Although established, the viceroyalty was not properly organized until the arrival of Viceroy Francisco Álvarez de Toledo, who made an extensive tour of inspection of the region.

He ended the indigenous Neo-Inca State in Vilcabamba, executing the Inca Túpac Amaru, and promoted economic development from the commercial monopoly and mineral extraction, mainly from silver mines in Potosí.

The first Jesuit reduction to Christianize the indigenous population was founded in 1609, but some areas occupied by Brazilians as bandeirantes gradually extended their activities through much of the basin and adjoining Mato Grosso in the 17th and 18th centuries.

[note 2] In fact, as time passed, they were used as a self-funding occupation force by the Portuguese authorities in what was effectively a low-level war of territorial conquest.

Diego Fernández de Córdoba, Marquis of Guadalcázar, reformed the fiscal system and stopped the interfamily rivalry that was bloodying the domain.

They expanded the naval forces, fortified the ports of Valdivia, Valparaíso, Arica and Callao and constructed city walls in Lima (1686) and Trujillo (1685–1687).

With the creation of the Viceroyalty of the Río de la Plata from southern areas that are now Argentina, Bolivia, Paraguay and Uruguay in 1776, the Charcas and Buenos Aires audiencias were similarly lost.

Viceroy Teodoro de Croix also decentralized the government through the creation of eight intendencias in the area of the Audiencia of Lima, and two in the Captaincy General of Chile.

Amat y Juniet established the first Regulation of Commerce and Organization of Customs rules, which led to the building of the customshouse in Callao.

Viceroy José Fernando de Abascal y Sousa promoted educational reforms, reorganized the army, and stamped out local rebellions.

[citation needed] Lord Cochrane unsuccessfully attacked Guayaquil and Callao, but on 4 February he captured Valdivia, called at the time The Key of the South Seas and the Gibraltar of the Pacific, due to its huge fortifications.

[citation needed] On September 8, 1820, the Expedición Libertadora of Peru, organized mainly by the Chilean government with the objective of executing previous plans laid out by Argentine libertador José de San Martín,[9] landed on the beach at Paracas Bay near the city of Pisco, with the land army under the command of José de San Martín and the navy under the command of Thomas Cochrane.

Viceroy José de la Serna e Hinojosa, still in command of a sizable military force, retired to Jauja, and later to Cusco.

Having regrouped in Trujillo, Bolívar in June led his rebel forces South to confront the Spanish under Field Marshal José de Canterac.

This battle, led by Bolívar's lieutenant Antonio José de Sucre, sealed the independence of Peru and South America.

During the 16th, 17th and most of the 18th centuries, all of the colonial wealth of South America created by the silver mines passed through Lima on its way to the Isthmus of Panama and from there to Seville, Spain.

By the start of the 18th century, Lima had become a distinguished and aristocratic colonial capital, seat of the 250-year-old Royal and Pontifical University of San Marcos and the chief Spanish stronghold in the Americas.

[10] By the end of the 16th century the quasi-private encomienda had been replaced by the repartimiento system (known in Peru by the Quechua term, mita), which was controlled by local crown officials.

At the local level there were hundreds of districts, in both Indian and Spanish areas, which were headed by either a corregidor (also known as an alcalde mayor) or a cabildo (town council), both of which had judicial and administrative powers.

In the late 18th century the Bourbon dynasty began phasing out the corregidores and introduced intendants, whose broad fiscal powers cut into the authority of the viceroys, governors and cabildos.

[14] The huge amounts of silver exported from the viceroyalty of Peru and Mexico deeply affected Europe, where some scholars believe it caused the so-called price revolution.

Indeed, the Real Situado was an annual payment of silver from the viceroyalty to finance the permanent Spanish army in Chile that which fought a prolonged conflict known as Arauco War.

[18] Another issue that burdened the finances of the viceroyalty was the maintenance of the Valdivian Fort System built in response to the Dutch expedition to Valdivia in 1643.

[19] Luis Jerónimo Fernández de Cabrera prohibited direct trade between Peru and New Spain (Mexico) and the persecution of Portuguese Jews, the principal traders in Lima.

Viceroy José de Armendáriz reestablished the system whereby Inca nobles who could prove their ancestry were recognized as hijosdalgos of Castile.

On the death of the Peruvian astronomer Doctor Francisco Ruiz Lozano, Viceroy Melchor Liñán y Cisneros (with the approval of the Crown) gave mathematics a permanent position in the University of San Marcos.

Francisco Gil de Taboada supported the foundation of the newspaper El Mercurio Peruano in 1791 and founded the Academy of Fine Arts.

Jesuit Barnabé de Cobo (1582–1657), who explored Mexico and Peru, brought the cinchona bark from Lima to Spain in 1632, and afterwards to Rome and other parts of Italy.

In 1737, Jorge Juan y Santacilia and Antonio de Ulloa, Spanish scientists sent by the French Academy on a scientific mission to measure a degree of meridian arc at the equator, arrived in the colony.

Manuel de Guirior assisted the scientific expedition of Hipólito Ruiz López, José Antonio Pavón and Joseph Dombey, sent to study the flora of the viceroyalty.