Economic Systems and Labor Exploitation in Colonial Mexico

During the eventful Spanish colonial era in Mexico, the economy depended upon land as well as labor exploitation, especially of Indians. The initial Spanish settlers planned and organized the famous encomienda system. This system saw the Spaniards receive ownership and title to villages and American land. The Spaniards promised to ensure that Indians became Christians. In turn, they could use the labor and land in whatever means they deemed necessary. Unfortunately, this system rapidly turned to clear slavery. Indians received very low wages after providing backbreaking labor in mines and plantations. On the other hand, the Spaniards believed that they had possessed a divine duty to convert all Indians to Christianity. Eternal salvation turned into an excuse for servitude. The economic system in colonial Mexico succeeded because of the then-ensuing cooperation between the Spaniards and the Americans. The economic policies pursued by the Spanish in colonial Mexico succeeded because of the use of labor exploitation methods and the encomienda economic system. The purpose of this essay is to examine the economic systems as well as labor exploitation in colonial Mexico. The essay will give premium to the period between 1750 and 1800 during colonial Mexico. 


The Spanish people debated on the rights of the natives in the New World in the turn of the 15th century. This culminated in the promulgation of new laws tailored in a manner that ensured that their treatment had dignity in tandem with their natural rights. The new laws proscribed outright exploitation of the native people. However, the orders reached the New World completely diluted and very dissimilar from the ones from Madrid. Eventually, the abolishment of the encomienda in 1717 heralded a new era. However, it remained operational in the outlying areas until Mexico gained independence in 1820s. The colonial economy relied on gold for the Spanish settlers together with conquistadors. The Spaniards stole jewels and gold from the Aztecs and other areas of colonial Mexico. Displaying these items in Spain sought to drum support for the colonial venture. Upon discovering land in colonial Mexico, Christopher Columbus received ownership of the land from Queen Isabella so long as the Crown received 20% revenue – a one fifth. 

The main mineral in the New World – gold – had many implications. The conquered Indians received gold quotas that they took to the Spaniards to serve as rent. Failure to conform to such strictures lead to terrible punishment and this amounted to exploitation of the Indians. However, the gold demand by the Spaniards decreased since late 15th century upon the discovery of silver in Bolivia. The next fifty years had plenty of silver. This became Spain’s source of income. Unfortunately, Spain used over a fifth of its proceeds to fund the never-ending battles in Europe. Unsurprisingly, the conditions of all the Indians and eventually every African slave only served to demoralize them. Annual silver from colonial Mexico to Spain received celebration through public holidays, wine, and fireworks. Unfortunately, silver receipts fell culminating to the deterioration of the Spanish America economy but the Trans-Atlantic commerce in commodities, sugar, and slaves compensated for the deficit. Initially, shipping everything the Spaniards needed to colonial Mexico such as paper, weapons, food, nails et cetera constituted the normal practice. Before 1600, encomenderos alongside other Spaniards did pay for such trade commodities with silver and gold or even potatoes, chocolate, and corn at times. Things changed from 1600.

The influx of the Spanish people intensified the production of products in Lima, Vera Cruz and Mexico City. The crown felt that treating colonies like colonies translated to solidification of command and colonial rule. Towards this end, keeping all colonies such as colonial Mexico under Spain’s full control strengthened their rule. However, proscribing papermaking in the New World dealt the Spaniards a huge blow since the government in Spain required paper. After this situation worsened, reusing legal documents became normal. The availability of ship as a mode of transportation during the Trans-Atlantic trade helped in enhancing trade activities. In spite of this, the economy of colonial Mexico suffered from trade imbalances. Peru and colonial Mexico began producing products for themselves. This caused a huge decline in the demand for all products from Spain.  For this reason, Spanish merchants could not manage to buy the silver they needed. Slavery predicated upon labor exploitation remained a major problem in colonial Mexico. Most Indians perished during the initial years of the colonial rule. This amounted to a decline in labor availability. Obviously, the Spaniards could not work by themselves. This marked the emergence of the Trans-Atlantic trade. The Spanish conquistadors began contemplating on the need of beginning importing African slaves. The slaving ports owned by the long-established Portuguese brought African slaves from West Africa. They served in sugar plantations within the Caribbean.

Slave trade helped Spain in many ways. Essentially, slaves from West Africa continued working in earnest in these sugar plantations, especially in Hispaniola – currently Dominican Republic and Haiti as well as other islands. The arrival of these slaves served to reduce the erstwhile trade imbalance. The Spanish merchants had sugar, silver as well as gold to sell. The African and Indian slaves suffered the most. Life within these sugar plantations proved nasty, hostile, and even brutish. The triangle trade and slave economy facilitated the shipment of many slaves in the Caribbean for many years as exchange for rum and sugar. Consequently, the shipment of rum and sugar to Europe for nails, colored cloth, guns as well as other trade products, which eventually landed in Africa as exchange for slaves did dominate the American trade – both in British America and in Spanish America. The adventure, religion, politics, adventure and exploration issues bred by Renaissance prompted the movement of Europeans to Americas. This movement culminated in the cultural change through introduction of new economic institutions and values. For instance, the introduction of mercantilism spearheaded the emergence of an economic system that set wages through a standardized monetary system. Mercantilism altered slavery as depicted by the rise of various kinds of servitude. 

Western Europe relied on agriculture during the 15th century due to many reasons. The feudalism system lead by wealthy families ruled certain territories. Peasant farmers constituted Western Europe’s major economic class. Peasants worked for lords in the feudal system relying on crops as well as other products for sustenance. With advancement in technologies, farming techniques improved. Europe managed to recover from devastating diseases and famine of Middle Ages. Population grew. Land became scarce. This prompted people to move to other lands yonder. Eventually, Spain began colonizing Mexico. As mentioned earlier on, Spain sought valuable products like silver and gold by incorporating aboriginal people through coercion into its labor force. Few but wealthy settlers of Spanish descent dominated the peasant class. Indians and Africans constituted the peasant economic class. After the Roconquista capture, the encomienda system served to rule Muslim regions.  Spain sought to incorporate the locals into this economic system through creation of an inclusive community. Contrariwise, the society consigned and downgraded Indians into some inferior state. They became slaves with little autonomy and few rights. They worked in mines and fields. After depletion of minerals in the islands, the explorers went westwards. This economic system spread to colonial Mexico. It successfully served to plunder and subjugate native people together with their communities using an assortment of military conquest and religious conversion. Spain used the ‘souls and gold’ colonization strategy. 

Religion formed a potent in facilitating the colonization of New Spain. Converting the aboriginal people to Catholicism helped in spreading the Catholic Church doctrine. Moreover, it served in controlling the Indian behavior within the plantations and the mines. Additionally, missions acted as the spiritual centers as well as the economic base for all Spanish communities. Indians constituted the major labor force. Conversion to Christianity translated to indentured servitude to the Indians. Within the Caribbean, the Indian population had decreased courtesy of diseases. This prompted the Spaniards to import slave labor all the way from Africa. Tapping into the Trans-Atlantic trade with the assistance of the Portuguese, the Spaniards had managed the fill this deficit and keep labor output at the desired level in tandem with their economic needs. Violence characterized the Spanish conquest in colonial Mexico. The consequent colonization policies only served to inspire protests against the mistreatment of the Indians within the Caribbean. Arguably, disease and starvation fueled the reduction of the aboriginal population in colonial Mexico. On the other hand, Spain justified the conquest on purely religious grounds. However, colonial Mexico’s economic success reverberated across the entire Europe. Most European countries began taking part in the Columbian Exchange with the intent of establishing colonies within the Americas as well as break the monopoly enjoyed by Spain. Spain’s growing wealth and power justified the English colonization. However, during 1750 to 1800, elites dislike colonial restrictions. 

Integration of domestic economies into the extensive global economy is an imperative. For this reason, the onset of the 16th century marked the integration of colonial Mexico to the expansive global economy. Historical evidence points an increasing trend in inequality and wealth. The conquest of colonial Mexico saw its incorporation in the global economy as Spain’s colony chiefly based on ranching, mining and agriculture. The conquest also marked the beginning of labor exploitation.  Mexico supplied cochineal, tobacco, raw materials, sugar, silver et cetera. A lopsided economic system in colonial Mexico saw Spanish colonizers as well as their descendants dominates the political and economic spheres. Many non-whites thrived in abject poverty. These effects continue to reverberate in Mexico even today. Mercantilism and the Trans-Atlantic trade exacerbated the fierce economic and religious competitions amongst European nations in the New World. Spain had its different goals in colonial Mexico. It imposed its economic system and values upon America’s Indians as well as African slaves. Fortunately, the Enlightenment Age gave rise to the American Revolution, which ended slavery. In 1807, Britain terminated the global slave trade. 

From 1760s, the Crown in Spain under the newfangled Bourbon dynasty started implement an assortment of policies tailored to turbo-charge and the economy of colonial Mexico. These economic reforms sought to boost Mexico’s export of raw materials. Opening new ports and proscribing trade monopolies alongside stimulating silver production – largest Mexico’s export – had resounding effects. Before Mexico gained independence in 1801, it had become the most prosperous Spanish colony. These economic reforms stimulated economic development and served to integrate Mexico within the global economy. However, since the economic policies enabled Spanish monarchs extract wealth from colonial Mexico, income inequalities surfaced. Ranchers, miners, and traders benefited the most from the economic growth. They were of European descent. Laborers – mainly mestizos and natives – in rural sectors saw their incomes drop. The growth of exports through agricultural commercialization culminated to a rise in landholding concentration. This inequitable social system had adverse economic effects. Mestizos and other natives remained vulnerable even with these economic reforms due to the capitalist cultivation. Encroachment of haciendas, agricultural commercialization and other factors increased violence in the rural sector owing to pent-up frustrations. This culminated in class and racial warfare as well as elite infighting. Ameliorating colonial Mexico’s inequalities remained a puzzle.

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Spain led to the creation of a strictly controlled trade to safeguard her self-interests. Colonial Mexico historians blame Spain due to its highly regimented colonial trade system as well as the traders who benefited from it. The elite group made of Spanish and Mexican Consulados spearheaded the emergence of commercial monopolies that generated supernormal profits. Most trade institutions and business practices in colonial Mexico adapted to risk. Uncertainty and risk characterized the Trans-Atlantic trade. Traders exposed cargos to loss through hurricanes or even other forms of bad weather. Privateers and pirates attacked vulnerable ships. Great delays and poor communication worsened the Trans-Atlantic trade. Oftentimes, changing tastes and competing supplies rendered shipments worthless. Economic historians point out that pre-modern economies suffered huge certainties and risks. Without uncertainties and their consequences, most social and economic history in pre-modern world is inexplicable. In the colonial Mexico context, the Mexican and Spanish traders failed to adhere to any sound economic business practice. They participated in highly risky and uncertain trade activities. Despite this, the Mexican merchants participated in the Trans-Atlantic trade. The incidences of piracy grew exceedingly. Additionally, the Crown proscribed merchants from sailing individual ships. As a mitigation measure, merchant ships had to arm themselves in the event of potential enemies. The revered Spanish Crown had an elaborate trading house with the intent of overseeing the king’s individual commercial investments. The location of a trading house at Seville near Guadalquivir River made it secure and easy to access the Atlantic Ocean.  As Spain’s wealthiest and largest city, Seville had huge commercial advantage. Legally, every Trans-Atlantic trade passed via Veracruz, and this gave Seville some monopoly. 

Colonial Mexico served to make Spain stronger, self-sufficient and richer. Raw materials from colonial Mexico served in the manufacture and processing of finished goods. The exportation of these finished goods to other European countries or even back to colonial Mexico aided the realization of supernormal profits. The wealth of gold and silver deposits in colonial Mexico gave Spain a cutting edge. Consequently, the economy of colonial Mexico transformed due to the introduction of technology, draft animals as well as European crops. While excessive controls did stifle growth of commerce and industry, the Crown achieved the aim of creating monopolies for products like mercury, tobacco, salt, and gunpowder. Economic activities that seemingly competed with the expansive Spanish industry received numerous restrictions or even prohibited completely. Tight regulations characterized the weaving and tanning industries and, therefore they could not benefit colonial Mexico. Transport during the Trans-Atlantic trade became a tall order due to masked bandits who ambushed many mule trains travelling to Veracruz, Mexico City or even Acapulco. Dutch, English, and French pirates prowled the entire Caribbean looking for the Spanish galleons that they could plunder. Additionally, mining came second to agriculture. Ranching and farming served in sustaining colonial Mexico s a growing colony. The importation of sheep, cattle as well as livestock from Spain only served to make colonial Mexico an important colony. Moreover, the introduction of sugar cane, wheat, and citrus fruits as well as other fruits in the fertile lands also bolstered trade activities even with restrictions. Olive oil and wine became staples of the diet of colonists and the Spaniards. The natives could not plant olive groves and vineyards with the intent of protecting farmers’ interests. Farming mulberry bushes competed with the silk industry in Spain. 

Through a Spanish tax and duty system, the generation of revenue skyrocketed. Importation of goods to colonial Mexico and collection of accruing duties helped the Spanish economy grow. The onset of the 18th century saw the Bourbon monarchy ascend to the throne in Spain. Sweeping changes and government reforms alongside other policies towards colonial Mexico marked Charles III’s reign between 1759 and 1788. The reduction of trade restrictions served towards the advancement of interests of colonial Mexico. The Crown allowed colonial Mexico to establish ports in Yucatan and Campeche. Most importantly, the Crown had to sanction free trade throughout the ports in both Americas and in Spain. The Church equally began growing. The native people received and accepted the Christian doctrine during the mendicant friars. The arrival of clerics later offered spiritual needs for the affluent Spanish settlers. Eventually, most of these Spanish settlers bequeathed their earthly goods towards the church. In 1800, about 50% of colonial Mexico’s land as well as about two-thirds of the circulating money belonged to the Church. Colonial Mexico became one of Spain’s richest colonies abroad. 

 The 16th century marked the conquest, growth and consolidation of the Spanish realm. Colonial Mexico emerged as the leading global supplier of silver. The realization and capitalization of colonial wealth made colonial Mexico an important economic hub. Between 1750 and 1800, Spain and her colonies amassed wealth from numerous sources. However, silver mining emerged as the chief ‘cash crop.’ Throughout this period, the exportation of silver to Europe only worked to solidify the importance of colonial Mexico to Spain and the global economy. In the Viceroyalty, silver remained an important stimulant for international trade, market creation for domestic products as well as settlement in northern Mexico. Mining centers like Guanajuato, Zacatecas and Taxco flourished between 1750 and 1800. In order to ensure that silver export remained restricted, only Porto Bello, Vera Cruz and Cartagena traded with Spain directly. This enabled Spain to maintain a stricter control of silver export from colonial Mexico. On the other hand, Seville maintained its monopoly over the silver trade. This culminated to the rise of a very influential and high-ranking merchant class. However, this did not last for long. 

Economic fluctuations marked the 18th century. It started with an economic depression. However, economic conditions enhanced. The economy reached and then maintained unprecedented production levels. The all-important Bourbon reforms initiated by Charles III helped in restructuring the beneficial silver industry as well as throughout the colonial economy. However, this only lasted until the 1810 Mexican revolution. The Spanish economy collapsed during this period, especially with the declining Indian population. Overwork coupled with diseases served to wipe the aboriginal Indian population. The Indian and African labor force remained essential during this time. Ironically, Spain helped in destroying its own economy through monopolization of irrigation water in spite of inadequate water for agricultural activities. The nose diving economy caused farmland destruction by sheep and cattle herds. People had to retreat to rural estates, or Haciendas – self-sufficient economic and political power centers. The period between 1750 and1800 managed to shake-off these challenges. The economy of colonial Mexico experienced unprecedented growth. In the same way, the culture – Chambers and Aceves grew exponentially too. An assortment of economic, political and social factors prompted colonial Mexico’s material prosperity alongside scientific advancements. The economic reforms initiated by the then-Spanish Crown gave premium to abolishment of laws that subordinated the whole economy to the good of Spanish economy. The Spanish diplomats had to dictate measures with the intent of augmenting their monopolies with tax collection in order to speed free trade between Spanish Peninsula and colonial Mexico’s ports. 

Additionally, during this period, the Inter-colonial trade pitting Nueva Granada, Peru, Guatemala and Mexico did not face any restrictions. These restrictions could only serve to control the erstwhile mining industry. The newfound freedom represented the dynamic times. The abolishment of the fleets system in 1763 reinforced the need for a fair government. The exploitation of aboriginal people had to stop. Indisputably, many Native Americans died during the Spanish conquest. The remaining inhabitants became the laboring economic class. Native Americans carried out ranching work, mining and farming within the colony. The decreed their rights and freedoms coupled with good wages, labor exploitation only served to worsen their plight. As mentioned earlier on, the encomienda economic system saw European explorers alongside soldiers and settlers receive access to labor of the Native Americans to work in their vast landholdings. The Spanish government attempted to regulate exploitation of labor in mines and on farms in mid-16th century. The 1542 New Laws proscribed the enslavement of the aboriginal people. The laws provided that no settler, soldier or explorer would receive new encomiendas. The existing encomiendas reverted to Spanish monarchy in the event of death of holders since colonists strongly did oppose the economic reforms. They threatened to hold to general revolt. Spain relaxed the position of encomiendas inheritance. Spanish officials could not put in force the remaining actions.

The repartimiento forced labor system – required the native communities to supply workers for hire by Spanish settlers. The harsh and burdensome system particularly in the silver mines diverted the native workers away from agricultural tasks. Free blacks and slaves worked in Acapulco and Veracruz ports as well as in mines, sugar mills, factories and plantations. In urban centers, slaves worked like household servants. Some blacks managed the rural properties owned by absentee owners or even took charge of the Native American laborers. Colonial Mexico experienced many save riots. Most runaway slaved started autonomous communities in isolated and rugged regions. Large trades dominated the illegal commerce in colonial Mexico. Attempts to introduce strict trade restrictions became largely ineffective.  European crops like barley, wheat, and oats flourished. Silver had a ready market in Asia and Europe as opposed to agricultural items. Mining, exportation and trade of silver created a diversified and a complex economy within colonial Mexico. 

Unlike the areas that the English colonized, Spanish America remained a racially diverse society. Men were the early conquistadors, settlers and priests. Men craved for the female companionship and this led to intermarriages in colonial Mexico. Amongst the Spanish officials, families and wives were common as opposed to the remainder of the population. This created a mixed race population known as the mestizos. While some intermingling and intermarriages happened out of coercion, most people willingly interacted. The caste system – organized in manner that classified people according to the Indian blood amount – characterized the society. ‘The less the Indian blood, the lower the social respectability’ mantra resounded across the entire colonial Mexico. The Spanish relied on the limpieza de sangre principle that gave premium to blood purity. Public office aspirants had to meet this threshold. This culminated in the barring of mestizos from many public offices. They faced outright discrimination. Pure-Spanish descendants ruled colonial Mexico. Partly, this colonial legacy explains the Zapatista rebellion. 

The mestizo culture as a major issue in colonial Mexico coupled with the never-ending quest for cheap by the Spanish explained the decision to import African slaves to colonial Mexico to work in sugar plantations and mines in the Caribbean and South America respectively. The influx of the Africans courtesy of the Trans-Atlantic trade further compounded the issue of cultural diversity and racial mixture due to intermarriages. The blend of Americans, Africans and Europeans in colonial Mexico bred an enthralling cultural brew. With Catholicism as the formal religion, slaves in colonial Mexico retained their personal beliefs. They incorporated them to Christian worship. The Comanche, Apache, and Navaho tribes did not mix with Spanish rulers albeit few intermarriage cases. They stayed separate. They averted the European interference. A racially based caste system in Southwest Mexico grew in leaps and bounds. Race played an important dual role during the colonial Mexico. The cultural blend that incorporated European, Indian and African elements adversely affected peaceful coexistence. It became the basis for disastrous racist divisions within the society. Racial discrimination affected many people in colonial Mexico. People with non-European blood had limited life opportunities. It brought discrimination and inequality. 

In conclusion, it is clear from the essay that the Trans-Atlantic trade played an important role during colonial Mexico, particularly between 1750 and 1800. Towards this end, the importation of African slaves by the Spaniards to work in mines and plantations bolstered the dwindling production and the labor output by the Native Americans. With the discovery of gold and silver, colonial Mexico became an important economic hub within the global market. The export of Mexican products to Asian and European countries solidified the Trans-Atlantic trade in spite of the associated risks, costly delays and uncertainties. Additionally, Spain introduced the encomienda system. This culminated in exploitation of the aboriginal people. Labor exploitation by the Spaniards characterized colonial Mexico. The oligopoly in the Trans-Atlantic trade affected colonial Mexico. The Mexican-Spanish trade had long-term profitability and other multiplier effects. In 1700s, the Spanish and Mexican merchants took advantage of the Trans-Atlantic trade to amass their wealth. Wading off risk created predacious monopolists as shown in the paper.

Mar 11, 2019 in Economics
Drivers of Change in Public Service Since 1970
Human Resource Development

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