ARGENTINA 209
inces, it fi nally was agreed that the city should be
the provisional capital of both the Argentine Re-
public and the province and that the Buenos Aires
customhouse should be nationalized, with the pro-
viso that for a period of fi ve years the revenues of
the province would not fall below the 1859 level.
Bartolomé Mitre—distinguished historian, poet,
soldier, and statesman—was elected the fi rst presi-
dent of a united Argentina.
Mitre promoted economic progress and con-
solidated national unity. The customhouse was
nationalized, as had been promised, and plans
were made for the federalization of the capital. The
construction of railways and telegraph lines that
would forge closer links between Buenos Aires and
the interior had begun, and European immigrants
arrived in growing numbers. Some advances were
made in the establishment of a public school system.
But great problems remained, the most diffi cult of
which was the long, exhausting Paraguayan War
(1865–1870).
THE PARAGUAYAN WAR
On the death of the dictator Francia in 1840,
power in Paraguay was assumed by a triumvi-
rate in which Carlos Antonio López soon emerged
as the dominant fi gure. In essence, López contin-
ued Francia’s dictatorial system but gave it a thin
disguise of constitutional, representative govern-
ment. Since he had inherited a stable, prosperous
state, López could afford to rule in a less repressive
fashion than his predecessor. More fl exible than
Francia, too, with a better understanding of the
outside world, López made a successful effort to end
Paraguay’s diplomatic and commercial isolation.
After the fall of Rosas, a stubborn enemy of Para-
guayan independence, López obtained Argentine
recognition of his country’s independence, and the
Paraná was at last opened to Paraguayan trade.
López also established diplomatic relations with a
series of countries, including England, France, and
the United States.
The end of the policy of isolation was accom-
panied by a major expansion of the Paraguayan
economy. Although agriculture (especially the
production of such export crops as tobacco and
yerba maté) continued to be the principal eco-
nomic activity, López assigned great importance
to the development of industry. One of his proud-
est achievements in this fi eld was the construction
of an iron foundry, the most modern enterprise of
its type in Latin America. Transportation was im-
proved with the building of roads and canals, the
creation of a fl eet of merchant ships, and the con-
struction of a short railroad line.
Continuing Francia’s policy, López enlarged
the role of the state sector in the national economy.
In 1848 he transferred to state ownership forest
lands that produced yerba maté and other com-
mercial wood products and much arable land. The
lucrative export trade in yerba maté and some other
products became a government monopoly, and the
number of state-owned ranches rose to sixty-four.
López promoted education as well as economic
growth; by the time of his death, Paraguay had
435 elementary schools, with some 25,000 pupils,
and a larger proportion of literate inhabitants than
any other Latin American country.
At the same time, López took advantage of
his position to concentrate ownership of land and
various commercial enterprises in his own hands
and those of his children, relatives, and associates;
thus, there arose a bourgeoisie that profi ted by its
close connection with the state apparatus, which
enabled it to promote its own interests. The num-
ber of large private estates, however, was small; the
private agricultural sector was dominated by small
or medium-sized farms that owners or tenants cul-
tivated, sometimes with the help of a few hired la-
borers. In contrast with the situation in other Latin
American countries, peonage and debt servitude
were rare, and slavery was gradually abolished by
an 1842 manumission law. The relative absence
of peonage and other feudal survivals contributed
to a rapid growth of Paraguayan capitalism and
the well-being of its predominantly indigenous
and mestizo population. When López died in 1862,
Paraguay was one of the most progressive and
prosperous states in South America.
His son, Francisco Solano, succeeded him as
dictator. The younger López inherited a tradition
of border disputes with Brazil that erupted into
open war when Brazil sent an army into Uruguay