In 1503 the monarchs provided their answer to the dilemma: the encomienda system. Individual Spaniards became trustees of indigenous groups, promising to ensure their safety, freedom, and religious instruction. In fine protection-racket style, Indians paid for Spanish “security” with their labor. The encomienda can be thought of as an attempt to answer the objections to slavery raised by Adam Smith. By restricting the demands on Indians, the monarchs sought to reduce the incentive for revolt—a benefit to the Spaniards who employed them.
