Although the majority of the indigenous population continued to live in their traditional units across the countryside, their lives were nonetheless profoundly affected by the conquest and its aftermath. The most obvious development was drastic demographic loss; in a process marked by periodic large epidemics, the population declined through the 16th century and on into the 17th century to a small fraction (impossible to determine with precision) of its precontact size. Only in hot, low-lying areas, such as the Peruvian and Mexican coastal regions, however, were losses as disastrous as those of the Caribbean islands. The peoples of the temperate highlands, however much they may have diminished in numbers, survived in the sense of retaining their local units, their language, much of their cultural heritage, and the essence of their social organization.

The Nahuas of central Mexico are the people whose postconquest experience is best understood because of the voluminous records they produced in their own language. These records reveal that the Nahuas were not overly concerned with the Spaniards or the conquest, which seemed to them at first much like earlier conquests; they remained preoccupied to a large extent with their internal rivalries. The local state, the altepetl, with its rotating constituent parts, remained viable as a functioning autonomous unit and as bearer of all major Spanish structural innovations, not only the encomienda but also the parish and the indigenous municipality. The Nahuas accepted Christianity and built large churches for themselves, but those churches had the same function as preconquest temples, acting as the symbolic centre of the altepetl, and the saints installed in them had the same function as preconquest ethnic gods. The status and duties of the commoners remained distinct from those of the nobles, who manned the local Hispanic-style government of the altepetl as they had filled offices in preconquest times.

The household and land regime remained much the same in its organization despite reductions and losses. Household complexes, for example, continued to be divided into separate dwellings for the constituent nuclear families. The Spanish concept “family” had no equivalent in Nahuatl, and none was ever borrowed. The greatest internal social change was a result of the end of warfare, which had been endemic in preconquest times. Performance in war had provided degrees of social differentiation, avenues of mobility, and a large supply of slaves. Formal slavery among Indians soon disappeared, while internal social mobility tended to take the form of commoners claiming to be nobles or denying specific rights to specific lords. However, the categories themselves were not challenged: the strong distinction between commoner and noble was not soon erased. An entirely new type of mobility had come into existence—movement of Indians away from the whole realm of indigenous society in the direction of the Spanish world to become naborías or city dwellers.

The peoples from central Mexico to Guatemala had forms of recordkeeping on paper in preconquest times, and after the arrival of the Spaniards a remarkable cooperation between Spanish ecclesiastics and indigenous aides led to the adaptation of the Latin alphabet to indigenous languages and subsequently to regular record production. In the case of Nahuatl, the main language of central Mexico, the records have allowed the tracing of some basic lines of cultural and linguistic evolution in three stages. During the first generation, although cataclysmic change was occurring, Nahua concepts changed very little, and their language could hardly be said to have changed at all, using its own resources to describe anything new. In a second stage, beginning about 1540 or 1545 and lasting for nearly 100 years, Nahuatl borrowed many hundreds of Spanish words, each representing a cultural loan as well. But all were grammatically nouns; other innovations in the language were minimal. This was a time of change in a familiar corporate framework, centring on areas of close convergence between the two cultures. A third stage began about the middle of the 17th century, when Spaniards and Nahuas had come into closer contact, and many Nahuas were bilingual. Now there were no limitations on the kinds of things introduced into the language, and change increasingly took place at the level of the individual, with mediation no longer necessary.

The Nahuas had structures perhaps more similar to those of the Spaniards than any other indigenous group, and nowhere else was there such massive interaction of Spanish and indigenous populations, but broadly similar processes were at work across the central areas. Among the Maya of Yucatán, the direction and nature of the evolution was closely similar but much slower, corresponding to the relatively small Spanish presence there. The Yucatec Maya language stayed in something comparable to the second stage of Nahuatl for the entire time up to independence.

In the Andes too the indigenous social configuration was sufficiently close to the Spanish that it could serve as the basis for institutions such as the encomienda and parish. But Andean sociopolitical units were less contiguous territorially than those of central Mexico or Spain, and the population engaged in more seasonal migration. Thus the local ethnic states of the Andes, comparable to the altepetl of the Nahuas (though far less well understood) as the framework of social continuity, may have come under greater challenge of their essential character and identity. The Spaniards tended to reassign noncontiguous parts of one entity to other entities geographically closer, thereby mutilating the original entity. As far back as can be traced, the postconquest Andeans were inclined to migrate permanently from their home entity to another, whether to avoid taxes and labour duties or for other reasons. Such movement occurred in Mexico too, but there the new arrivals tended to melt into the existing entity, whereas in the Andes they remained a large separate group without local land rights or tribute duties, known in Spanish as forasteros. Another challenge to indigenous society came in the later 16th century in the form of attempts by the Spanish government to reorganize sociopolitical units, nucleating the population in so-called reducciones, with consequent social upheaval. Still another apparent disruptive force was the Spanish use of obligatory rotary labour of large groups for relatively long periods at great distances. Yet given the mobility of the Andean peoples from preconquest times, strong continuities may have been involved.

The Andeans had sophisticated recordkeeping systems in preconquest times but did not put records on paper with ink, and after the conquest they did not engage in alphabetic writing on the same scale as the indigenous people of Mesoamerica. Some indigenous-language records are now beginning to come to light, however, and so far cultural-linguistic evolution appears far more similar to that of central Mexico in nature, staging, and timing than one would have expected.

The central areas in the mature period

In the 1570s and ’80s the central areas went through a process of codification and institutionalization marking the beginning of a long time of slow transformation, which can be called the mature period. Among the new institutions were those formalizing functions that had long been evolving, including the consulados, or merchant guilds, of Mexico City and Lima and tribunals of the Inquisition in the same places (plus Cartagena on the Colombian coast). Entirely new was the Jesuit order, which entered in force at the beginning of this time, quickly becoming strong in urban areas. During these decades nunneries inhabited by daughters of substantial Spanish families came to be a normal feature in any thriving city.

Intellectual production began to include not only narrow chronicles but also broad surveys of the entire Spanish-American scene, whether religious, legal, or general in focus. For a time most of the writers were acquainted with both hemispheres, but by the later 17th century locally born Spanish figures were becoming prominent, such as the famous poet, dramatist, and essayist Sor Juana Inés de la Cruz, a Jeronymite nun of Mexico. The late 16th and early 17th centuries saw much significant writing by indigenous authors, affected by both Spanish and indigenous traditions. A large corpus appeared in the Nahuatl language of central Mexico. In Peru the indigenous historian and social commentator (don) Felipe Guaman Poma de Ayala produced a vast work in Spanish.

An elaborate ecclesiastical art and architecture flourished in the main centres, much of it with a special regional style of its own. Religious devotion became more localized, with the appearance of locally born saints and near-saints, notably St. Rose of Lima (Santa Rosa de Lima), as well as miraculous shrines, of which the most famous came to be that of the Virgin of Guadalupe near Mexico City.

The Hispanic sector continued to grow, still centred in the same cities founded in the conquest period. These cities maintained their dominance because they attracted to them anyone from the countryside who was fully successful in any endeavour. They were usually filled to overflowing, and consequently they ejected large numbers of lower-ranking Hispanics into the surrounding countryside. As a result, new nuclei of Spanish society began to form outside the cities. The process of urban formation repeated itself; a new entity came into being, Spanish at the centre, Indian at the edges, very much a replica of the original city, except that none of the Hispanics rose above a certain rank, and the whole settlement remained dependent on its parent. In time, under the right conditions, tertiary Hispanic-Indian satellites would arise around the secondary centres in turn, until the entire area was honeycombed, and the original pattern of Spanish city and Indian countryside was obscured.

Racial and cultural mixture complicated and blurred society greatly after the conquest period, but many social criteria were still the same under the surface. The intermediary functions were still the province of those ranking lowest in Hispanic society, but that stratum now contained not only the least senior members (new immigrants from Spain and other European countries) and Africans but also large numbers of mestizos as well as mulattoes and increasingly even Indians who had mastered Spanish language and culture. To organize the diversity, the Spaniards resorted to an ethnic hierarchy, ranking each mixed type according to its physical and cultural closeness to a Spanish ideal. As mixture proceeded across the generations, the types proliferated until finally, at the time of independence, the system collapsed under its own weight. The new categorizations were all at the intermediary level; despite them, all these people, often simply called castas, assimilated to each other and intermingled, occupying the lower edge of Hispanic society. The more successful and better connected among them were constantly being recognized as Spaniards, as a result of which the Spanish category grew far beyond simple biological increase and included many people with some recognizably non-European physical traits.

Silver mining in Peru and Mexico continued along the same lines as before, reaching new heights of production in the early 17th century. After that a series of problems reversed the trend for a time. The absolute value of transatlantic trade seems to have fallen during the same period. Scholarly controversies about the existence, nature, and extent of a general economic depression during the 17th century have not been entirely resolved, but it is certain that the expansion of the Hispanic sector of society did not halt.

The most profitable mercantile operations still involved the trade of silver for European products, but some structural changes were occurring. Most of the transatlantic firms of the conquest period had broken up by now. The merchants in the large Spanish-American centres were still mainly born in Spain, but, rather than being members of Spanish firms, they were likely to be agents working on a commission basis or to be operating independently, buying up goods from Spain that arrived in the annual fleets. The change of company structure brought with it a localization of the merchant corps, who now stayed permanently in America, married locally, bought property, and even acted as governmental officials, especially in the treasury and the mint.

This time saw the rise of forms of economic activity not present or not well developed in the conquest period, of which haciendas (landed estates) and obrajes (textile shops) are the most prominent. The social organization of such enterprises, however, was familiar from earlier encomienda operations, consisting of a city-dwelling owner, often somewhat removed from daily operations; one or more majordomos; foremen; skilled permanent workers (functional descendants of the naborías); and less-skilled temporary workers. The owner was usually Spanish, the middle levels poorer Spaniards or castas, and the temporary workers generally still Indians. A powerful trend, corresponding to the growth of city markets and ethnic-cultural changes, was an increase in the proportion of personnel in the middle levels and a decrease in those at the lowest, especially an increase in permanent workers at the expense of temporary ones (though the latter were still very numerous).

All these developments ultimately had an immense effect on society in the indigenous entities of the countryside. In time, many rural Indians were absorbed within Hispanic society, while leading members of local indigenous society would ally and even intermarry with the humble Hispanics who were now beginning to dominate the local economy. Ties to specific local Spaniards and Spanish organizations gained ever greater importance in the lives of the indigenous people, compared with their own corporate society; one result was large-scale fragmentation of indigenous entities. In central Mexico, many altepetl broke into their constituent parts, and in the Andes even many of these constituent parts (ayllus) went out of existence or changed their principles of organization.