Frankly, I'm not sure why everyone's having so much trouble with the naval battle... The first time I played it, I throughly trounced the French fleet, forcing three or four of their ships to surrender and sinking the rest, losing none of my own ships (though the admiral's first rate and the second rate took substantial damage)... I guess it may partly have been to do with the fact that I was taking a "chain shot, just sink the bastards!" approach, using nothing but standard cannon fire...
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