As a Mexican dependency in 1824, Mexican Colony Law established rules for petitioning for a land grants in California; and by 1828, the rules for establishing land grants were codified in the Mexican Reglamento.

A native born or naturalized Mexican citizen could make an application for a land grant immediately, but a non-Mexican settler could only petition for citizenship, then pledge his loyalty to both Mexico and the Roman Catholic Church. After a year's probation, he could receive citizenship and petition for a land grant.

All land grant applicants had to:

1) Set forth the location boundaries, or approximate size of the desired property;
2) Testify that it did not overlap another grant;
3) Declare that he would stock with the legally required number of horses and cattle;
4) Supply a "diseno", or rough topographical map.

A "borrador" or blotter copy of the Land Grant was kept at the governor's office. The minutes of the Land Grant transaction were kept in the record book called the "toma de razon". Then both the "diseno" and "borrador" were placed in the archives, filed under "expediente."

A land survey was then carried out under a magistrate, with many witnesses present from neighboring rancheros. To measure the Grant, surveyors started at a pile of stones called a "mojonera" using a 50 foot "reata," or rawhide cord tied to stakes that the riders thrust into the ground as they rode along. The minimum size of a ranchero was set at one square league (about 4,500 acres,) with an 11 square league maximum. Of the 11 leagues, one was to be in irrigable soil, four were dependent upon rain for their growing conditions, and six were to be fit only for grazing.

There was no limit on family holdings or holdings from inheritance or purchase. The validity of the grant depended on fulfillment of certain conditions such as building a house, stocking the land with cattle, and planting trees on boundaries. Land Grants could be revoked if conditions were not met to the satisfaction of the government.

It was a requirement of many land grants that a structure be built onsite. The typical rancho mansion was a long, one story adobe with shaded verandah, often with a surrounded courtyard. An excellent example remains in San Diego's old town; another is the Vallejo "fort" in Sonoma. In Orinda, an original 1840's adobe is still occupied as a private residence.

Huge herds of cattle ranged over the land. Cattle was the primary, and almost sole, business. Meals were beef for breakfast, beef for lunch, and beef for dinner. With an abundance of grazing land, there was no need for the Californios to seek new industry -- they made their comfortable living without unpleasant labor (Indians did what physical work was required) and no longer were the lands being cultivated for crops as was performed by the Spanish Missions.

The Mission Industries -- blanket making, tanning, wine making, soap, candles, etc., were left unattended as well. Because of this lack of industry everything had to be imported, a contributing cause for the small population remaining so.

Most Californios were poor ranch hands who maintained their own herds of cattle. But Rancho life was good for the richer land owners, who lived a leisurely lifestyle, one that was dedicated to family and tradition. They constructed themselves relatively lavish ranch houses.

At these larger ranchos, working as vaqueros or servants, were vast numbers of Indians toiling under serf-like conditions. It was the Indians who provided the hard labor of the ranching. And it is life under these conditions as observed by the "Yankee" outsiders that fueled the great Californio myth of indolence, wealth and ease.

With the land locked up by these Californio families, new immigrants had little opportunity to generate a living. The only empty economic niche was trading between the ranchers and foreign ships, and this was where the Yankees could excel. Cowhides were as good as "gold" to the Californios, who called them California Banknotes. They traded hides with trading-ship's captains for household items and luxury goods.

It was when California was introduced to "Yankees" from the outside world, that the world's image of Spanish California became locked into an impression of this period. Hardworking sailors were offended at the easy life of the Californios, who were not only copying the attitudes of the landed aristocracy in Spain , but also in their Spanish attitudes toward religion. The Californio believed he need only obey the church and prosper to receive eternity in heaven

"The Californians are an idle, thriftless people, and can make nothing for themselves. The country abounds in grapes, yet they buy, at a great price, bad wine from Boston. [The Boston shoes we sell them are] as like as not made of their own hides, which have been carried twice round Cape Horn...The Indians do all the hard work, two or three being attached to the better house, and the poorest persons are able to keep one at least."

While Indians formed a servant class, the Yankees made up the merchant class. Their cultural attitude towards work made them were very successful in Mexican California. The Yankee's disdain of the Californios is in large part due to this Protestant work ethic.

On the Yankee trading-ships, it was the job of the ship's mate to make sure the sailors were continuously occupied with tasks, and if no work was available, the crew was put to almost useless work scraping barnacles off the anchor chain.

"In Monterey, there are a number of English and Americans ... Having more industry, frugality, and enterprise than the natives, they soon get nearly all the trade into their hands. They usually keep shops, in which they retail the goods purchased in larger quantities from our vessels."