The Viceroyalty of New Spain reaches from New Mexico to Panama by the end of the seventeenth century and includes the Caribbean islands and the Philippines.

Local audiencias enjoy greater autonomy in the most distant areas, and viceregal authority is merely nominal.

After the sixteenth-century expansion of power, the seventeenth century has been marked by a decline in central authority, even though the administrative structure transplanted to the New World remains intact.

Trade restrictions imposed by Spain, natural disasters, and foreign attacks devastate the economy of the Captaincy General of Guatemala throughout the seventeenth century.

The local government neglects agricultural production; powerful earthquakes in 1648, 1651, and 1663 cause massive destruction in the Province of Nicaragua; and from 1651 to 1689, Nicaragua is subjected to bloody incursions from English, French, and Dutch pirates.

In 1668 and 1670, these buccaneers capture and destroy the city of Granada, center of the province's agricultural wealth.

The Captaincy General of Guatemala is generally neglected by Spain.

Within the captaincy general, the Province of Nicaragua remains weak and unstable, ruled by persons with little interest in the welfare of its people.

The Spanish crown grants large tracts of land, initially under the terms of the encomienda system, whereby the grantee is invested with the right to collect tribute from the native inhabitants of a designated area.

The manifest abuse of the native population that results from the encomienda system contributes to its replacement in the mid-sixteenth century by the repartimiento system.

Under repartimiento, representatives of the crown are empowered to regulate the work allotment and treatment of native laborers.

Although more humane in theory, it is a system that is extremely vulnerable to abuse.

The colony's distance from the mother country, the ease with which royal officials can be corrupted, and the prevailing disregard among the elite—made up of peninsulares, born in Spain, and criollos born in the New World of Spanish parentage—for the plight of the natives militates against any substantive improvement in living conditions for the indigenous population.

Landholders in El Salvador exercise nearly absolute power within their fiefdoms, but  they do not begin to realize the full economic potential of their holdings until they institute the system of widespread cultivation of a single lucrative export commodity.

The first of these commodities is cacao, which flourishes during the latter half of the sixteenth century.

The Spanish had come to Central America seeking, at least in part, to add to the store of precious metals that constituted the most immediate spoils of the Mexican conquest.

They are severely disappointed in this regard in the small colony that they dub El Salvador ("the savior").

What little gold is available is accessible only through the laborious and time-consuming method of panning, a process that consumes the effort of numerous impressed native laborers for a number of years.

Denied the opportunity for quick riches, the conquistadors and later the Spanish settlers eventually come to realize that the sole exploitable resource of El Salvador is the land.

El Salvador thus is relegated to the status of a backwater of the Spanish Empire.

In this state of neglect and isolation, the seeds of the country's politico-economic structure are planted.

Mining production begins to decline in the 1560s, and Honduras rapidly declines in importance.

The subordination of Honduras to the Captaincy General of Guatemala has been reaffirmed with the move of the capital to Antigua, and the status of Honduras as a province within the Captaincy General of Guatemala will be maintained until independence.

Beginning in 1569, new silver strikes in the interior briefly revive the economy and led to the founding of the town of Tegucigalpa, which soon begins to rival Comayagua as the most important town in the province, but the silver boom peaks in 1584, and economic depression returns shortly thereafter.

Mining efforts in Honduras are hampered by a lack of capital and labor, difficult terrain, the limited size of many gold and silver deposits, and bureaucratic regulations and incompetence.

Mercury, vital to the production of silver, is constantly in short supply; once an entire year's supply is lost through the negligence of officials.

By the seventeenth century, Honduras has become a poor and neglected backwater of the Spanish colonial empire, having a scattered population of mestizos, native people, blacks, and a handful of Spanish rulers and landowners.

By the seventeenth century, Honduras has become a poor and neglected backwater of the Spanish colonial empire, having a scattered population of mestizos, native people, blacks, and a handful of Spanish rulers and landowners.

Honduras seems headed for relative prosperity and influence by the late 1540s, a development marked by the establishment in 1544 of the regional audiencia of Guatemala with its capital at Gracias.

The audiencia is a Spanish governmental unit encompassing both judicial and legislative functions whose president holds the additional tides of governor and captain general (hence the alternative name of Captaincy General of Guatemala).

The location of the capital was bitterly resented by the more populous centers in Guatemala and El Salvador, and in 1549 the capital of the audiencia is moved to Antigua, Guatemala.

William Claiborne, fresh from his defeat over Kent Island, had in May 1638 received a commission from the Providence Land Company, who had been advised by his old friend Maurice Thomson to create a new colony on Roatan Island off the coast of Honduras in the Caribbean Sea.

At this time, Honduras itself is a part of Spain's Kingdom of Guatemala, and Spanish settlements dominate the mainland of Central America.

In contesting with the Spanish for colonization of the Caribbean, the English have occupied the Bay Islands on and off since 1550.

Claiborne had optimistically called his new colony Rich Island, but Spanish power in the area is too strong and the colony is destroyed in 1642.

The federalist forces largely prevail in writing the new constitution, but the centralists win three major concessions.

The constitution of 1824, which is strongly influenced by the United States constitution and Mexico's legislative relationship with Spain since 1810, establishes the United Mexican States (Estados Unidos Mexicanos) as a federal republic composed of nineteen states and four territories.

Power is distributed among executive, legislative, and judicial branches of government.

Legislative power is wielded by the Senate and the Chamber of Deputies, while executive power is exercised by a president and a vice president elected by the state legislatures for four-year terms.

In spite of the liberal outlook of the constitution, certain traditional privileges are maintained: Roman Catholicism remains the official religion, the fueros are retained by the military and clergy, and in national emergencies the president can exercise unlimited powers.

Mexico's  economic conditions worsen during the administration of its first president, Guadalupe Victoria, as government expenditures soar beyond revenues.

Declining economic conditions persuade the criollos that there is more behind the economic decline than bad management by peninsulares.

One of the government's major burdens is the assumption of all debts contracted during the late colonial period and the empire, a substantial sum.

The government's ability to service the debt is severely constrained by the costs of maintaining a fifty-thousand-strong standing army and the insufficiency of revenues generated by tariffs, taxes, and government monopolies.

To cover the shortfall, Victoria accepts two large loans on stiff terms from British merchant houses.

The British have supported independence movements in Spanish colonies and see the loans as an opportunity to further displace Spain as the New World's dominant mercantile power.