Thenceforward for many years Uruguay's history is inexplicably entwined with the story of the struggle between the two great Argentine factions. The little country became the storm-centre of South American politics and the chief battlefield of the contending forces. Now for the first time we encounter references to "blancos" and "colorados," which remain to this day the names of Uruguayan political parties. All the forces of the community lined up on either side and never have political parties fought more determinedly and relentlessly. The divisions between them entered into all social and business relations, and even friendly intercourse between the members of the two factions was almost impossible. Men have often been more blanco or colorado than Uruguayan. The old conservative resident Spanish families were the basis of the blanco, or Oribe party, while the colorados, or partisans of Rivera, were the progressive faction. The latter attracted the Argentine refugees fleeing from the tyranny of Rosas, and could count upon the support of resident Europeans and upon the sympathy of foreign governments. Rosas in Argentina and the blancos in Uruguay represented the spirit of exclusivism and opposition to foreign influences.
After Oribe's accession to power Rivera hastened to raise a revolt in the western districts. He obtained help from the unitarians, and his invasion was accompanied by many Argentine generals who had distinguished themselves in the wars against Rosas. The Argentine dictator sent help to Oribe, but for two years the tide of battle set in favour of the colorados and unitarians. Rivera had obtained so decided an advantage by 1838 that Oribe abandoned Montevideo and embarked for Buenos Aires, followed by the chiefs of his party. The colorado chief, now in control of all Uruguay, celebrated a formal alliance with the province of Corrientes, then in revolt against Rosas, and war was declared against the latter. A large Argentine army, accompanied by many blancos, invaded Uruguay, but was decisively defeated at the battle of Cagancha, December 10, 1839.
The interval of unquestioned colorado supremacy which followed was one of the most flourishing periods in the history of Uruguay. Large numbers of the intellectual élite of Buenos Aires swarmed across the river; Montevideo became the centre of arts and letters of Spanish America; the civil wars of the last few years had not been severe, and even during their continuance property had suffered little. Immigration from England, France, and Italy began on a large scale, and the population increased at the rate of four per cent. per annum. In the year 1840 nine hundred ocean-going ships entered the port of Montevideo, more than three thousand houses were erected, and twenty-seven great meat-curing establishments were in active operation. However, Rosas and the blancos were only awaiting a good opportunity to attack.