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(From Beowulf, based on patch 1.04)
Luckily, there are no historical events for portraying the political turmoil Uruguay went through in the Victoria time span, so you can safely leave your sense of historicity and realism at home when you start a game of Victoria as Uruguay. You wont need it.
On paper Uruguay doesn't seem to have much going for it, one of the smallest populations in the world (127000), 10% literacy, and only cattle and wool in their RGOs. Well, as you will see, the solution to the first of those problems will be the solution to all of Uruguays problems.
Then, what is the solution to the problem of under-population? You're probably thinking it as you read this... i-m-m-i-g-r-a-t-i-o-n!
How to attract immigrants? Basically it all boils down to this: be more attractive than the USA.
And although she may look like Barbara Streisand with a bad nose job in 1836, Uruguay has the potential of becoming Miss America within a few decades.
First of all, it should be understood that every step in the following description hinges on the fact that Uruguay's major parties have Full Citizenship as an issue, making immigration likely for any of them.

First step: Become a democracy.

Presidential dictatorship may appeal to some, but those people usually prefer talking about it over actually moving there. To become a democracy, all you have to do is make a sufficient amount of political reforms, and this is where the small population comes in handy. The prices of reforms are proportional to the size of the population, so with the amount of money you start with you can easily afford the necessary reforms: Voting rights - Universal Suffrage, Political parties - Free Parties, Trade Unions - All Allowed (may not be necessary to become a democracy, I'm not sure, but why not buy while it's cheap?). You may want to change to Free Press too, but you can't do that until you become a democracy. Within a few days the democracy event will fire and you're on your way!

Second step: Social spending.

To be attaractive to the poor, huddled masses of Europe, you need to look to their social needs. For this, you're going to need money, more than you have left after the first step. Unfortunately, the prices of cattle and wool are low and you'll probably want to spend some of your income on full education and full crime fighting, so you wont have a huge income, maybe less than 1£ per day. Don't be afraid to tax your population heavily, even as much as 80% can work without ill effects (keep an eye on your pops so they are getting their needs though), and use full tariffs, to bring in the money. Selling off your supplies is one way of getting rich quick, just crank up all your taxes to 100% and place selling orders on all the stuff you wont need immediately, wait a few days, then bring down the taxes again, you should now have increased your money by a 1000£ or so. This money will cover some social reforms, starting with Good Healthcare to increase population growth, but not all. As you probably realize there is no way you're going to be able to pay for the upkeep of these social reforms, but then you don't have to. Paying an absolute minimum will be enough to attract immigrants. It's all about appearances!
At this point the waiting game begins. To set up more reforms, or to do anything else, you need money, and at typically less than 1£ per day, that is going to test your patience. By the early 40's you should have been able to pay for the reforms you want, and luckily this is usually when you'll start to see some immigration. As the political turmoil and wars in Europe increases, you will get a few hundred farmers or labourers dropping in every month. Not much, but it's a start. Your income will slowly start to pick up and the time for the next step has come.

Third step: Go liberal!

Uruguay has three parties as you become a democracy, two conservative and one liberal, but with only farmers, laborers and soldiers in your nation, the liberals aren't going to win any elections soon. My answer to this problem is: build a factory! From the start of the game and by funding full education you should have been able to research at least one of the techs that give you free machine parts, which will allow you to do just that. You will probably have to wait a while for the money to accumulate, and you should wait, because going into debt will hamper your immigration severely, and will also damage your economy with interests eating into your small profits. Once you have the money and the other goods you need to build a factory, you should build a fabric factory, based on the fact that you produce one of the needed raw materials (wool) and that the other (cotton) is cheap and plentiful. As soon as you've given the order to build the factory you'll start seeing a new kind of immigrant, craftsmen, and possibly (but very few) capitalists or clerks. The craftsmen will immediately start working in your factory once it's built and your income will increase. You will also see that a part of your population is now willing to vote for change. But as a majority of your immigrants are still conservative farmers or laborers, you're going to have to tip the scale somehow. To do this, simply pick the largest farmer pop you can find (typically 80-90k at this point) and turn him into a craftsman. You'll probably have to wait a while before you can afford this but with the increase in income it shouldn't be too long. Another thing that can help this political process along is the State & Government tech which has an invention called Populism vs. Establishment, where selecting populism makes your pops vote more according to their issues than to their ideology, but with any luck this shouldn't be necessary.
Now hold an election and most likely the Colorados (liberals) will win. If not, convert another pop and hold another election. Once the Colorados are in power, you will be drowning in immigrants, and all the problems you'll have are your own. From here you can go in any direction, build your military and go conquer your neighbors, or choose the peaceful path to industrial victory. Even with the peaceful path Uruguay can end up with nearly 200000000 (Two hundred million!) inhabitants!


Little addition

here's shorter and imo more convenient way of becoming liberal democracy:

- after starting new game, wait till last day of the first month
- pause the game
- enact all the needed social reforms (healthcare at least)
- change your ruling party to liberal (you're dictatorship atm, can do)
- enact all political reforms
- unpause the game
- after event fires and converts you to democracy, pause game again
- convert clergymen to labourers
- set voting rights to wealth
- set social spending on 0
this way you are democracy in one month's time, with liberals in power and NO electorate since you have no middle class - current ruling party gets re-elected by default. now immigrants will flock in huge numbers and that small debt you ran into will be repaid in no time.

also as of "peaceful path" - west lies argentina which has the same culture you have, so regardless of path you choose it's best to annex it imo.

regards, AJLion