The economic system which was used by the Spanish colonists incorporated the Native American population but also repressed it. Native Americans worked a plot of land called a encomienda, which was granted to a colonist by the governor. Indian laborers worked without pay at tasks such as tanning hides and were required to provide the owner of the encomienda with an annual tribute of goods. The Spanish economic system created a society of extremes. Owners of land were profiting from the labor of native peoples. The tributes and labor were expected even in times of crisis such as drought, further oppressing the natives.

In colonial Spain's economic system, a person's race determined their place in society. Only peninsulares, who were Spaniards born in Spain, could hold the highest colonial government position of viceroy. Creoles, people of European descent but who were born in the colonies, had access to offices such as archbishop. Mestizos, or people of Spanish and Indian origin, could not hold any public offices and worked only in crafts. On the lowest rung were the Indians who worked on the encomiendas for the Spanish. By making race a factor in a person's economic status, colonial Spain succeeded in oppressing the natives.

Even colonial Spain's missionaries eventually became hostile to the Native Americans. When New Mexico was founded in 1598, the Spanish monarchy felt that it had a duty to convert the natives. In the beginning the number of religious conversions was more important to the Catholic friars than strict doctrine. Similarities between native and Catholic religions such as the belief in a higher power also aided the process of blending the cultures together. The tolerance of the friars for the natives ended after the drought of the 1670s. Since the English god was unable to provide the Native American tribe of the Pueblo with much needed rain, the Pueblo rejected Catholicism and went back to their old religion. In response, friars destroyed altars and forbade dances which the Pueblo used in their religious ceremonies. Also, 47 ceremonial leaders were arrested, three of whom were killed by the Spanish. Clearly both religion and economics were used to subjugate the Indians.