Until the middle of the eighteenth century the authority of the Lima viceroy nominally extended over the whole of Spanish South America. However, boards of high judicial and civil functionaries called audiencias, responsible directly to the Crown, exercised very important and independent judicial and administrative functions, each over a great division of Spanish America. Hardly had the conquest been completed when an audiencia was established at Charcas and that city became the political and ecclesiastical capital not only of all Upper Peru but of the vast regions to the south. The viceroy was too far away to interfere, and in effect a great semi-independent province was created, whose boundaries extended indefinitely south and east from the transverse range which separated the Titicaca basin from the region immediately governed by the viceroy and known as Lower Peru. To the jurisdiction of this province the governors of Tucuman, Paraguay, and Buenos Aires were subject, as well as the missions among the Chiquitos and Mojos on the headwaters of the Paraguay and Madeira.
The Bourbon kings, who succeeded the House of Austria early in the eighteenth century, were forced to abandon the effort to centralise the administration and commerce of the whole continent at Lima. The Atlantic and Caribbean coasts could not be effectively governed from the Pacific and the rising currents of trade and immigration must be allowed more liberty to follow their natural channels. The viceroyalty of Bogotá was created in 1740 including the northern and north-western portions of the continent, and in 1776 the south-eastern parts were erected into the viceroyalty of Buenos Aires. The whole audiencia of Charcas was separated from Lima, and to its territory was added that portion of Chile which lay east of the Andes. Though the Bolivian plateau was the most populous and important division of the new viceroyalty, Buenos Aires, far away on the Atlantic and in a region then considered of little value, was chosen as the capital.
In spite of prohibitive regulations goods had long been smuggled into Buenos Aires and thence carried over the Argentine plains up the comparatively easy passes leading to southern Bolivia, and the selection of the Plate city was a recognition by the Spanish government of the futility of longer trying to divert the trade of the Atlantic slope from its natural channels. But the greater length of the Atlantic route largely overcame the advantage of easier gradients, and social and commercial habits centuries old could not be revolutionised by statute. Most of Bolivia's small intercourse with the outside world continued to be conducted along the old Inca routes to the Pacific, and political union brought about no organic and commercial incorporation with the provinces near the mouth of the Plate.