Vatican City
The name was first used in the Lateran Treaty, signed on 11 February 1929, which established the modern city-state. The name is taken from Vatican Hill, the geographic location of the state. "Vatican" is derived from the name of an Etruscan settlement, "Vatica" or "Vaticum" meaning garden, located in the general area the Romans called "vaticanus ager", "Vatican territory".
Papal States
Despite the fact that the traditionally Catholic powers did not come to the pope's aid, the papacy rejected any substantial accommodation with the Italian Kingdom, especially any proposal which required the pope to become an Italian subject. Instead the papacy confined itself (see Prisoner in the Vatican) to the Apostolic Palace and adjacent buildings in the loop of the ancient fortifications known as the Leonine City, on Vatican Hill. From there it maintained a number of features pertaining to sovereignty, such as diplomatic relations, since in canon law these were inherent in the papacy. In the 1920s, the papacy – then under Pius XI—renounced the bulk of the Papal States, and the Lateran Treaty with Italy (then ruled by the National Fascist Party under Benito Mussolini) was signed on February 11, 1929, creating the State of the Vatican City, forming the sovereign territory of the Holy See, which was also indemnified to some degree for loss of territory.