King Theodore's Corsica

Discussion in 'Alternate History Discussion: Before 1900' started by Carp, Jun 11, 2017.

  1. isabella Well-Known Member

    Mar 22, 2012
    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...
    Last edited: Oct 10, 2019 at 1:03 AM
  2. Carp Literally a fish

    Apr 16, 2014
    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.
    Last edited: Oct 10, 2019 at 3:18 AM
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  3. Orko Well-Known Member

    Nov 11, 2009
    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.?
  4. Droman الفينيقي

    May 21, 2014
    Maybe you're carrying an extra zero with the above?
  5. Space Oddity That One Guy. You Know Who I Mean.

    Jul 19, 2010
    It happened all the time. As for what happened, it depended what state you were.
  6. Icedaemon Well-Known Member

    Jul 5, 2016
    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.
  7. Carp Literally a fish

    Apr 16, 2014
    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.
    Last edited: Oct 10, 2019 at 5:51 PM
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  8. AnonymousSauce Raisin Canesian

    Aug 17, 2016
    by the deep fryer
  9. Space Oddity That One Guy. You Know Who I Mean.

    Jul 19, 2010
    Pretty much.

    It was hard being a financier in the early modern era. Better than it had been in the medieval era, but that didn't take much.
  10. Some Bloke Well-Known Member

    Jun 13, 2008
    A small village in Arkhamshire.
    Just caught up with it so far.