How Did Spain Build Its Empire in the Americas?

Spain built its American empire in roughly fifty years — between 1492 and the 1550s — and most of the imperial structure was in place by the time Charles V abdicated in 1556. The conventional explanation focuses on Spanish military advantages, religious zeal, and royal administrative genius. The more honest explanation, which Lockhart, Schwartz, and Restall have developed in different ways, is that the Spanish built their empire on indigenous political foundations, with indigenous collaborators, and on a small Spanish population that was never numerous enough to settle the territories it claimed. The empire was, in that sense, less a Spanish achievement than an Iberian-indigenous co-production, with the indigenous share gradually diminished by demographic catastrophe.

This page focuses on the specific mechanisms by which the empire was built: the capitulación contract between the Crown and the conquistador, the encomienda and repartimiento labor systems, the audiencia and virreinato administrative structure, and the silver-based commercial system that linked the colonies to Seville and to the wider world economy.

The Capitulación and the Conquistador

The Spanish Empire was not built by direct royal administration. It was built through a system of contracts, the capitulaciones, by which the Crown granted individuals the right to discover, conquer, and settle specific territories in exchange for a share of the profits and an obligation to fund the expedition at their own cost. The capitulación was a Castilian legal instrument with roots in the Reconquista, and it was well suited to the early phases of American conquest, when the Crown lacked the resources to fund transatlantic expeditions and the conquistadors were willing to risk their own capital in exchange for a share of the spoils.

Cortés’s capitulación with Governor Velázquez of Cuba in 1518 (later annulled, then reissued by Charles V) and Pizarro’s capitulación with Charles V in 1529 are the two most famous examples. Both contracts granted the conquistador the right to conquer specific territories in exchange for one-fifth of the loot (the quinto real, plus various other royal shares), the right to distribute encomiendas, and the obligation to found cities, build churches, and finance the conversion of the indigenous populations. The system produced rapid expansion and equally rapid abuses. The Crown was perpetually trying to reign in the conquistadors, and the conflict between royal authority and conquistador autonomy is one of the central themes of the early colonial period.

The Role of Indigenous Allies

The Spanish military victories were not, in any simple sense, Spanish. Cortés landed on the Mexican coast in 1519 with about 600 soldiers, 16 horses, and a small number of indigenous Cubans. Within two years, he had conquered the Aztec Empire with the help of tens of thousands of indigenous allies, of whom the Tlaxcalans were the most important. The Tlaxcalans had been fighting the Aztecs for generations, and they saw the Spanish as a useful counterweight. Cortés’s political genius was to recognize the opportunity and to manage the coalition skillfully, not to fight the Aztecs alone. By the time of the final siege of Tenochtitlán in 1521, the Spanish-led army was overwhelmingly indigenous.

The same pattern held in Peru. Pizarro landed on the Ecuadorian coast in 1532 with about 168 Spanish soldiers, but the campaign that captured Atahualpa at Cajamarca and eventually toppled the Inca state was carried out with massive indigenous support — the Cañari, the Chachapoya, and other groups that had been conquered or threatened by the Incas. Restall’s Seven Myths of the Spanish Conquest (2003) is the most useful corrective to the older military accounts, which tend to underplay this. The conquest was, in his phrase, “a messy, contingent, indigenous-supported Spanish enterprise.”

The Encomienda and the Repartimiento

The labor system that paid for the empire was coercive. The encomienda, established in the early 1500s, granted indigenous communities to Spanish encomenderos, who were theoretically obligated to provide religious instruction and protection in exchange for tribute and labor. In practice, the encomienda was widely abused, and the system was gradually restricted by the Laws of Burgos (1512) and the Laws of the Indies (1542), and largely replaced by the repartimiento (called the mita in the Andes) by the mid-sixteenth century. The repartimiento conscripted indigenous men for rotating stints of wage labor, often on public works, in mines, or on haciendas.

The system was not slavery in the strict legal sense — indigenous laborers were paid wages, in theory — but the wages were often below subsistence, the conditions were brutal, and the demographic consequences were devastating. Lockhart and Schwartz’s Early Latin America (1983) makes the case that the encomienda and repartimiento were the Castilian inheritance from the Reconquista, and that they were, by the standards of the day, less brutal than the English and Dutch plantation slavery that developed later. The comparison is, of course, invidious; the Spanish system killed a lot of people, and the demographic catastrophe in Mesoamerica and the Andes is the most important single fact about the early empire.

The Administrative Framework

The Spanish Crown was, by 16th-century standards, unusually attentive to the legal and administrative structure of its American possessions. The Casa de Contratación, established in Seville in 1503, regulated all trade with the Indies. The Council of the Indies, created in 1524, became the supreme governing body for the colonies. Two great viceroyalties — New Spain, based in Mexico City, and Peru, based in Lima — were the basic units of Spanish American administration, and they were later joined by New Granada (1717) and Río de la Plata (1776). Within each viceroyalty, audiencias served as courts of appeal and as advisory bodies to the viceroys, while capitanías generales and gobernaciones handled frontier defense and Indian affairs.

Cities were the foundation of Spanish colonial life. The chartered town, the cabildo with its elected municipal council, was a transplanted version of Castilian municipal government. The grid plan, the central plaza, the parish church, and the town hall were the standard elements of urban design across Spanish America, prescribed in detail by the Laws of the Indies (1573). The cities were not merely administrative centers; they were instruments of cultural transformation, designed to convert indigenous populations to Spanish ways of life and to project royal authority into the interior. By 1600, Mexico City was the largest city in the Americas, and Lima, Puebla, Quito, and Bogotá were substantial urban centers that would grow through the seventeenth and eighteenth centuries.

The Silver Economy

The economic engine of the Spanish Empire was silver. The great mining centers of Zacatecas, Guanajuato, and San Luis Potosí in New Spain, and especially Potosí in upper Peru (modern Bolivia), produced an astonishing flow of bullion that reached Europe in two annual fleets, the flota and the galeones, sailing from Veracruz and Cartagena to Seville. The silver paid for Spain’s wars in Europe, supported the development of European banking, and underwrote the global silver trade, much of it flowing through Manila to China. The mercury amalgamation process, developed in New Spain in the 1550s by Bartolomé de Medina, made low-grade ores profitable, and the production of silver at Potosí increased by an order of magnitude over the course of the sixteenth century.

The Spanish fiscal system was, however, parasitic rather than productive. The Crown levied heavy taxes on mineral production, the quinto real plus a thick layer of additional duties, and the colonial economy remained heavily dependent on the export of bullion, plantation crops, and other raw materials. Bakewell’s Miners of the Red Mountain (1984) is the best account of the labor system that made the silver economy work. The dependence on bullion was, in the longer term, a structural weakness: when the silver veins thinned in the seventeenth century, the empire’s revenues collapsed, and the Spanish state was unable to finance the wars of the eighteenth century without borrowing from the very banking houses (the Genoese, the Dutch, the German) that had grown rich on the silver trade.

The Missionary System

The Catholic Church was an integral part of the Spanish American empire from the beginning. Missionaries of the great mendicant orders — Franciscans, Dominicans, Augustinians, and later Jesuits — followed closely behind the conquistadors, founding missions, convents, and schools. The mission system was the principal instrument by which indigenous peoples were incorporated into Spanish colonial life, and it produced both the destruction of indigenous religious practices and the preservation of indigenous languages and traditions in missionary records. The friar Bernardino de Sahagún’s Florentine Codex, the Jesuit “reductions” of Paraguay, and the Franciscan missions of New Mexico and California are all examples of the complex cultural encounter that took place in mission settings.