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cannot start a transaction within a transaction using sqlite shell
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(Edited to retract earlier agreement and amend earlier experiment report)

<b>After looking into this,</b> I <b>no longer</b> agree that your test should have either succeeded, without the complaint you posted, or should have done something else. (I would think it would have "failed" often with a flurry of "busy" messages. This I expect because, by default, there is no busy handler set by the shell. <b>The shell indicates this with a message, "Error: near line 18575: database is locked"</b>. )

With sqlite3 v3.36.0 on Ubuntu, instead of the error you report I get <code>
  Error: near line \#\#\#: disk I/O error
</code>, repeatedly, where the line number progresses.

I think this also should not happen. This will be investigated.

<b>This does not happen on Ubuntu 20.04 running on a system by itself. It appears to be an artifact of running on Ubuntu [WSL](https://docs.microsoft.com/en-us/windows/wsl/about).</b>

(Amendment via edit in light of Richard's post:)

With this in the DB stuffing process:<code>
  for n in $(seq 1000000); do echo "begin immediate transaction; insert into foo values($n); commit;"; done
 | sqlite3 test.db
</code>, I continue to get the "disk I/O error" <b>on WSL only</b>.

I agree that letting SQLite defer actual transaction until the next, does-something statement, is problematic. I am investigating why, without such deferment (using "immediate") there is still an error other than SQLITE_BUSY.