As a consequence of this state of affairs, Philip II instituted annual transfers, known as the situado, from the Spanish treasury to pay the presidio payroll and other expenses.
[2] This money was derived from the king's portion of precious metals mined in the Americas that was not transported to Spain, but rather was distributed throughout the colonial territories to fund their administrative and defense expenses.
These intercolonial tax flows, or situados, formed a vital part of the Spanish monarchy's vast and complex fiscal system.
[4] The silver mines of Mexico, especially in the second half of the 18th century, furnished an increasing sum spent directly in the Americas and not recorded by the royal treasury in Madrid.
[3] The Viceroyalty of New Spain therefore not only provided important sums of precious metals for the Spanish metropole but also financed the largest part of the empire's defenses in the greater Caribbean.