How Colonialism Works

The First Wave of European Colonialism

Aztec slaves, Mexico City Aztec slaves, Mexico City
The Spanish conquistadors enslaved the Aztec Indians into building Mexico City on the ruins of the Aztec capital of Tenochtitlan. Ann Ronan Pictures/Print Collector/Getty Images

The great age of European colonialism began around 1500 C.E., after mariners reached the Americas. After the Spanish poked around in the Caribbean and failed to find riches there, they invaded and seized Mexico from the dominant Aztec people in a bloody war in the early 1500s, plundering the Aztec empire's gold and silver. A couple of decades later, they overthrew the Incas in Peru and seized even more riches.

Those lands eventually would become part of a far-flung Spanish colonial realm that would span the globe, from Cuba to the Philippines in Southeast Asia. They sent colonists across the water to found new settlements that grew into cities such as Veracruz and Lima.

As big as it was, though, the Spanish Empire was never as strong or profitable as it should have been. One problem was that Spain didn't produce enough manufactured goods to make money from trade. And their attempts to use the conquered people as a source of labor didn't work out too well. The Spanish created a system called encomienda, in which natives were entrusted to Spanish protectors, for whom they worked and provided tribute. But the Spanish were cruel taskmasters and spread diseases that wiped out the natives. In the Caribbean, the indigenous population decreased from 50 million in the 1500s to about 4 million a century later [source: Nowell, et al.].

Portugal, another seafaring power, grabbed Brazil, and set up outposts in India and the East Indies as well. By the 1600s, those countries had plenty of rivals. France, Great Britain and the Netherlands also began expanding their reach across the globe, and eventually battled one another for supremacy.

By the mid-1700s, the economics of colonialism had begun to shift. Originally, the Europeans saw colonies as sources of things they wanted, such as gold, silver and raw materials. With the Industrial Revolution and the rise of machine-produced goods, the colonial powers still needed things like cotton and foodstuffs from their colonies. But they became even more interested in what they could sell to the colonists. Rulers saw colonies as markets for the products that their machines churned out, which could be sold to them (often using raw materials from these same colonies) at a profitable markup [source: Nowell, et al.]. In many ways, it was the beginning of the global economy that we have today [source: Aubet].

Not everybody in the colonies went along with being exploited in this way. In the 1770s, American colonists rebelled and overthrew British rule to establish their own nation, so they could trade with whomever they wanted, make their own goods and profits from their own natural resources. The U.S. grew so powerful and confident that in 1823, President James Monroe issued a warning to European nations that the Western Hemisphere was closed to further colonization [source: Gilder Lehrman].

Around that time, South American countries also freed themselves from Spanish and Portuguese rule, thanks to leaders like Simon Bolivar [source:, Britannica].