The Viceroy's intercourse with Polo de Ondegardo informed him respecting the administrative system of the Incas, so admirably adapted to the genius of the people, and he had the wisdom to see that there was much to learn from it. His policy was to collect the people, who, to a great extent, were scattered over the country and hiding from the Spaniards, in villages placed near the centres of their cultivated or pasture lands. He fixed the numbers in each village at 400 to 500, with a priest and Alcalde. He also ordered the boundaries of all the parishes to be settled. Spanish Corregidors were to take the places of the _Tucuyricoc_ or governors of Inca times, and each village had an elected Alcalde approved by the Corregidor. Under him there were to be two overseers, a _Pichca pachaca_ over 500, and a _Pachaca_ as assistant. Another important measure was the settlement of the tribute. The name "tribute" was unfortunate. The system was that of the Incas, and the same which prevailed throughout the east. The government was the landlord, and the so-called "tribute" was rent. The Incas took two-thirds for the state and for religion, and set apart one-third for the cultivators. Toledo did much the same, assessing, according to the nature of the soil, the crops, and other local circumstances. For the formation of villages and the assessment of the tribute he promulgated a whole code of ordinances, many of them intended to prevent local oppression in various forms.
The Viceroy next took up the questions of the position of _yana-cunas_ or domestic servants, and of forced service. Both these institutions existed in Incarial times. All that was needed were moderate laws for the protection of servants and conscripts, and the enforcement of such laws. Toledo allowed a seventh of the adult male population in each village to be made liable for service in mines or factories, fixed the distance they could be taken from their homes, and made rules for their proper treatment. It is true that the _mita_, as it was called, was afterwards an instrument of cruel oppression, that rules were disregarded, and that it depopulated the country. But this was not the fault of Toledo.
The Viceroy gave much attention to the mining industry, promoted the introduction of the use of mercury in the extraction of silver, and founded the town of Huancavelica near the quick-silver mine. His personality pervaded every department of the state, and his _tasas_ or ordinances fill a large volume. He was a prolific legislator and a great statesman.