Banks and other institutions of credit were set up, colonizing schemes were devised, and railways were laid out.

To meet the demands of all these enterprises, the Government borrowed immense sums from foreign capitalists and issued vast quantities of paper money, with little regard for its ultimate redemption.

Argentina spent huge sums in prodigal fashion on all sorts of public improvements in an effort to attract still more capital and immigration, and thus entered upon a dangerous era of inflation.
Of the near neighbors of Argentina, Uruguay continued along the tortuous path of alternate disturbance and progress, losing many of its inhabitants to the greater states beyond, where they sought relative peace and security; while Paraguay, on the other hand, enjoyed freedom from civil strife, though weighed down with a war debt and untold millions in indemnities exacted by Argentina and Brazil, which it could never hope to pay.

In consequence, this indebtedness was a useful club to brandish over powerless Paraguay whenever that little country might venture to question the right of either of its big neighbors to break the promise they had made of keeping its territory intact.

Argentina, however, consented in 1878 to refer certain claims to the decision of the President of the United States.