Years before the official abolishment of the Repartimiento in 1720 CE, this economic system was on its way out. Repartimiento was dependent upon the available Indio population of forced labor by the Spanish. Many natives were either killed off or died from European disease of one sort or another; villages shrank and disappeared. Most of the estates were lacking the labor force to work the fields; some were bankrupt due to mismanagement or the death of the land holders without heirs, leaving idle vacant land in Mexico. These vacant lands reverted back to the Royal Crown of Spain. The King was in need of capital and began selling the land even though he feared losing control of the territory. The American-born Spaniards, known as the Carrillo, had made large sums of money from the Encomienda and Repartimiento systems and was anxious to invest in the newly abandoned lands. Some of the land was declared vacant, with or without knowledge by the Crown, regardless if it was still inhabited with small communities of the native people or not. Villages were simply engulfed within the land purchased and became incorporated into the new system of the Hacienda.

Haciendas were one of the methods used by Spain to colonize the Americas. The Hacienda’s organization was similar to the complicated feudal system that was a way of life in Medieval Europe. The primary function of these Haciendas was for the purpose of creating industrialized centers besides adding to the wealth, power and prestige of the owner. Various products were produced from farming, ranching, lumber mills, rope making, mining, the cultivation of sugar cane, the growing and the fermentation of agave for the drink Pulque and Pulque’s distillation to make Tequila.

The Mexican laborers were bound totally to the Hacienda for basic sustenance, some medical benefits, and an insignificant wage. They were always in debt to the Hacendados. It was very common for the laborers to receive advances of their wages and was completely unable to ever pay back the money they owed. Debt was also inherited by the family upon the death of the borrower, which kept the people tied to the Hacienda indefinitely. Worse, was an Indio expelled from the Hacienda, as there was no place for him to survive outside of this economic system. Since the Indio was prohibited from all professional trades, there was no source of livelihood other than the Hacienda. The Haciendas provided housing for the laborers and their families, a school for the children, a church, a jail, a cemetery, and the processing plant or factory. Some Haciendas were so large they had their own railway station and were more like towns. They also served as inns for travelers and became important economic and social centers. Huge fortunes were made from the labor of the Mexican peasant.

The Church, who had at first looked after the wellbeing of the natives, now used them to increase their own wealth. The Indios were forced to pay tithes of 10% of their income or from the fruits of their labor in the form of crops and domestic animals. The Church was allowed to keep 8/9ths of the tribute, 1/9th went to the Crown. The missionaries built over four hundred convents by 1630. Many convents served no social or economic purpose. It was common for the clergy to become lazy and self-indulgent. They also charged exorbitant fees for performing marriages, burial rites, and baptisms. The Indios were always subservient and submissive; head bowed with hat in hand. The Hacienda system lasted until the Mexican Revolution of 1910 – 1917.