After the Great War, immigration increased, primarily from Spain and Italy. Brazilians and Britons also flocked to Uruguay to snap up hundreds of estancias (ranches). The proportion of the immigrant population in Uruguay rose from 48 percent in 1860 to 68 percent in 1868. Many were Basques of Spanish or French nationality. In the 1870s, another 100,000 Europeans settled in Uruguay. By 1879 the total population of the country was over 438,000. Montevideo, where approximately one-fourth of the population lived, expanded and improved its services. Gas services were initiated in 1853, the first bank in 1857, sewage works in 1860, a telegraph in 1866, railroads to the interior in 1869, and running water in 1871. The creation in 1870 of the typographers' union, the first permanent workers' organization, was soon followed by the establishment of other unions. Montevideo remained mainly a commercial center. Thanks to its natural harbor, it was able to serve as a trade center for goods moving to and from Argentina, Brazil, and Paraguay. The cities of Paysandú and Salto, on the Río Uruguay, complemented this role.

After the Great War, livestock raising recovered and prospered. Improvements in breeding techniques and fencing were introduced, and between 1860 and 1868 sheep breeding, stimulated by European demand, expanded from 3 million head to 17 million head. A group of modernizing hacendados (landowners), a large number of whom were foreigners, was responsible for this change. In 1871 they established the Rural Association (Asociación Rural) to improve livestock-raising techniques. The association developed a reputation for defending rural traditions and exerting considerable influence on policy makers.

Meat-salting enterprises were the main stimulus for the industrialization of livestock products. In 1865 the Liebig Meat Extract Company of London opened a meat-extract factory at Fray Bentos on the Río Uruguay to supply the European armies, thus initiating diversification in the sector. This type of meat processing, however, was dependent on cheap cattle. As the price of cattle increased, the meat-extract industry declined, along with the saladeros, which prepared salted and sun-dried meat. Cuba and Brazil were the main purchasers of salted meat Europe, of meat extract and the United States and Europe, of leather and wool.

Data as of December 1990