A Cartographical Error
In 1440, Pope Eugene IV, needing to repay a debt of 25,000 gold florins to the Republic of Florence, agreed to sell the town of Borgo San Sepolcro. The treaty specified that the new border would follow a river named "Rio". Surveyors from the Papal States identified a river to the south as the boundary, while Florentine surveyors chose a different river with the same name about 500 meters to the north. This oversight created an unclaimed sliver of land, a terra nullius, measuring about 2.5 kilometers long and 500 meters wide. The roughly 250 residents of the hamlet of Cospaia, finding themselves outside of both states, seized the opportunity and declared independence in 1441. Neither neighboring power contested the declaration, finding it easier to tolerate the microstate than to renegotiate the already complex treaty. For nearly four centuries, the Republic of Cospaia operated as a tax-free, autonomous zone.
Tobacco and Anarchy
Cospaia had no formal government, no army, no police, and no prisons. Its only written law was its motto, "Perpetua et firma libertas" (Perpetual and firm liberty), which is still inscribed on the architrave of the local church. Governance was handled by a Council of Elders and Heads of Families, which met to resolve disputes. For much of its existence, this system maintained stability. The republic's tax-free status turned it into a free-trade zone and a buffer between its powerful neighbors.