Paraguay lapsed after 1898 into the earlier sins of Spanish America. Upon a comparatively placid presidential regime followed a series of barrack uprisings or attacks by Congress on the executive. The constitution became a farce. No longer, to be sure, an abode of Arcadian seclusion as in colonial times, or a sort of territorial cobweb from the center of which a spiderlike Francia hung motionless or darted upon his hapless prey, or even a battle ground on which fanatical warriors might fight and die at the behest of a savage Lopez, Paraguay now took on the aspect of an arena in which petty political gamecocks might try out their spurs. Happily, the opposing parties spent their energies in high words and vehement gestures rather than in blows and bloodshed. The credit of the country sank lower and lower until its paper money stood at a discount of several hundred per cent compared with gold.
European bankers had begun to view the financial future of Argentina also with great alarm. In 1890 the mad careering of private speculation and public expenditure along the roseate pathway of limitless credit reached a veritable "crisis of progress." A frightful panic ensued. Paper money fell to less than a quarter of its former value in gold. Many a firm became bankrupt, and many a fortune shriveled. As is usual in such cases, the Government had to shoulder the blame. A four-day revolution broke out in Buenos Aires, and the President became the scapegoat; but the panic went on, nevertheless, until gold stood at nearly five to one. Most of the banks suspended payment; the national debt underwent a huge increase; and immigration practically ceased.
By 1895, however, the country had more or less resumed its normal condition. A new census showed that the population had risen to four million, about a sixth of whom resided in the capital. The importance which agriculture had attained was attested by the establishment of a separate ministry in the presidential cabinet. Industry, too, made such rapid strides at this time that organized labor began to take a hand in politics. The short-lived "revolution" of 1905, for example, was not primarily the work of politicians but of strikers organized into a workingmen's federation. For three months civil guarantees were suspended, and by a so-called "law of residence," enacted some years before and now put into effect, the Government was authorized to expel summarily any foreigner guilty of fomenting strikes or of disturbing public order in any other fashion.
Political agitation soon assumed a new form. Since the Autonomist-National party had been in control for thirty years or more, it seemed to the Civic-Nationalists, now known as Republicans, to the Autonomists proper, and to various other factions, that they ought to do something to break the hold of that powerful organization. Accordingly in 1906 the President, supported by a coalition of these factions, started what was termed an "upward-downward revolution"—in other words, a series of interventions by which local governors and members of legislatures suspected of Autonomist-National leanings were to be replaced by individuals who enjoyed the confidence of the Administration. Pretexts for such action were not hard to find under the terms of the constitution; but their political interests suffered so much in the effort that the promoters had to abandon it.
Owing to persistent obstruction on the part of Congress, which took the form of a refusal either to sanction his appointments or to approve the budget, the President suspended the sessions of that body in 1908 and decreed a continuance of the estimates for the preceding year. The antagonism between the chief executive and the legislature became so violent that, if his opponents had not been split up into factions, civil war might have ensued in Argentina.
To remedy a situation made worse by the absence—usual in most of the Hispanic republics—of a secret ballot and by the refusal of political malcontents to take part in elections, voting was made both obligatory and secret in 1911, and the principle of minority representation was introduced. Legislation of this sort was designed to check bribery and intimidation and to enable the radical-minded to do their duty at the polls. Its effect was shown five years later, when the secret ballot was used substantially for the first time. The radicals won both the presidency and a majority in the Congress.
One of the secrets of the prosperity of Argentina, as of Brazil, in recent years has been its abstention from warlike ventures beyond its borders and its endeavor to adjust boundary conflicts by arbitration. Even when its attitude toward its huge neighbor had become embittered in consequence of a boundary decision rendered by the President of the United States in 1895, it abated none of its enthusiasm for the principle of a peaceful settlement of international disputes. Four years later, in a treaty with Uruguay, the so-called "Argentine Formula" appeared. To quote its language: "The contracting parties agree to submit to arbitration all questions of any nature which may arise between them, provided they do not affect provisions of the constitution of either state, and cannot be adjusted by direct negotiation." This Formula was soon put to the test in a serious dispute with Chile.
In the Treaty of 1881, in partitioning Patagonia, the crest of the Andes had been assumed to be the true continental watershed between the Atlantic and the Pacific and hence was made the boundary line between Argentina and Chile. The entire Atlantic coast was to belong to Argentina, the Pacific coast to Chile; the island of Tierra del Fuego was to be divided between them. At the same time the Strait of Magellan was declared a neutral waterway, open to the ships of all nations. Ere long, however, it was ascertained that the crest of the Andes did not actually coincide with the continental divide. Thereupon Argentina insisted that the boundary line should be made to run along the crest, while Chile demanded that it be traced along the watershed. Since the mountainous area concerned was of little value, the question at bottom was simply one of power and prestige between rival states.
As the dispute waxed warmer, a noisy press and populace clamored for war. The Governments of the two nations spent large sums in increasing their armaments; and Argentina, in imitation of its western neighbor, made military service compulsory. But, as the conviction gradually spread that a struggle would leave the victor as prostrate as the vanquished, wiser counsels prevailed. In 1899, accordingly, the matter was referred to the King of Great Britain for decision. Though the award was a compromise, Chile was the actual gainer in territory.
By their treaties of 1902 both republics declared their intention to uphold the principle of arbitration and to refrain from interfering in each other's affairs along their respective coasts. They also agreed upon a limitation of armaments—the sole example on record of a realization of the purpose of the First Hague Conference. To commemorate still further their international accord, in 1904 they erected on the summit of the Uspallata Pass, over which San Martin had crossed with his army of liberation in 1817, a bronze statue of Christ the Redeemer. There, amid the snow-capped peaks of the giant Andes, one may read inscribed upon the pedestal: "Sooner shall these mountains crumble to dust than Argentinos and Chileans break the peace which at the feet of Christ the Redeemer they have sworn to maintain!" Nor has the peace been broken.