From 1524 to 1700, the Habsburg dynasty ruled New Spain. In 1535, they unified the lands initially claimed by Spain from Panama to Alta, California, into the Viceroyalty of Spain. It was governed by a viceroy, on behalf of the King, until 1821. The viceroy controlled this vast territory through local governors. There were three other Spanish viceroyalties; the Viceroyalty of Peru, the Viceroyalty of Río de la Plata, and the Viceroyalty of New Grenada.

In local areas where the danger of attack was high, a captain general was in charge. Land was held through the encomienda system, in which the recipient of an encomienda had the right to the labor of the indigenous people in a certain region. In Peru, the parallel yanaconaje system offered an alternative to the encomienda system.

In this system, indigenous laborers were tied to individual Spanish colonizers and relieved of the obligation to pay a tribute called the mita. As personal servants, these yanaconas were mobile until 1572, when a change in the law tied them to labor in a particular place (this reduced labor shortages in mines, for instance).

As a result of the War of Spanish Succession (1701-1713), the Bourbons replaced the Habsburgs as rulers of Spain and its territories. The Bourbon reforms reorganized New Spain to increase efficiency and profits, reorganized tax collection, introduced new ideas in agriculture and mining, and placed a royal monopoly on tobacco. Furthermore, Enlightenment ideas began to reach the Spanish colonies.

In Brazil, governors general held a status similar to the Spanish viceroys. Donatarios in Brazil held captaincies and grants of land, again with rights to indigenous labor. Following its independence from Spain (1640), the House of Braganza took the Portuguese throne, and in Brazil, when it declared independence in 1822, descendants of the same House continued to rule as Emperor until 1889.

During the early period of Braganza rule, sugar was the main product of Brazil. In the 1700s, deposits of both gold and diamonds were discovered. Both sugar production and gold mining were done using the labor of enormous numbers of enslaved Africans. The Marquis de Pombal, a leading Portuguese official, introduced the “Pombaline” reforms in Brazil, expanding settlement in the North, West, and South and encouraging the integration of indigenous people with the European colonizers through intermarriage.

Other reforms were intended to speed up the justice system and curtail abuses. In North America, colonies were established by the Dutch, French, and British. British colonies might be royal colonies, corporate colonies, or proprietary colonies. A corporate colony or joint stock company was one in which a royal charter was given to a corporate body of colonists; an example is the Massachusetts Bay Colony (until 1691 when it became a royal colony and was merged with Maine and the Plymouth Colony).

In a proprietary colony, an individual or a few individuals received the charter; an example is William Penn’s colony, Pennsylvania. In a royal colony, the King appointed a governor to rule directly on the King’s behalf; examples are New York and Virginia, although New York began as a proprietary colony and Virginia as a corporate colony. The French and British practiced the economic system of mercantilism, using their colonies as sources of raw materials and markets for European manufactured goods.

Jamestown (1607) was the first permanent British colony in North America. The settlers initially hoped to find gold, but soon settled down to grow tobacco. Other settlements such as those of the Pilgrims and Puritans were established in what is now Massachusetts. Although relationships with indigenous people were initially positive, they soon soured as the colonists expanded their claims to territory.

In New France, however, the French focused on establishing trading posts to develop the fur trade, and maintained generally positive relations with the indigenous population. A major challenge to British settlement came in the form of King Philip’s War (1675-76), an effort by the indigenous people of southern New England to drive out the English settlers. The effort failed and its leader was executed.

In the war, some Native American groups fought on the side of the colonists. By 1754, there were 13 British colonies in North America, stretching down the Atlantic seaboard. Their populations were growing and clashes with the French began to take place, particularly in the Ohio Valley.

In 1754, war broke out between British colonists and the French. In this war, the French and Indian War (1754-1763) Indians in fact fought on both sides. Although the French enjoyed some early victories, ultimately the British triumphed, and in the Treaty of Paris the French gave up control of all French territory in North America, and the majority of it went to the British.