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Upon returning from Lima, Chaves founded the city of Santa Cruz de la Sierra (Holy Cross of the Hills) on February 26, 1561, 220 km (137 mi) east of its present-day location, to function as the capital of the newly formed province of Moxos and Chaves.
The settlement was named after Chaves's home town in Extremadura, where he grew up before venturing to America.
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On September 13, 1590 the city was officially moved to the banks of the Guapay Empero river and renamed San Lorenzo de la Frontera.
However, in spite of its strategic importance, the city did not grow much in colonial times.
Most of the economic activity was centered in the mining centers of the west and the main source of income of the city was agriculture.
Among the few known facts of these tribes, according to accounts of the first Spanish explorers that came into contact with the Chané, are that they had a formal leader, a cacique, called Grigota for several years but his reign came to an end after one of the several Guarani (Chirigano) incursions in the area.
The first Europeans to set foot in the area were Spanish conquistadores from the recently created Governorate of New Andalusia that encompassed the territories of present-day Argentina, Uruguay, Paraguay, Chile and Bolivia.
In 1549, Captain General Domingo Martinez de Irala became the first Spaniard to explore the region, but it was not until 1558 that Ñuflo de Chaves, who had arrived in Asuncion in 1541 with Alvar Nuñez/Álvar Núñez Cabeza de Vaca, led a new expedition with the objective of settling the region.