The Economy of Colonial Paraguay.

The Guaraní economy prior to colonization by the Spanish consisted of agriculture, fishing, and hunting. The foods typically grown by the Guaraní were sweet manioc (cassava root), maize (their staple food), sweet potatoes, beans, peanuts, and pumpkins. Meat was obtained for their diet by hunting deer and tapir (pig-like animals), and fishing also supplemented their protein intake, especially for tribes in close proximity to major rivers.

Following the establishment of the encomienda system and Jesuit reducciones across Paraguay the yerba mate, (A species of holly indigenous to the Paraguay region that is steeped in hot water to create a tea-like beverage and was used for medicinal purposes by the Guaraní. It appears to produce a narcotic-like effect when drank.) became the staple export for the Spanish to trade with neighboring colonies. Because there was no gold or silver to be found in Paraguay the Spanish relied on the bartering system and the selling of agriculture and cattle to neighboring colonies (The selling of items was necessary for the Guaraní in order to pay tribute to the Spanish crown which required silver coinage) in order to run the missions.

The social ramifications for the Spanish were minimal because the Guaraní were doing the same things economically that they had done before the Spanish arrived. The Spanish introduced cattle and the trade system in Paraguay which worked very well because the Spanish had the Guaraní Indians to work the land and cattle for trade with other colonies. The most interesting problem in the economy of Paraguay was in the seventeenth century the governor of Paraguay put an end to the production and consumption of yerba mate because the Spanish drank it continuously and “had become such a necessity among the settlers that many fell into debt or sold their arms, horses, and clothing to get it,” while many people “often skipped going to mass in order to have their yerba mate.” (Lopez 498)

Service, Elman R. "The Encomienda in Paraguay." The Hispanic American Historical Review 31, no. 2 (1951): 230-252.

Lopez, Adalberto. "The Economics of Yerba Mate in Seventeenth-Century South America." Agricultural History 48, no. 4 (1974): 493-509.