Paraguay and the World Cotton Market: The "Crisis" of the 1860s

Author(s): Thomas Whigham

Source: Agricultural History , Summer, 1994, Vol. 68, No. 3 (Summer, 1994), pp. 1-15
Published by: Agricultural History Society

Stable URL: https://www.jstor.org/stable/3744146

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 Paraguay and the World Cotton Market: The
"Crisis" ofthe 1860s

THOMAS WHIGHAM

Historians have long recognized the important

role cotton played in fomenting and then sustaining the Industrial Rev
olution. Starting in the 1820s, world demand for textiles was such t
capitalists and mill owners in Great Britain could see no limit to their
potential profits. This sense of optimism infected everyone associated
with the cotton trade-and a good many who wanted to be. After all,
British calicoes and baizes had already demonstrated their value in every
market from California to the coast of Mozambique,
Nonetheless, in many ways, this optimism rested on a naive under?
standing of the world economy. It failed to take into consideration, for
example, the phenomenon of overproduction, which, by the end of the
1850s, caused cotton goods to become an unmarketable burden in many
areas. Still, the image of cotton as a sort of white gold endured into the
new decade. It continued to attract investors in Europe; it convinced tra?
ditional suppliers that their influence was far greater than it actually was;
and, perhaps most tragically, it drew the attention of planters and state
authorities in lesser-known locales and led them to believe that they, too,
could share in the profits. All that was needed, they felt, was an oppor-
tunity to enter the trade at a moment when normal suppliers might be at
a disadvantage.
The U.S. Civil War gave them their chance. The world cotton trade
contained within it a flaw that few noticed before 1862. British factories
had long depended on imports of high-quality cotton from the southern
United States, and that source of raw material was universally regarded
as convenient and secure. The attack on Fort Sumter, however, raised
doubts about the security of the cotton trade. Hoping to force a foreign

THOMAS WHIGHAM is Associate Professor of History, University of Georgia. He thanks

Bennett Wall, Carl Vipperman, and Jerry W. Cooney for their thoughtful comments.

agricultural history volume 68 ? number 3 ? summer 1994. ? agricultural history society

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 2 agricultural history

intervention (or at least gain the recognition of Britain, France and the
other European powers), the seceded states refused to ship their key
export. The imposition of a federal naval blockade only worsened the
deteriorating situation. Disheartened at the news of these events, stock-
holders and cotton speculators in London began to increase earlier ef?
forts made to find a new source of cotton. Several sites, particularly India
and Egypt, had been suggested, but none, it seemed, could cover the
entire demand. Where, then, could cotton brokers find an adequate sup?
ply?
No one, least of all the inhabitants, thought that Paraguay, could fill
this gap. Only a decade and a half earlier, the country was as unknown
to European merchants as the far side of the moon. The few travellers
who passed near the Paraguayan frontier spoke of it in excited tones, as
if entering a Tibet or an "inland Japan;" rumor had it that natural re?
sources of all kinds abounded there, and that only expertise and invest?
ment were needed to bring bonanza profits. Individuals who had never
set foot in Paraguay waxed eloquent on the virtues of its tobacco, hard-
woods, green tea (yerba mate), and notably, its cotton.
The truth was less reassuring. Paraguay was nearly a thousand miles
from the coast, connected with the outside only by the meandering
Parana river, known mainly for its shifting and dangerous sandbars,
which presented a year-round hazard for navigation. Conditions for cul-
tivating cotton in the region also proved less than perfect. Although soil
and climate were favorable, Paraguayan farmers had hitherto devoted
only minor attention to cotton growing and little understood its intrica-
cies. Native varieties of cotton, moreover, were decidedly inferior to what
the British market wanted-a long staple variety easily adaptable to ma?
chine spinning.
For all of these reasons, the likelihood of any major outside invest?
ment in Paraguayan cotton remained small. The Paraguayans themselves
had been preoccupied since the early 1810s with avoiding the political
disorder that plagued Latin America at the time. This meant, in effect, that
any plans to improve or diversify the nation's exports would have to wait.
In the end, they waited for over forty years.
The late colonial period in Paraguay had witnessed an impressive ex?
pansion of regional trade ?so much so that a golden age developed for
the export of tobacco and yerba mate.1 The emphasis given by mer?
chants to these commodities, especially the latter, left cotton with little
obvious potential as an export, even though Paraguay produced a crop
1. The best overall treatment of the economic aspects of the late colonial period in Par-
aguay is Jerry W. Cooney, Economia y sociedad en la intendencia del Paraguay (Asuncion,
1990).

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 3 World Cotton Market

ample for domestic consumption. The quest for profits from cash c
ping ultimately brought a dearth of cotton, and after independenc
1811, the country purchased it from the adjacent provinces of northea
ern Argentina. In spite of growing political difficulties, cotton exp
from that area to Paraguay continued into the 1830s.2
Meanwhile, under the authoritarian rule of Dr. Jose Gaspar Rodrigue
de Francia (1814-1840), Paraguay began to shut its doors to the outs
Government policy reinforced the isolation already mandated by the r
gion's geographic position by restricting foreign trade to two minor p
in the south, Pilar and Itapua. Traders, who in any case were few in
number, rarely journeyed beyond these spots into the more populat
sections of Paraguay.3 As a result, subsistence agriculture dominated th
economic scene even close to the capital. The state itself operated a
series of ranches to meet the needs of its military establishment.4
Francia's rejection of foreign contacts had a clear political purpose: to
guarantee Paraguayan independence. A weak nation, he felt, could ill
afford to mix in the volatile politics of its neighbors. Better in the main to
avoid contact. invariably, then, little opportunity arose to develop the
country's export options in cotton or anything else.
The isolation that had hitherto characterized Paraguay could not last
forever, especially given the avid eye of government officials and private
entrepreneurs downriver. The Juan Manuel de Rosas regime in Buenos
Aires (1829-1852), for instance, had never recognized Paraguayan inde?
pendence, and permitted commercial contacts only at its own sufferance.
And the mid-1840s were hardly propitious years for the cultivation of
friendly relations. Civil war raged in the neighboring Argentine province
of Corrientes, where allies of Rosas fought a brutal campaign against his
centralist opponents.
The Paraguayan state, now headed by President Carlos Antonio Lopez
(ruled 1844-1862), reacted to these events with some apprehension. The
traditional policy of nonintercourse was unlikely to engender the same
results as before. Reluctantly, then, in 1845, Ldpez authorized a military
intervention into Corrientes to help stem the Rosista advance. The expe-

2. See, for example, Guia of Juan Francisco Lopez, Pilar, 27 Dec. 1818, in Archivo Nacional
de Asuncion, Seccidn Nueva Encuadernaeion (hereinafter ANA-NE), vol. 1847; Guia of Miguel
Geronimo Nunez, Pilar, 23 Dec. 1822, in ibid.; Guia of Jose Gregorio Estigarribia, Pilar, 31 Dec.
1824, in ANA-Secci6n Historia (hereinafter SH), vol. 234, no.1, and; Comprobantes of Juan de
la Cruz Mendoza, Pilar, 8 Nov. 1831, in ANA-NE, vol. 2935.
3. For an incisive look at the politics and economics of Paraguayan isolationism, see John
Hoyt Williams, "Paraguayan Isolation under Dr. Francia: A Reevaluation," Hispanic American
Historical Review 52 (Feb. 1972): 102-122.
4. See John Hoyt Williams, "Paraguay's Nineteenth-Century Estancias de la Republica,"
Agricultural History Al (July 1973): 206-15.

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 4 agricultural history

ditionary force, commanded by the president's son, lacked the where-

withal for any long-term fight, however, and the younger Lopez wisely
chose to withdraw back into his homeland.5
The 1845 episode had a positive side in that it forced Paraguay into
participating in regional affairs; risky though this was, it resulted in useful
diplomatic links, and ultimately, in new trade arrangements. One year
later, British and French warships escorted a convoy of some 100 mer?
chant vessels to Corrientes. The traders who took part in this speculation
also succeeded in establishing some preliminary trade contacts with Par?
aguay. These merchants, primarily based in Montevideo, had already had
visions of trade in Paraguayan yerba, tobacco, and cotton.6 And though
this first venture into the Paraguayan market generally brought disap-
pointment at the time, still they had high hopes of forging commercial
contacts in the future.7
The year 1852 saw several critical changes. For one thing, the long and
ofttimes violent rule of Juan Manuel de Rosas came to a crashing end in
February, when a rebel army crushed the main Rosista force and went on
to occupy Buenos Aires. The once most powerful man in Argentina fled
into an ignominious exile aboard a British warship. The victors counted
among their number many individuals from the riverine provinces who
had chafed under Rosas's trade restrictions. They soon demanded ?and
got ?a complete opening of the interior waterways to as much commer?
cial traffic as they could bear.8 A natural corollary to this opening was the
recognition of Paraguayan independence, first by Argentina and then
shortly thereafter, by Britain, the United States, and host of other coun?
tries.9 Trade rebounded quickly in this environment.
Carlos Antonio Lopez had seen it coming. He had already ordered
officials at state ranches and farms to grow cotton for the government as
early as 1851.10 Although the original intent of his order appears to have
been to help reduce dependence on imported cloth for military uniforms,
it was only a short step from there to an active promotion of the Para?
guayan cotton trade. Within two years, Lopez went further still in recog-

5. The best treatment of the 1845 expedition is that of Juan E. O'Leary, La alianza de 1845
con Corrientes. Aparacion de Solano Lopez en el escenario del Plata (Asuncion, 1953).
6. See editorial in Comercio del Plata (Montevideo), 24 Nov. 1845.
7. For details of the expedition, see Britannia (Montevideo), 5 Dec. 1846.
8. This new status soon took on the force of law as part of Articles 12 and 16 of the 1853
Argentine Constitution. See Registro nacional de la republica Argentina (Buenos Aires, 1863),
I: 177, 180.
9. See Treaty of Limits, Friendship, Commerce, and Navigation. Asuncion, 17 July 1852, in
ANA-SH 298, no.17; more generally, see Peter A. Schmitt, Paraguay und Europa: die diplo-
matischen Beziehungen unter Carlos Antonio Lopez und Francisco Solano Ldpez, 1841-1870
(Berlin, 1963), passim.
10. See, for example, Informe of Manuel Uriarte, Altos, 10 Nov. 1851, in ANA-NE vol. 2698.

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 5 World Cotton Market

nizing cotton's key role in the overall economy by having the state new
paper reprint a pamphlet called Instructions on the Cultivation and
Harvest of Cotton."
The wisdom of emphasizing cotton as a cash crop was soon demon-
strated. The 1850s and early 1860s brought happy times to regional trade,
with such traditional exports as tobacco, yerba, timber, and cotton pro?
viding the basis for sustained development. To cite one measure of the
magnitude of this growth and its implications for Paraguayan trade, we
need only examine the profits earned on the export of yerba (a state
monopoly): in 1852, the government trade registers recorded 157,108
pesos earned, while by 1860, the amount had shot up to 1,093,860 pesos
earned.12 Other products showed similar increase.13 Yet for reasons not
completely clear, cotton seemed to lag behind. Perhaps the government,
which always played the role of chief backer in Paraguayan commercial
enterprises, simply preferred to export the more lucrative tobacco and
yerba. In any case, however, the value of cotton soon became apparent
to all.
Shortly after the commencement of the U.S. Civil War in 1861, the
Confederate States deliberately embarked on a policy of restricting their
own cotton exports. The southerners assumed that France and Britain
would be so stricken economically by the beginning of 1862 that they
would be forced to intervene in order to reestablish a supply of cotton. If
they did so, this might well have guaranteed independence for the south?
ern states.

While a cotton famine in Europe seemed a near certainty, nevert

the secessionists badly miscalculated in thinking they could easi
sure European governments, or, for that matter, textile manufact
Abnormally large cotton harvests in the United States the two yea
fore the war had left the British and French with a sizeable surplu
thus had enough time to search for new cotton sources without an
ical change in their foreign policy.
The Confederates' loss improved the cotton growing and marketi
many other countries. The supply of cotton from India, China, Bra

11. See El Semanario (Asuncion), 9 July 1853 (and subsequent issues).

12. For these and other trade statistics for the Lopez era, see ANA SH vol. 274,
Semanario, 1 Oct. 1853, 8 Oct. 1853. 24 Dec. 1853, 11 Jan. 1855, and 16 Feb. 1861 through 8
July 1865; Alfred Marbais DuGraty, La republica del Paraguay (Besangon, 1862), 346-50, and;
Juan Carlos Herken Krauer, "Proceso economico en el Paraguay de Carlos Antonio Lopez: la
vision del consul britanico Henderson (1851-1860)," Revista Paraguaya de Sociologia 19
(mayo-ago. 1982): 83-116.
13. For a general treatment of Paraguayan trade before the Triple Alliance War, see
Thomas Whigham, The Politics of River Trade. Tradition and Development in the Upper Plata,
1780-1870 (Albuquerque, 1991), passim.

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 6 agricultural history

Egypt (not to mention supplies that had run the U.S. blockade) by 1863
had grown so that British and French textile manufacturers, although
hurt, could generally breathe easier.14 The exciting news of the cotton
famine, however, had already spread.
In Paraguay, word of the problem came via the government's British
connections. With the opening ofthe rivers in 1852, Carlos Antonio Lopez
had sought to diversify his nation's diplomatic and trade links with the
outside world. Pursuant to this goal, he sent his eldest son, Francisco
Solano Lopez, on a European tour. He stayed about a year in Britain and
the continent, laying the foundation for commercial interchanges, attend?
ing government receptions, and unfortunately, gaining a taste for flashy
uniforms and modern military equipment. These tastes would ultimately
cost his country dearly.
While in London, Francisco Solano L6pez retained the services of John
and Alfred Blyth of Limehouse, who thereafter acted as agents of Para?
guay in Britain. Aside from providing the Lopez government with con-
tracted machinists and engineers, the Blyth brothers also kept the Para-
guayans appraised of current market trends. In June 1861, they notified
the younger Lopez that the cotton crisis had struck:

there is no doubt that the supply of that article from the Confederated
States for the English market will be very much diminished as well by
the blockade of the ports, and by a decrease in production, and no
time could be more favourable for the introduction of cotton from
Paraguay. If Your Excellency will send us samples of Paraguay cotton
we will obtain a report upon it from the most competent authorities.15

For Francisco Solano Lopez, who had seen the British textile mills at
first hand, this news was little short of prophetic. Finally Paraguay pos-
sessed a commodity that the Old World needed and needed badly. The
cotton crisis, then, might provide Paraguay with its first major opportu-
nity to couple its trade with that of the Atlantic economy. And Lopez, fo
one, had no intention of seeing this chance slip by without taking ad
vantage of it.
And seize advantage he did: within days of receiving these letters
Lopez sent a large shipment of Paraguayan cotton to London on his gov-

14. The best single source on the cotton famine of the early 1860s is Frank Lawrence
Owsley, King Cotton Diplomacy. Foreign Relations ofthe Confederate States of America (Ch
cago, 1931), 146-65; see also Gavin Wright, The Political Economy ofthe Cotton South (New
York, 1978), 128-57, and; Elis6e Reclus, "Le Coton et la crise americaine," Revue des Deux
Mondes 37 (janvier 1862): 176-208.
15. J. and A. Blyth to Francisco Solano Lopez, London, 22 June 1861, in ANA Coleccidn Rio
Branco (hereinafter CRB) I-29, 34, 25, no. 8.

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 7 World Cotton Market

ernment account. Although a portion of this cotton mildewed in trans

by the end of October enough had arrived intact to permit the sa
some 400 bales at ten and one-half pence per pound.16 This attrac
price whetted Lopez's appetite all the more. By December, he had his
father decree that Paraguayan landowners cultivate cotton instead of to?
bacco during the upcoming 1862 planting season. The average Para?
guayan landowner only grudgingly accepted this order, as the U.S. min?
ister in Asuncion:

What amount this decree will be able to force into existence I am

unable to say but I apprehend not enough to affect the Lowell or
Manchester markets. The little labor that this people bestow upon the
soil, it is said, yields a much better return if employed in raising to?
bacco than in cultivating cotton and as they will plant cotton on com-
pulsion it is not likely that it will receive much attention afterward.17

The reticence shown by Paraguayan farmers proved well founded. For

most, Britain seemed unbelievably far away, and the new trade simply
failed to warrant any major readjustment on their part, especially given
the fact that a ready market for Paraguay's tobacco already existed close
at hand in neighboring countries.18 Moreover, the British market required
high-quality cotton already divested of seed, but as the Paraguayans had
no gins, it seemed preposterous to suppose that they could supply the
desired article.19
On the other hand, Francisco Solano Lopez believed his countrymen's
stubbornness misplaced, and felt that cotton would bring them dramatic
profits. After all, resident foreigners had advised him as much. So had the
Blyth brothers, Paraguayan diplomatic representatives in Europe, and
more and more, British businessmen operating from Argentina.
The doyen of this latter group was Thomas J. Hutchinson, British con-
sul at the Parana river port of Rosario. Hutchinson, whose accomplish-
ments would later include authorship of two influential travelogues,
spent as much time promoting cotton in the countryside as he did ful-
filling consular duties. In this, he had the support of both the Argentine

16. J. and A. Blyth to Francisco Solano Lopez, London, 8 Nov. 1861, in ANA-CRB I-29, 34,
25, no.18.
17. Despatch of Charles Ames Washburn to Secretary of State William Seward, Asuncion,
5 Feb. 1862, in U.S. National Archive, M-128 no. 1 (on microfilm).
18. Regarding the Paraguayan tobacco trade, see Thomas L. Whigham, "Agriculture and
the Upper Plata: The Tobacco Trade, 1780-1865," The Business History Review 59:4 (Winter
1985): 563-96.
19. Regarding Paraguayan cotton at this early stage, see Belisario Ibarra Encina, "Historia
de la produccion algodonera en el Paraguay," Revista del Centro Estudiantes de Ciencias
Economicos 14: 118 (1953):45-47.

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 8 agricultural history

and British governments, and the Cotton Supply Association of Manches?

ter, which sent him New Orleans seed for distribution to provincial gov?
ernments. He personally explored the lower reaches of the Salado River
valley in 1862 with an eye to promoting cotton cultivation there. Yet all
these efforts evidently came to naught.20 Argentine planters resisted
switching to cotton much as did their counterparts in Paraguay, and in
their case, no threat of force dangled over them.
As might have been expected, the efforts of Hutchinson and others in
Argentina struck strong chords in Asuncion. Francisco Solano Lopez had
by now succeeded to the presidency (his father having died in 1862) and
was anxiously pursuing every modernization project that came his way.
Through the firm of Blyth Brothers, London, he obtained the services of
scores of British engineers who constructed a new arsenal, public build?
ings, a shipyard, and even a railroad, one of the first in South America.
Solano Lopez was particularly ambitious in promoting his cotton
schemes. In January 1863 he had his minister in Montevideo purchase
400 copies of an introductory manual on cotton cultivation.21 Two
months later, he ordered 20 tons of seed from New York.22 And in May,
his representatives in the latter city shipped to Paraguay two modern
cotton gins, one for cleaning long fiber ("Sea Island") and the other for
short ("Upland").23 With such innovations already being acted upon, Par?
aguay soon could boast of plantings in the millions.
Given such prospects, Lopez wanted to make sure that his market in
Europe was as secure as he had been led to believe. News from overseas
did not reassure him. High quality cotton from India and Egypt had ap?
peared in great quantities in Manchester, and little reason existed to as?
sume that those sources could not supply their product cheaply. Para?
guay had to become competitive. Thus, Lopez maintained regular contact
with his agents in Paris, London, and Brussels, through whom he pro-

20. Hutchinson's work did, however, bring about legislation in the Argentine province of
Corrientes in 1863 that freed cotton planters from all taxes and duties. See Thomas J. Hutchin?
son, Buenos Aires and Argentine Glean/ngs (London, 1865), 223-225, 314-315, and passim;
see also his subsequent survey and travelogue, The Parana (London, 1868), 233-234.
21. Juan Jose Brizuela to Francisco Sanchez, Montevideo, 15 Jan. 1863, in ANA-CRB I-30,
22, 1, no.1.
22. Foreign Minister Jose Berges to Richard Mullowney, Asuncion, 5 Mar. 1863, in ANA-
CRB I-22, 11, 1, no.73.
23. The machines arrived in mid-August. See Invoice of Richard Mullowney, New York, 20
May 1863, in ANA-NE 2801, and Jose Berges to Carlos Calvo, Asuncion, 21 Aug. 1863, in
ANA-CRB I-22, 11, 1, no. 175. Another observer noted that six gins eventually reached Asun?
cion. See Michael G. Mulhall, The Cotton Fields of Paraguay and Corrientes (Buenos Aires,
1864), 38.

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 9 World Cotton Market

moted Paraguayan cotton on an experimental basis.24 These

agents, for their part, continued to send rosy reports back to the presi
over the next few months; as far as they were concerned, only transp
problems prevented Paraguay from capturing a good portion of th
ropean cotton market.25
The enthusiasm of distant promoters aside, the prosperity of Pa
guayan cotton really depended on on-the-spot, expert advice in Paragu
proper. The local planters could not provide exactly what foreign clien
wanted without a clear indication of standards. Therefore, the arrival in
Asuncion of Michael G. Mulhall presented a hopeful opportunity for the
Paraguayans. Mulhall was less a cotton expert than a well-respected
Plata hand. He worked as editor of The Standard, the chief English-
language newspaper in Buenos Aires, and despite his relative youth, was
regarded as a spokesman for the entire British community in the region.
In later years, he gained a measure of fame as a writer of travel literature,
and co-authored with his brother, the Handbook of the River Plate, an
indispensable guide for Anglo-Saxon immigrants to Argentina, Paraguay,
and Uruguay.26
Mulhall was well aware of Hutchinson's earlier explorations but came
to the conclusion that the Northeastern region-especially Corrientes and
perhaps Paraguay-offered a far more propitious site for cotton cultiva?
tion than did the valley of the Salado. Mulhall's own efforts to promote
Argentine cotton growing were already well established; indeed, he had
distributed cotton seed for some time from the offices of The Standard.27
The Paraguay excursion, however, lent the capstone to all of these earlier
labors and speculations.
Mulhall started up the Parana river aboard a comfortable steamer in
November 1863. By his own account, it proved a decidedly pleasant jour-
ney. The many tropical islands along the course of the river suggested to
him the possibility of hundreds of tiny cotton plantations, like so many
clouds upon the waters. He made extensive inspections of cotton farms
in Corrientes province, where he proudly noted that his newspaper's

24. For instance, Francisco Solano Lopez sent 1,500 pounds of cotton as samples to France
and Britain in May 1863. See Berges to Ludovico Tenre, Asuncion, 6 May 1863, in ANA-CRB
I-22, 11, 1 no.113, and El Semanario 16 May 1863.
25. See Berges to Tenre, Asuncion, 6 June 1863, in ANA-CRB I-22, 11, 1 no.134, and
especially Tenre to Berges, Paris, 6 Aug. 1863, in ANA-CRB I-29, 32, 52 no. 2, in which the
former suggests that Paraguayan cotton should be displayed at the Universal Exposition.
26. Michael G. Mulhall, Rio Grande do Sul and its German Colonies (London, 1873); Mi-
chael G. Mulhall, The English in South America (Buenos Aires and London, 1878); Michael G.
and E. T. Mulhall, Handbook ofthe River Plate (Buenos Aires, 1869); (5th ed., Buenos Aires and
London, 1885); (6th ed., Buenos Aires and London, 1892).
27. Mulhall, Cotton Fields of Paraguay and Corrientes, pp.11-13.

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 10 agricultural history

preaching had "succeeded in arousing or resuscitating a cotton fever."28

When he met the provincial governor toward the end of his stay, the
latter argued strongly for the establishment of an English agricultural
colony in Corrientes, dedicated exclusively to cotton cultivation, Nothing
evidently came of this proposal, but it nonetheless indicated how much
attention cotton had attracted in the backlands of Argentina.29
Transferring to a Paraguayan vessel, Mulhall continued on his way
upriver, finally arriving at Asuncion in December. He found the capital
sweltering in the summer heat, but in other ways an attractive city, with
amiable inhabitants and a quiet Hispanic ambience. The official inspec-
tion at the customshouse he regarded as most severe, however, and
hardly the best harbinger of an open, healthy commerce.
Told that President Lopez was ill, Mulhall instead went to see Foreign
Minister Jose Berges, who showed great interest in cotton. The Foreign
Minister provided a guide to the cotton districts ofthe interior for Mulhall
whenever he wished to depart. With clear enthusiasm, Berges displayed
a recent letter from the Blyth brothers that mentioned an offer from a
Manchester firm to buy Paraguayan cotton at 24 pence per pound. He
added that the reports previously sent Mulhall at The Standard had omit?
ted the figures for cotton sown after September 30th, and that now the
number of cotton "hills" planted probably exceeded 150 million.30 Mul?
hall regarded that claim with understandable but polite skepticism. Later,
on his trip to the interior, he learned that, if anything, the Foreign Minister
had underestimated the total plantings,
Despite the suffocating heat, Mulhall stayed on in the capital for the
Christmas revels, attending balls and dinner parties, and observing horse
races, fireworks, and bullfights. Only at the beginning of January did he
set off eastward on horseback from Asuncion. Passing through the green,
hilly country to the south of Lake Ypacarai, Mulhall was caught by a
heavy downpour before eventually reaching the small village of Itaugua,
where he accepted the hospitality of local officials.31 When the rain
cleared the next day, the Briton resumed his travels inland through still
more well-kept cotton fields, and past the communities of Pirayu, Para-
guari, Yaguaron, and Ita.
Although he spent only four days travelling the back roads of Para?
guay, Mulhall felt he could now confirm the general picture given by
Berges. In the five districts he visited he predicted a total ginned cotton

28. Ibid., 65.

29. Ibid., 79-81.
30. A cotton "hill" is made up of an individual plant and the small mound of earth that
surrounds it. Ibid., 88-89.
31. Ibid., 95.

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 11 World Cotton Market

production of at least 150,000 arrobas (some 3,750,000 pounds) for th

year. And, "yet," he noted, "these districts contain only one-eighth ofthe
total quantity planted, and I have not mentioned the new plantings o
October and November.32
Mulhall departed Paraguay by river steamer on January 8th. Before he
left Paraguayan waters, he penned a report detailing his observations on
cotton. Its tone was optimistic. He regretted that the government had
imported North American seed, which was annual, instead of Egyptian or
other perennial varieties, which required less labor and were better
suited to the climate. The oft-cited difficulties of transport and labor were
minimal, however, since Lopez could summon 20,000 troops to provide
labor if necessary. In this respect, Mulhall much preferred Paraguay to
Argentina as a source of cotton.
Mulhall's final comments betrayed great excitement, a touch of self-
satisfaction, and some unrecognized irony that a year later would look
prophetic indeed:

[Paraguay's cotton crop may realize] twenty-four million petacones, or

fifteen hundred thousand doubloons. This magnificent sum will dazzle
the sceptical, and give room for suspicion of gross error or exagger-
ation, but there can be no question that, saving some terrible and
unforeseen calamity, the cotton crop of Paraguay for 1864 will be stu-
pendous, and cause a revolution in the commerce of these river.... I
rejoice that I have come to Paraguay and seen the first indications of
this great industry, of which, without exposing myself to the charge of
egotism, I may truly say the Standard was the precursor.33

The Mulhall visit convinced Lopez and his advisors that they had been
on the right track all along: cotton could ensure Paraguay a golden fu?
ture. Throughout late 1863 and early 1864 the Paraguayans received what
seemed like an endless series of glowing reports from their representa?
tives in Europe.34 All of these underscored the continued absence of
North American cotton in continental markets and the good showing
made by the Paraguayan product. Though the amount of cotton exported
by Paraguay was still limited, nonetheless, all signs pointed to much-
increased output in the future, and with it, much-increased earnings.
The thing that spoiled all of those happy prospects was war, or rather,

32. Ibid., 101-02.

33. Ibid., 102-03.
34. See Berges to Ludovico Tenre, Asuncion, 6 Dec 1863, in ANA-CRB I-22, 11, 1, no.241;
Tenre to Venancio Lopez, Paris, 24 Jan. 1864, in Ibid., I-30, 2, 17, no.2; Tenre to Reynault de
Savigny, Paris, 23 Feb. 1864, in Ibid., I-30, 23, 100, and; Alfred Marbais DuGraty, "La culture
du Coton au Paraguay," Le Precursor (Anvers), 29 Apr. 1864.

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 12 agricultural history

the ebbing of one war and the commencement of another. In North

America, the Confederacy was counting its days. The Union victories at
Gettysburg and Vicksburg in July 1863 brought about a sense of anxiety
in the South that gave way to panic and despair as General Sherman's
army advanced into Georgia a year later. All hope of foreign recognition
for the secessionist government evaporated.
As far as world cotton markets were concerned, the decline of the
Confederacy made little difference. The cotton crisis had long since
passed, and full supplies of Egyptian and especially Indian cotton now
arrived regularly at British mills. 35 Of course, cotton shipped from the
southern states did reenter the European markets after the conclusion of
hostilities, but now it had to compete to gain a foothold. Thus, the hol-
lowness of the old "King Cotton" diplomacy was now obvious to all ?
except perhaps in Paraguay.
Lopez continued to heed the optimistic estimations of his advisers,
who argued that cotton greatly benefited the country's export economy.
As noted, this feeling was understandable. Encouraging predictions and
reports, as well as new machinery, kept pouring in.36 The Paraguayan
government had even been approached by a Montevideo firm that of?
fered to establish a branch office in Asuncion to fund cotton cultivation,
and, if warranted, to arrange for the immigration of still more laborers.37
Lopez gave his general assent to these endeavors, ordered his European
agents to keep publicizing Paraguayan cotton, and then moved on to
other matters.

He had a great deal to concern him. Even before his father's death, he
had dedicated himself largely to improving Paraguay's military potential.
Now, in sad circumstances, came the opportunity to test how well he had
done his work.
The events that sparked the most costly war ever seen in South Amer?
ica were straightforward enough. The Brazilian Empire had had long-
standing difficulties with Uruguay, a country whose ranching elite had
several times supported anti-government rebels in Brazil's southern
provinces. Aside from this general animosity, certain Brazilian landown?
ers held property on both sides of the Brazil-Uruguay frontier withou
ever having established clear and legal title. By the early 1860s, these
hazy claims and counterclaims resulted in a major international dispute
that Brazil was willing to settle by force. The Uruguayans found an ally,

35. By the end of the U.S. Civil War, the British were receiving 85 per cent of their cotton
imports from India; see Owsley, King Cotton Diplomacy, 572.
36. Regarding new machinery sent by the Cotton Supply Association, see Berges to Drab-
ble Brothers, Asuncion, 6 Apr. 1864, in ANA-CRB I-22, 11, 1 no.319.
37. Ibarra Encina, "Historia de la produccion algodonera," 47.

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 13 World Cotton Market

however. Neither Francia nor Carlos Antonio Lopez had cared much
about faraway Uruguay, and they certainly never thought to intervene in
Uruguayan affairs. The younger Lopez, however, convinced himself that
the political status of neighboring states was intimately tied to that of
Uruguay. Through diplomatic channels, he let it be known that his regime
would not countenance any outside interference in the affairs of that
state.

Even if Lopez was sincere in his estimation of the political realities at

that moment, anything more than a rhetorical attack against the powerf
Empire seemed absurd and was so dismissed by all observers. The gov?
ernment in Rio de Janeiro simply chose to ignore the Paraguayan ulti
matum and proceeded against Uruguay by means of a military interven-
tion in October 1864. An enraged Lopez responded with a general
mobilization, sending his troops upriver into Brazilian territory. A few
months later, trying to force a passage south to Uruguay across Argen?
tine territory, Lopez also incurred the ill-will of Buenos Aires. He ended by
going to war with both countries, and ultimately with Uruguay, by then
under the control of forces friendly to Brazil.38
After seven months of bloody offensive operations, the Paraguayan
army was thrown back across its own borders by a large Allied force,
which thereafter subjected Paraguay to a slow strangulation. This cam?
paign included a near-total blockade at the confluence of the Parana and
Paraguay rivers. No trading ships could enter or leave the country.
Under such circumstances, Lopez's plans for an expanded commerce
in cotton came to an abrupt and necessary end. Yet, up to March 1865,
he was still communicating with his foreign agents on this point and still
sending shipments of Paraguayan cotton downriver.39 Perhaps he as?
sumed the war with Brazil would not interfere with his plans for cotton.
Or perhaps he simply did not want to leave this task undone. In any case,
Lopez's attack on the Argentine port of Corrientes one month later
brought an immediate declaration of war from Buenos Aires, and with it,
a definitive closing of the river to his merchant ships.
During the fighting, all cotton produced in Paraguay was destined for
local consumption, and for the needs of the army. These needs were
considerable. Lopez had mobilized the entire population for the war ef?
fort, and while the majority of Paraguayan men had relocated to the front,

38. The best account of the war's origins is still Pelham Horton Box, The Origins of the
Paraguayan War (Urbana, 1930). See also Efrafm Cardozo, Visperas de la guerra del Paraguay
(Buenos Aires, 1954); Charles J. Kolinski, Independence or Death! The Story of the Para?
guayan War (Gainesville, 1965); and, for a military analysis, Augusto Tasso Fragoso, Historia
da Guerra entre a Triplice Alianga e o Paraguai (Rio de Janeiro, 1934), 5 vols.
39. See, for instance, DuGraty to Berges, Berlin, 22 Feb. 1865, in ANA-CRB I-30, 4, 35 no.
5.

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 14 agricultural history

the women of the country stayed behind to work the fields, sowing row
after row of vegetables, tobacco, medicinal herbs, and cotton for cloth.
To judge from the incomplete agricultural censuses ordered by Lopez
between 1866 and 1870, these plantings probably numbered in the mil?
lions of rows.40 How much cotton cloth got to the troops, however, is
unclear.

As Paraguay's fortunes on the battlefield declined, the country's in?

habitants started to forget about quotas for cotton production and began
to search for ways to survive. The advent of cholera and smallpox added
to the misery, as did the progressively more capricious and violent be?
havior of Lopez, who now saw defeatists and traitors at every turn. His
victims included members of his own family and many of his closest
collaborators.41 By the time the Allies entered Asuncion in 1869, the long-
suffering people of Paraguay had given up all hope. Lopez's death at the
hands of a Brazilian lancer one year later came almost as an anticlimax.
The dying words of Lopez, "I die with my country," were painfully
accurate. Out of a population of just under half a million before the war,
only 221,000 were left, and of these only 28,000 were adult men.42 It
would be years before anyone in Paraguay again thought seriously about
cotton exports, and by then, the competitors in Argentina, Brazil, and
elsewhere in the world had multiplied a hundredfold.
The cotton crisis of the 1860s produced by the Civil War in North
America shook the world market profoundly. It sent speculators far afield
in search of new sources to replace the cotton that had been exported
from the southern United States. Their frantic activities affected produc?
tion on several continents and stimulated growers everywhere into think-
ing that they, too, could reap bonanza profits from a desperate market.
Paraguay, then, took its lead from many countries in vastly expanding
its cultivation of cotton. By any measure, however, the odds were long
that the country could enter the trade successfully. Paraguay was remote
from the potential consumers of its product; the country was even re?
mote in South American terms, being situated far up a river infamous for
its sandbars and other navigational hazards. The transport infrastructure
remained primitive. Though a few steamers might ferry cotton to Europe
on government account, the greater portion of the export would have to
be carried by smaller craft, and then only as far as Buenos Aires, where

40. These censuses are highly detailed, but also rather suspect, since no indication has
come to light to explain how they were conducted and by whom. See, for example, Informe
on Paraguayan Agriculture for 1866, in ANA-NE 2405, and El Semanario (Asuncidn) 19 Oct.
1867.

41. A useful account of these sad events is Hector Francisco Decoud, Guerra del Paraguay.
La masacre de Concepcidn ordenada por el mariscal L6pez (Buenos Aires, 1926).
42. Kolinski, Independence or Death!, 198.

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 15 World Cotton Market

it would be transshipped to Europe. Given the cost of freights, insura

anchorage fees, and other expenses, the costs of transport alone w
negate much of the probable earnings. At the level of production
was the problem ofthe natural conservatism of Paraguayan farmers, w
traditionally resisted growing more than they thought necessary for
immediate wants. Lopez tried to overcome this reluctance by fiat,
had his orders been given the chance, this feeling might have been ov
come. No one, however, thought it would be easy.
With all of these disadvantages, nonetheless Lopez persisted in h
enthusiasm for cotton exports. He probably became caught up in
clamor of the moment. After all, his military machine required al
foreign exchange he could garner. He thus willingly allowed himself t
persuaded by the windy predictions of his advisers and of outsiders su
as Mulhall and Hutchinson. Yet, they too, operated under the misco
ception that the rise in demand would be permanent, that the Manche
Cotton Supply Association well understood its own needs. As we h
seen, the speculators' dire predictions, though understandable, wer
largely unwarranted. The "crisis" passed without ever really assum
ugly proportions.
Where did this leave the Paraguayans? Once an enthusiasm has b
kindled, it is often difficult to set it aside. Lopez counted on cotto
generate the revenues he needed to advance his military ambitions in
Plata basin. No one, least of all his paid agents, was anxious to tell
that the world market had failed to turn to Paraguay's clear advan
Instead, they exaggerated the country's chances to meet European
mand, just as they would later exaggerate the support Lopez could
pect in any confrontation with Brazil and Argentina.
Such advice poorly served the Paraguayan people. It ultimately
Lopez's sense of infallibility, and caused human and natural resourc
be diverted into poorly conceived projects that little benefited the
ulace. Cotton obviously had a future as a part of the country's mod
izing economy, but it could never be Paraguay's salvation. The failu
grasp that fact meant increased work, and, in the end, increased suffe
ing.

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