Queen Isabella of Spain indirectly laid the original foundations for the political administration of Peru in 1503 when she authorized the initiation of an encomienda system , which meant that successful Spanish conquerors could extract tribute for the Crown and personal service in return for converting the natives to Christianity. They were not, however, given title to the land itself. As governor of Peru, Pizarro used the encomienda system to grant large groups of Indians to his favourite soldier-companions. In this way the basic colonial land-tenure structure was created in everything but name. “Personal service” rapidly came to mean subservient serfdom for the native population, many of whom were now expected to raise animals introduced from the Old World (cattle, hens, etc) on behalf of their new overlords. Many Inca cities were rebuilt as Spanish towns, although some, like Cusco, retained native masonry for their foundations and even walls. Other Inca sites, like Huanuco Viejo, were abandoned in favour of cities in more hospitable lower altitudes. The Spanish were drawn to the coast for strategic as well as climatic reasons – above all to maintain constant oceanic links with the homeland via Panama.
The foundation of Lima in 1535 began a multilayered process of satellite dependency which continues even today. The fat of the land (originally mostly gold and other treasures) was sucked in from regions all over Peru, processed in Lima, and sent on from there to Spain. Lima survived on the backs of Peru’s municipal capitals which, in turn, extracted tribute from the scattered encomenderos. The encomenderos depended on local chieftains ( curacas) to rake in service and goods from even the most remote villages and hamlets. At the lowest level there was little difference between Inca imperial exploitation and the economic network of Spanish colonialism. Where they really varied was that under the Incas the surplus produce circulated among the elite within the country, while the Spaniards sent much of it to a distant monarch on the other side of the world.
In 1541 Pizarro was assassinated by a disgruntled faction among the conquistadores who looked to Diego Almagro as their leader, and for the next seven years the nascent colonial society was rent by civil war. In response, the first viceroy – Blasco Nuñez de Vela – was sent from Spain in 1544. His task was to act as royal commissioner and to secure the colony’s loyalty to Spain; his fate was to be killed by Gonzalo Pizarro, brother of Francisco. But Royalist forces, now under Pedro de la Gasca, eventually prevailed – Gonzalo was captured and executed, and Crown control firmly established.