ABSTRACT
The refugees from the two cities settled in the vicinity of Mbaracayu and made yerba mate production their primary economic activity. On that occasion the settlers of Paraguay were mobilized for war as they were in 1676 when the paulistas invaded the Mbaracayu region, destroyed Villa Rica and seemed intent on attacking Asuncion. Paraguay was fertile and all types of crops were grown without difficulty in spite of the backward agricultural tools and techniques of both the settlers and the Indians. In the sixteenth and seventeenth centuries labor in Paraguay was provided primarily by the Guarani Indians. In the seventeenth century the largest and most important estancias were located on the plains immediately north of the Tebicuary River. Tobacco exports continued to increase but these constituted a small proportion of total Paraguayan exports at the beginning of the seventeenth century. The Guarani Indians of the eastern bank of the Paraguay, accepted the arrival of the Spaniards without resistance.
