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After the fall of Quebec and Montreal in 1759, Pitt was willing to make peace with France, including returning Quebec. Pitt's terms saw the acquisition of the Ohio Country, Niagra, and the Great Lakes region as nonnegotiable, but he would return most of New France.

Why? Well, for one, he was worried about Spanish entry into the war; as it stands, it had been a bloody, prolonged conflict.

Equally important was the fact that Britain's Prussian ally was getting slaughtered; Pitt was hoping to balance the return of New France with a peace that preserved Prussia.

There is precedent for such a swap; in 1748, Louisberg was returned to France under the Treaty of Axi-la-Chapelle in return for France's withdrawal from the Low Countries.

Effects? On the one hand, I don't think Britain would be as willing to restrain colonial expansion westward; fears of a resurgent France expanding once again will still be there. On the other hand, colonials will be unhappy that once again, their conquest has been swapped for thirty acres of European potato farms. The Prussian-British alliance will still be intact, however, but Spain won't take the blows (and impetus for reform itreceived) during the Seven Years War.
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