This policy, seemingly successful at first, fell short later because Spain failed to provide necessary manufactured goods for its colonies. As a result, foreign competitors appeared, and smuggling (contrabando) or illegal trade grew.

Even though the encomenderos were supposed to protect the group of natives working for them, they often abused and enslaved them. This resulted in the reduction of the native population, as many died from diseases and maltreatment.

Therefore, towards the end of the 17th century, the encomienda was eventually replaced by low-paid labor as well as slavery.

The origins of the "white" elite can be traced back to the start of the conquest. It was made up by conquistadors and those descendents who had purchased nobiliary titles, obtained the best lands, and/or been benefited with encomiendas (groups of natives legally bound to work for them). However, as the colonial economy started flourishing, a group of white men started accumulating wealth thanks to mining and commerce and became part of the social elite.

However, not all of the criollos were allowed to occupy positions in the government.

In order to do so, you had to be a vecino, which implied owning a property. Some criollos, however, didn't have any properties, money or prestige and carried out manual labors, such as in farming, construction, or transport

"whites". In practice, this meant that natives were to be subdued by the Spanish.

The lowest social stratum was made up by the africans, who had been introduced to America as slaves and were called blacks. Africans lacked rights and were considered property of their slaves; therefore, they were bought and sold as goods.

These groups made up of people with African or American descent were known as castes (castas in Spanish).