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The downfall of the encomienda system first began to occur when Blasco Núñez Vela, the first viceroy of Peru, tried to enforce the New Laws. Many of the encomenderos were unwilling to comply with the New Laws and soon revolted against Vela.
Other problems of the encomienda system occurred due to the breaking up of extended families, or ayllus, which brought an end to their economic system of vertical exchanges. Not only did this impair the encomienda system but also the epidemic diseases brought to Latin America by the Europeans. These diseases, such as the plague and smallpox, killed a large percentage of the indigenous population because they had no natural defenses against them.