Romantic Venice Afloat in Modern-Day Woes : Italy: Ten million tourists a year come to see marvels from city’s 1,500 years of grandeur. But businesses are fleeing, housing is too expensive and the population has shrunk in 30 years from 138,000 to 70,000. And yes, the city is still sinking.

Venice. A human tide is washing over the resplendent city that owes its grandeur to the sea.

Ten million visitors a year arrive to marvel at the remains of its astonishing 1,500 years of glory, the architecture and paintings. They are seduced by the dreamlike allure of a place that seems to exist somehow apart from real life--a kind of baroque elegy adrift in its lagoon, floating in mist and shadow, entranced by the ceaseless murmur of the water as it never tires of kissing the stones.

But Venice is not a dream. These days the Italian city is facing more than its share of reality. In fact, Venice at heart is a classic small town trapped in the body of a monument.

The sweep of the vistas across the Venetian Lagoon, the immense, moody arc of the sky, the grandiose facades, all give the illusion of amplitude; actually, Venice covers a mere three square miles.

You could walk from one end to the other in an hour. And you will walk, because the streets are usually the size of an average sidewalk, or less. Walking, as much as the surrounding water, dictates the shape of Venetian life: the reasonable pace, the sudden street-corner encounters with friends, the pause to talk.

Is Venice still sinking? This is the question everybody outside Venice seems to ask. In a word, yes, though the rate has slowed, mainly because the pumping of ground water for industries on the mainland has been stopped.

But today a rising tide of troubles is more likely to swamp the city. A new sense of desperation seems to have taken hold. Businesses have moved out; the population has shrunk over the last 30 years from 138,000 to a mere 70,000.

Today, the sadness and anxiety of the Venetians have become something more complex than you could account for by listing the problems. It is a sensation deeply involved with their own lost grandeur, the echo of the centuries when Venice was an independent city-state, ruler of the eastern Mediterranean.

Venice fell to Napoleon in 1797; then came an Austrian army, then annexation to Italy. Some remnant of anguish remains, a synthesis of longing and fatalism. And there is that unfathomable beauty.

“Venice is a place that overwhelms you,” said Clarenza Catullo, a senior assistant at a museum. Her Venetian parents moved to the mainland, but she moved back. “Every time I leave Venice, I have not only psychological pain but physical pain too.”

Dawn in Venice. The water awakens first. Along the smaller canals there is a tentative rippling. The air is chilly with three kinds of coolness: from the darkness, the stones and the damp.

To the east, a dull, orange sun began to lift itself slowly above the pinnacles, domes and towers. Above the tangled finials of the Basilica of San Marco, it paused. The water made little clapping sounds.

The floating bus-stop platforms creak and sway, the pavements undulate. The entire city seems suspended in a liquid medium. You not only hear the water, you feel it. In the winter the damp, chill fog seeps into your skin; in the summer the air can be soggy and heavy.

Midday in Venice. On a springtime Saturday, the flood of tourists is rising. The Venetians know they need tourists to survive, but can’t figure out how to reduce their impact.

The commercial diversity of the city has shrunk drastically over the years. Though the port and the glass furnaces are still active, beleaguered artisans and small shopkeepers struggle to prosper as taxes consume up to half of their gross.

The crux of the problem is how to preserve the artistic heritage while accommodating the hordes who come to admire it. “If you have 120,000 people in a town like Venice, as we did last Saturday, you run the risk of having the good destroyed,” said Deputy Mayor Gianfranco Mossetto.

His solution. Ration access to the city. This could mean either selling tickets to limit the total number of people allowed into the city, or organizing itineraries so they don’t all arrive at San Marco at once.

Evening in Venice. The twilight sky gleams with opal and silver, the mainland succumbs to the mist. The dancing water in the lagoon glows with the light it has been gathering all day. The Venetians begin to turn homeward.

Homes are one of the biggest problems in Venice. The basic difficulty is an exotic tangle of laws that, in one way or the other, work against both the owners and the tenants.

The price of housing is just as problematic. But worst of all are the empty houses. Over the years, many foreigners have bought houses in Venice. They restore them, but they use them mainly for vacation.

“Housing is the main reason people move out,” said Claudio Orazio, the new deputy mayor for housing. “There are enough habitable houses in Venice, so the main problem is the money.”

Night in Venice. The streets are silent, except for the sound of my heels as I walk. I pass through a tiny street smelling of jasmine and cat urine, and I am just crossing the Bridge of the Tree when I hear music--a woman singing to a piano accompaniment. I pause and listen to the sweet, unaffected melody.

For the first time that day, I wasn’t thinking about the problems. I thought of an elderly gondolier who had said, “There is a hand that sustains Venice, an army of angels with chains of gold that keep it up.”

Why should Venice be saved? I used to think the answer was obvious. But the answer has become more elusive, though no less compelling. I think the Venetians would simply say, because our children were born here and our parents are buried here. It’s home.