The conquest of the Aztec empire required an enormous effort and a tremendous sacrifice by CortÚs's army, and after their victory, the soldiers demanded what they had come for: prestige and wealth. The spoils from the city largely had been lost; CortÚs had to resort to some other strategy to provide for his men. The conquistador had already surveyed all Aztec records related to tributes and tributary towns, and on the basis of this information, he decided to distribute grants of people and land among his men. This practice had already been tried in the Caribbean, and CortÚs himself had received encomiendas , grants of land and people, in Hispaniola in 1509 and in Cuba in 1511. Granting encomiendas became an institution throughout New Spain to ensure subordination of the conquered populations and the use of their labor by the Spanish colonizers, as well as a means to reward Spanish subjects for services rendered to the crown.

The encomienda was a Spanish institution of Roman origin, and in the New World, the Spanish government established a series of rights and obligations between the encomendero (grantee) and the people under his care. The indigenous people were required to provide tribute and free labor to the encomendero , who was responsible for their welfare, their assimilation into Spanish culture, and their Christianization. Political and social stratification among the encomenderos was easily achieved by the simple fact that there were communities of different sizes. The larger the grant, the larger the amount of tribute and labor available, and thus the greater the potential wealth and prestige of the assignment. In reality, the native population was accustomed to a similar organization of tributary towns under the Aztec. In time, the encomenderos became the New World version of Spanish feudal lords. This new source of political power came to worry the Spanish authorities because of the dangers of a local nobility capable of contending peninsular authority.

Although disease and hardship decimated the indigenous population, increasing numbers of Spaniards arrived with great expectations of new wealth. Along with this flow of Europeans came the African slaves, who were directed to the central areas of New Spain. In 1549 the Spanish government ended yearlong labor obligations, as well as payment of tribute. To compensate for this loss, the crown instituted a new system of forced labor allotments (repartimientos ) of forty-five days a year, for which every person was to be paid in wages. The repartimiento became a source of abuse by employers who would pay wages in advance and then obligate workers indefinitely as repayment.

In the late seventeenth and early eighteenth centuries, royal control of the granting of encomiendas became more strict. On November 13, 1717, a royal decree abolished encomiendas , an act that was confirmed by other decrees in 1720 and 1721. However, in the most remote areas, encomiendas were often kept throughout the colonial period in complete defiance of the royal decree in order to populate these regions.

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