Due to natural attrition and harsh misrule, the population of native laborers soon became too small for the voracious Spanish, so they began to import African slaves to work in sugar plantations and silver mines. The introduction of African traditions to the Native American and mestizo cultures already in existence made for a social mixture richer than in almost any other part of the world, although racism continued to play a dark role in the New World. Colonial society was hierarchical, based upon on the amount of non-Spanish blood a person possessed. A complicated system, called the casta, delineated over 100 separate names for groups containing certain levels of Indian and African blood. Jobs, government positions, titles to land, and almost everything else in the Americas functioned according to this system with those at the top getting preference over those lower on the list. Discrimination and repression were features of Spanish colonial rule throughout its history.
Spain's government in Madrid tried hard to govern the New World, despite its distance from Europe. Using a system of viceroyalties and audencias, royal courts of appeals, the Spanish Monarchy was able to exercise control over Spanish settlers, even when they didn't want any sort of interference from the central government. The Crown was entitled to one-fifth of all mining profits, and this huge income helped Spain to become the largest and most powerful empire in Europe by 1600. Religion was mixed with politics to create a hybrid system in what would become the American Southwest: Dominican, Franciscan and Jesuit missionaries were often left in charge of large areas in what is now Texas, Arizona, New Mexico and, later, California. With its goal of bringing the Catholic religion to the New World, Spain was also able to use the existing church governments for its own political uses. Today, religion and politics continue to mix in Latin America.
Excerpt courtesy of http://www.shmoop.com/spanish-colonization/summary.html