An instance of his ready interest in foreigners was his connection with a young American, named Hopkins, who had been sent out in 1845 by the United States Government to investigate the advisability of recognising Paraguay, then accessible for the first time. This enterprising young man fired Lopez's imagination with his accounts of the material progress of the United States, and Lopez even lent him money to return and form a company for the purpose of introducing American goods and cigar manufacture into Paraguay. Hopkins, after several years, succeeded in interesting some American capitalists and came back and established his factory. At first Lopez was delighted, but he soon quarrelled with the Americans. The etiquette in Paraguay was that the President should remain seated with his hat on when he granted an audience, and the manners of the visitor were expected to be correspondingly humble. The Americans mortally offended him by forgetting themselves in his presence. The situation soon became intolerable and the company retired.
After the overthrow of Rosas in 1851 the Paraná was declared free for navigation to vessels of all nations by Argentine law and by treaties to which Brazil and Uruguay were parties, although Paraguay was not. Nevertheless, Lopez permitted ships to ascend freely to Asuncion. Lopez wished to concentrate all trade at Asuncion and opened no ports north of his capital. The upper course of the river belonged to Brazil, but the boundary between Brazil and Paraguay had remained unsettled from colonial times. In his control of the Lower Paraguay, Lopez had a lever to force Brazil to terms. He steadfastly refused to permit ships to ascend into Brazil in spite of the latter's persistent efforts to procure the natural and necessary right of egress to the ocean by an international river. While this matter still remained unsettled, Lieutenant Page of the United States Navy appeared in the Water Witch at Asuncion on his survey of the Paraguay. Lopez was delighted, and extended every facility to the officer as far as the northern boundary of Paraguay. Page went on up to Brazil. Lopez was offended, for he feared that he would be at a disadvantage in his further negotiations with Brazil by having apparently granted to an American ship the permission which he had steadily refused to Brazilians. Unfortunately, just at this time occurred the quarrel with the American promoter, Hopkins. The American officer took his countryman's side, giving him refuge on board the Water Witch. This so enraged Lopez that he issued a decree prohibiting foreign war-vessels from entering Paraguayan waters, and one of his forts fired at the Lieutenant's vessel, killing a man. This outrage brought about Lopez's ears a naval expedition which compelled him to apologise and to agree to reimburse the Hopkins Company.
Brazil also sent a fleet up the Paraná to coerce Lopez into granting free transit along the Paraguay, but he cleverly held the Brazilians in parley until he had an opportunity to fortify the river. England's gunboats at Buenos Aires virtually held the Paraguayan flagship, with Lopez's eldest son on board as hostage for a young British subject named Canstatt, who had been imprisoned and condemned to death for complicity in a conspiracy at Asuncion. Lopez was forced to release him and pay damages.
These humiliations changed his love for foreigners into a bitter hatred, and he began to prepare his country to resist their aggressions more effectively. From his youth he had trained his sons to succeed him. Francisco, the eldest, early evinced a taste for military affairs. When only eighteen years of age, he commanded the expedition of 1849 into the Argentine, and thenceforward continued to be his father's general-in-chief and minister-of-war and the active agent in improving Paraguay's military resources. The second son, Venancio, was commander of the garrison at Asuncion, and the third, Benigno, was Admiral. Though so rigid with his other subjects, he gave both his sons and daughters unlimited license and they grew up to regard themselves as members of a royal family. They enriched themselves at the public expense. The sons took as many mistresses as they pleased and gave free rein to all their cruel and bad instincts. The selfishness, obstinacy, unspeakable cruelty, and hard-heartedness of Francisco were soon to bring the guiltless Paraguayan people to the verge of extinction.
In 1854 Lopez had sent Francisco to Europe as ambassador. The young man spent eighteen months in the different Courts of Europe, and returned an expert in the vices of great capitals and enamoured of military glory. After seeing the reviews of European armies, he became convinced that Paraguay could be made an efficient military power and that he himself might play a Napoleonic rôle in South America. His father, exasperated by the repeated humiliations put upon him by other countries, gave hearty support to his plans for the improvement of the Paraguayan army. In 1862, after a long and painful illness, the elder Lopez died. Francisco took possession of his effects and papers and produced a will naming himself Vice-President. Word sent to the military chiefs of the different towns insured the assembling of an obedient Congress at Asuncion, by which he was formally elected and proclaimed President and invested with all the absolute power wielded by his father and Francia.
