Colonia del Sacramento: History

Pre-20th-Century History

Colonia del Sacramento's first inhabitants, the Guaraní, were semi-sedentary agriculturalists who occupied the land between the Uruguay and lower Paraguay rivers. Contact with the Spanish at the start of the 16th century was hostile, with the Guaraní and the Charrúa -indigenous Uruguayans fishing in the same area - preventing settlement.

By 1680, the Portuguese had founded Colonia del Sacramento, and were smuggling goods across the Río de la Plata into Buenos Aires. Soon after, Rio de Janeiro's governor, Maestre de Campo Manuel Lobo, authorized the construction of a fortified city. The site was of strategic importance in resisting the Spanish, who eventually captured it in 1762 and held it until 1777, when it again transferred to Portuguese control. The Guaraní also fought to drive the Portuguese out as early as 1742. Under the Portuguese, tax reforms finally permitted foreign goods to proceed directly to Buenos Aires. Brazil controlled the colony until it became part of independent Uruguay in 1828.

Modern History

Post-independence, only a handful of Uruguayan settlements existed outside Colonia del Sacramento and the capital, Montevideo, with most of the land being used for agricultural purposes. The portside town remained an export hub and industrial center for nearby pastoral areas, which mainly harvested cereals and vegetables.

The town's picturesque location on the Río de la Plata led it to become a popular Argentine holiday destination, and when its commercial downtown, Barrio Histórico (historic quarter), was placed on Unesco's World Heritage List in December 1995, the international tourists followed.

Recent History

Tourism to Colonia del Sacramento fell sharply in 2000. A downturn in exports due to the economic problems of its larger neighbors saw Argentinean investment, which accounted for 80% of foreign reserves in Uruguay's banks, abruptly withdrawn. The tourist industry, one of the strongest in South America, was heavily reliant on prosperous Argentines. As Uruguay's economy crumbled, its peso plummeted in value. By the end of 2002, public spending was cut and sales tax increased - measures which were rewarded by a series of loans from the US, the IMF and the World Bank. As confidence returned and Argentinean investment began to flow again, tourism to Colonia del Sacramento and other destinations along Uruguay's coast started to thrive once more.

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