import. Without this base the British would have been forced to operate out of Gibraltar, which is nearly five times further from Toulon. It cannot be doubted that this would have significantly affected the efficiency of the Toulon blockade, resulting in fewer ships on station with more heavily fouled hulls. Whether the British still would have thwarted the French squadron’s escape in 1759 under these poorer circumstances cannot be known, but the fact that they were thwarted was a major contributing factor to the ultimate failure of the French attempt to launch an army across the English Channel later that year. Although it is purely a fanciful speculation, it is at least possible that - following this line of causality - Ambassador Paoli saved the Hanoverian monarchy.

For the Corsicans, the summer’s events marked the end of what is generally known today as il decennio francese - “the French decade” - between the Treaty of Monaco in 1749 and the Convention of Bastia in 1759. The partnership between France and Corsica had begun with promise; French officials saw themselves as the vanguard of a civilizing mission to pull Corsica into the modern era and showcase the benefits of French science, administration, and law. But these lofty aims were tainted by a popular perception that France, like Genoa, was intent on treating Corsica as a colony rather than an ally. Bertin’s well-meaning projects of economic rejuvenation ran aground upon the exploitative “Monaco Debt,” France’s own economic imperatives (for instance in the coral industry), and his own failure to grasp the cultural and political nuances of the land he was attempting to remake. War had strained the Franco-Corsican relationship to the breaking point, and the waning years of la decennio francese saw France abandon its lofty goal of national rejuvenation for hard-handed political realism and repression.

Fortunately for its people, Corsica would not simply be passed from one master to another. In the negotiations which would ultimately resolve the Anglo-French war, it became clear to both sides that a permanent British base on Corsica was not compatible with a lasting peace. For the British, a base on Corsica was a useful but hardly vital forward position; for the French it was a mortal threat. Corsica under British occupation was so intolerable to the French that it would be an ever-present incitement to war, and a war over Corsica was not one which necessarily favored Britain. This was not Minorca, commanded by one garrison within a single vast fortress; it was a whole island in close proximity to France with numerous harbors and beaches. This rendered it indefensible - or at least, defensible only by a massive garrison which would be intolerable to the British government in peacetime.

The solution - fortuitously for Theodore - was neutrality. From the British perspective, a “robust neutrality” guaranteed by British arms would still be of some use to Britain in wartime (as neutral Livorno had been in past conflicts), while posing less of a provocation to France. Certainly this did not mean the absence of British influence; “neutrality” was a vague and fluid concept, and there was a world of difference between a friendly neutral and a hostile one. But the need to preserve the plausible appearance of neutrality, as well as Britain's desired reputation as a benevolent power, meant that Britain could not seize the same dominant position in Corsica that the French had held in the decennio francese. Their objectives would have to be achieved through subtler methods.

One of these methods - bribery - has already been mentioned; another involved bringing Austria into Corsican affairs. Although relations between London and Vienna were not exactly cordial, the two states had not actually been at war, and diplomatic relations - though strained - were not cut off. As the threat of British force alone might not be sufficient, the British reasoned that France might still be dissuaded from violating Corsican neutrality if doing so would offend France’s own ally. To this end, British policy in the 1760s was to encourage closer Austro-Corsican relations - and, more controversially, to support the royal ambitions of Don Federico, Principe di Capraia, whose familial links to the House of Lorraine (among other things) made him appear best suited for the role Britain wanted a Corsican monarch to play.


Footnotes
[1] Theodore was not present in Bastia at this time. His absence may have been a purposeful attempt to keep the British at arm’s length to avoid putting the king’s neutrality into further doubt.
 
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So, the British are actually having the sense to see when they are outstaying their welcome, and take a lighter approach to Corsica than France had.
Neutrality is absolutely the only way for Corsica to actually survive ad an independent Kingdom here.
How did the broader war go?
 
I figured that that would be the best thing for Corsica in the long-term, neutrality established by treaty and guaranteed by one of the great powers, like Switzerland or Belgium. Though, unlike Belgium, it is much hard geographically to violate that neutrality.

Given how this chapter ends I guess we will soon be entering into the argument of Theodore's successor.
 
I like that Britain sees itself forced to play nice with the Corsicans precisely because it is decidedly not playing nice in regards to neutral ships which try and visit French colonies. This handily lets the policymakers and propagandists pretend to ignore that Britain is much better at economic warfare than maintaining a garrison large enough to oppress a population and is thus very much playing to it's strengths.

Though, unlike Belgium, it is much hard geographically to violate that neutrality.

It's also much less necessary. If one wants to march an army from Germany to France, or indeed vice versa, not doing it via Belgium would be very bloody and likely to lead to a defeat unless one has a massive manpower and materiel advantage. A naval base on Corsica is nice to have when one is planning on presenting a naval threat to western Italy or southern France, but it's not absolutely vital.
 
How did the broader war go?

I've been putting it off as long as possible, but I really can't delay it any more. That will probably be the subject of the next update.

A naval base on Corsica is nice to have when one is planning on presenting a naval threat to western Italy or southern France, but it's not absolutely vital.

Particularly when one already has (or expects to recover) Minorca, which is already a well-developed and well-fortified naval base that isn't too much further from the French coast.

My hope in this update was to make it clear that Britain's "generous" approach here doesn't come from some sort of pro-Corsican sentiment, but practicality. I don't think 1760s Britain would have seriously considered a permanent occupation of Corsica, and occupying a single port is also unlikely to end well. British Ajaccio (or Calvi, etc.) would be as intolerable to France as, say, a permanent French occupation of Ostend and Nieuwpoort would be to Britain; it would be seen as so offensive and dangerous that even if the French were somehow forced to accept it by treaty, they would be plotting to drive the British out before the ink was dry. Such a permanent occupation is likely to drive the Corsican government into French arms, and there is no port on Corsica so secure that it could indefinitely withstand a Franco-Corsican siege. The way I see it, enforced neutrality is the option which best protects British interests at a cost Britain is willing to bear. It prevents Corsica from becoming a French naval base (which would threaten the English trade out of Livorno) while still allowing its ports to be used for victualing British fleets and sheltering British privateers (which, at that time, were acceptable functions of neutral ports).
 
Well, while Corsica just swapped influences, at least it was free again and that alone was surely an improvement for the kingdom, and that's the important thing in the end.

However, Paoli now would pretend his own reward, because, "thanks to me, the French invasion was repealed", etc. Reconstruction and return into normalcy would be sort of challenging for Theodore...
 
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