Or neither?
The New York Times did this amazing piece about Guarani language. Basically this is as you mentioned about the Jesuit missions that utilized the languages as medium of proselytism. But more importantly the survival and high status of Guarani is due to successive rulers of Paraguay patronized the language, used it for nationalistic propaganda and narratives, and supported the Guarani speakers. First of such ruler was President José Gaspar Rodríguez de Francia, who used Guarani speaking people as base of supporters to counter the previously important Spanish Metizos and Peninsulares. To quote the article:
he (De Francia) banned those in the light-skinned upper class from marrying each other, sealed Paraguay’s borders and used Guaraní-speaking informants called pyragues, or fleet-footed ones, to bolster his tyrannical regime.
As did General Stroesner who ruled the country from 1950s-1980s
General Stroessner, the son of a Bavarian immigrant and his Guaraní-speaking wife, made it an official language, employed his own espionage network of pyragues and rewarded rural Guaraní-speakers with land for their loyalty.
Such measures might be considered tyrannical by westerns standards but it definitely helped the survival and high status that Guarani language enjoyed, compared to neighboring native languages such as Quechua, Aymara, or Mapundungan.
I think this is a hard question to answer because the average English-speaking, reddit-using lay-person doesn’t have too many historical sources sitting around that discuss this topic. Furthermore, there are so few sources on Paraguay in English at all that finding anything to address your question is fairly hard. I’ll try my best; hopefully, others can jump in too. Guaraní is part of a much larger language family called Tupí-Guaraní, which scholars believe originally shared a common ancestor. This family also included (includes) many other indigenous languages (mostly) south of the Amazon and east of the Andes. But before discussing the Spanish, we should look at how central the language was to precolumbian Guaraní culture. Here is an excerpt from Chapter 2 of the creation story of the Guaraní religion, called “Ayvu Rapyta” (“The Foundation of Human Speech” translated by León Cadogan in 1966):
The true father Ñamandu, the first one, Out of a small portion of his own godliness, And out of the wisdom contained in his Own godliness, Caused flames and tenuous mist to Be begotten.
Having emerged in human form, Out of the wisdom contained in his own godliness, And by virtue of his creative wisdom He conceived the foundation of human speech. Out of the wisdom contained within his own godliness, And by virtue of his creative wisdom Our father created the foundation of human speech, And caused it to form part of his own godliness. Before the earth existed, In the midst of primeval darkness, Before there was knowledge of things, He created the foundations of future human speech, And the first true father Ñamandu Caused it to form part of his own divinity...
Before Ñamandu created the Guaraní, people in general, the Earth, or even emotions like love, the language was born. Peter Lambert and Andrew Nickson write in the Paraguay Reader (where I got the translation) that “the very identity of the Mbya-Guaraní depends on a shared language, a willingness to love each other, and adherence to a common religion” (15). Even though your question isn’t really about the pre-contact period, it is important to show how central language was to these people. The very first thing their god created was language, which helped lay the foundation for all other aspects of Guaraní life.
Next, I should also point out that Guaraní was not the only indigenous language to survive contact with Europeans. Hundreds of indigenous languages are spoken in the Western Hemisphere, often despite the best efforts of colonizers. Once the Spanish arrived in the Río de la Plata region, they quickly settled in Paraguay, abandoning Buenos Aires in the process, in favor of the semi-sedentary agriculturalists of central South America. Once this happened, the language of both the colonizers and the colonized immediately began to change. The two languages mixed together. Guaraní was much more affected, and as the languages evolved, Guaraní might better be described as a creole or mixed language. Thus, when it was recognized as an official language of Paraguay in 1992, the language had undergone significant changes from that which the first explorers would have heard. So here is the real “meat” of your question. How did this language beat the odds and remain so prevalent in a region where indigenous languages tended to give way to Spanish or Portuguese?
Well, there are lots of reasons, which I will try to succinctly summarize. First, the relationships between the Spanish, Portuguese, and Guaraní allowed for many opportunities to preserve Guaraní culture (and language as shown above). The missions, which you mention, became central to this relationship after the Jesuits were granted authority to convert the people of the region in 1608. Though they have always been controversial (historians like Branislava Susnik and Philip Caraman demonstrated that the missions were often brutal places), more recent historians like Barbara Ganson and James Schofield Saeger have shown that the missions allowed indigenous people a large amount of freedom to preserve their culture and protect their interests.
In the beginning, the Jesuits tried to spread Spanish, but this was abandoned in favor of Guaraní, since the semi-settled populations spoke several dialects of the language that were mutually intelligible. Cajetan Cattaneo, an Italian Jesuit in a letter to his brother in 1730, explained his experience with the language: “The only thing that gave me some pain, was the difficulty of the language. I have applied myself so assiduously to it that these two months I have catechized the children...Tho’ I now and then mistake one word for another, I find they understand me pretty well, as I do them by their answers. Those that answer best, I reward with pictures, and dismiss all my people well satisfied” Cattaneo shows that the language provided the Jesuits with a medium of communication through which they could spread the gospel. It also allowed them to quickly teach European values and agricultural methods. All of these were central to Spanish goals throughout the New World. As historian Lyman Johnson points out, Guaraní language became centrally important to trade in the region and allowed various individuals from all over South America to communicate. Eventually, to counter the growing threat of Brazilian slavers who were preying on the missions, the Jesuits organized Guaraní military forces, who spoke their native language, further protecting and fostering a sense of cultural and linguistic identity. Additionally, Guaranís who objected to life in the missions or in the colonial world could flee, finding communities of unincorporated natives deep in the rugged and forested terrain of central South America. Here too, the language survived largely outside of Spanish or Portuguese control. Finally, Paraguay remained on the fringes of the two major European empires. Lacking substantial, exploitable natural resources, the region and its indigenous inhabitants were (relatively) spared from the levels of involvement seen in other regions of the New World. Far fewer immigrants came to the region, and thus, Spanish speakers remained a significant minority. Mestizos often assumed leadership positions in the region in ways that would have been shut in other areas of the Spanish Empire.
Following independence, Paraguay shut itself off from the world, pursuing a policy of nationalistic self-sufficiency, and given the penetration of Guaraní language and culture in Paraguayan society, this move promoted a more homogeneous population and culture. Peter Lambert and Andrew Nickson point out that there was even a ban to prevent foreigners and Spanish elite from marrying among themselves. Guaraní was used as the language of government until the end of War of the Triple Alliance, when the victors forced the change, and was encouraged among the lower classes. (An aside to address another of your questions: I haven’t seen the huge numbers of casualties in the war cited as a cause of the ascension of Guaraní language in any of the sources I have read. It MIGHT be a cause that I simply haven’t encountered in the primarily English sources before, but since most of the people of Paraguay by the 1860’s were Guaraní-speaking mestizos, the huge numbers of casualties would not have made a huge difference since the language had already gained a foothold in Paraguayan culture.) Guaraní remained widely spoken by the lower and middle classes and was further bolstered as the language used by the military during the Chaco War. The language was looked down upon for much of the national period among the wealthy elite, but during the twentieth century, pride in indigenous and working class heritage grew, eventually being recognized as a national language in the 60’s and an official language in 1992.
EDIT sources:
Lambert, Peter, and Andrew Nickson, eds. “The Foundation of Human Speech.” In The Paraguay Reader: History, Culture Politics, 15–20. Durham: Duke University Press, 2013.
Burkholder, Mark, and Lyman Johnson. Colonial Latin America, 6th Edition. New York: Oxford University Press, 2008.
Caraman, Philip. The Lost Paradise: The Jesuit Republic in South America. New York: The Seabury Press, 1976.
Ganson, Barbara. The Guaraní Under Spanish Rule in the Río de la Plata. Stanford: Stanford University Press, 2003.
López, Adalberto. The Colonial History of Paraguay. New Brunswick: Transaction Publishers, 2005.
Saeger, James Schofield. The Chaco Mission Frontier: The Guaycuruan Experience. Tucson: University of Arizona Press, 2000.
Susnik, Branislava, and Miguel Chase-Sardi. Los indios del Paraguay. Madrid: Colecciones MAPFRE, 1995.
Cattaneo, Father Cajetan. “Three letters by Italian Jesuit Father Cajetan Cattaneo (1695-1733) to his brother describing missionary work in the New World.” Fordham. http:// www.fordham.edu/images/undergraduate/lalsi/letters_from_father_cajetan_cattaneo.pdf (accessed 4 May 2011).