Potosí lies at the foot of the Cerro de Potosí—sometimes referred to as the Cerro Rico ("rich mountain") — a mountain popularly conceived of as being "made of" silver ore that dominates the city. The Cerro Rico is the reason for Potosí's historical importance, since it was the major supply of silver for Spain during the period of the New World Spanish Empire.
Founded in 1545 as a mining town, it soon produced fabulous wealth, and the population eventually exceeded 200,000 people. The city gave rise to a Spanish expression, still in use: vale un Potosí, ("to be worth a Potosí") meaning "to be of great value". The rich mountain, Cerro Rico, produced an estimated 60% of all silver mined in the world during the second half of the 16th century.
Potosí's naturally rich deposits, along with technological advancements in production like the Patio process, allowed silver production costs to remain extremely low. In fact, Spanish American mines were the world's cheapest sources of silver during this time period. Spanish America's ability to supply a great amount of silver and China's strong demand for this commodity resulted in a spectacular mining boom. The true champion of this boom in the silver industry was indeed the Spanish crown. By allowing private-sector entrepreneurs to operate mines and placing high taxes on mining profits, the Spanish empire was able to extract the greatest benefits. An example of a tax that was levied includes the quinto, a 20% severance tax on gross value. From the raw materials extracted from the mines, the Potosí mint called pieces of eight were fashioned.
For Europeans, Peru–Bolivia was part of the Viceroyalty of Peru and was known as Alto Perú before becoming independent as part of Bolivia. Potosi was a mythical land of riches, it is mentioned in Miguel de Cervantes' famous novel, Don Quixote (second part, chap. LXXI) as a land of "extraordinary richness". One theory holds that the mint mark of Potosí (the letters "PTSI" superimposed on one another) is the origin of the dollar sign, although the likelier origin of the symbol is the $-shaped scroll-wrapped columns on the reverse of the Spanish dollar.
Labor
Native-American laborers were conscripted and forced to work in Potosí's silver mines through the traditional Incan mita system of contributed labor. Many of them died due to the harsh conditions of the mine life and natural gases. At such a high altitude, pneumonia was always a concern, and mercury poisoning took the lives of many involved in the refining process. According to Noble David Cook, "A key factor in understanding the impact of the Potosi mita on the Indians is that mita labor was only one form of work at the mines. A 1603 report stated that of 58,800 Indians working at Potosi, 5100 were mitayos, or less than one in ten. In addition to the mitayos there were 10,500 mingas (contractual workers) and 43,200 free wage earners. Yet mitayos were required to do the work others refused: predominantly the transport of the ore up the shafts to the mouth of the mine."
From around 1600, the death rate skyrocketed among the local Indian communities. To compensate for the diminishing indigenous labor force, the colonists made a request in 1608 to the Crown in Madrid to begin allowing the importation of 1,500 to 2,000 African slaves per year. An estimated total of 30,000 African slaves were taken to Potosí during the colonial era. Like the native laborers, they too died in large numbers. During colonial times an estimated eight million African and Amerindian slaves died in the process of the silver extraction. African slaves were also forced to work in the Casa de la Moneda (mint) as acémilas humanas (human mules). Since mules would die after a couple of months pushing the mills, the colonists replaced the four mules with twenty African slaves.
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