Note: This article is based on the Chapter 23 of the book Prithvi Narayan Shah by Surya Bikram Gyawali
When we think of King Prithvi Narayan Shah, the image that comes to mind is almost always one of a relentless military conqueror. He unified dozens of petty principalities into the nation of Nepal with the edge of his sword. This picture, while true, is incomplete. It misses the architect behind the warrior.
The true genius of Prithvi Narayan Shah’s unification campaign was not just in his military tactics but in his sophisticated, visionary, and often ruthless economic statecraft. He waged a war of commerce as fiercely as he waged a war of conquest, strangling his enemies’ economies and laying a protectionist foundation for his new kingdom. This is the story of the unseen economic forces that truly shaped a nation.
In this post, you’ll read about…
The 5 Economic Strategies
1. How to Strangle an Economy into Submission
Prithvi Narayan Shah’s primary strategy against the prosperous Malla kingdoms of the Kathmandu Valley was not a frontal assault but a calculated economic strangulation. After capturing the strategic hill fort of Nuwakot in 1744, he seized control of the main trade route linking the valley to Tibet, the lifeblood of the Malla economy.
With this single move, he established a punishing economic blockade. Goods that once paid a single customs duty to the Malla kings now had to pay a second, separate duty to him. This systematically cut off the valley from the lucrative trans-Himalayan commerce that was its primary source of wealth. Far from being a distant strategist, he was a hands-on micromanager of this new economic weapon. In a letter to his agent in charge of purchasing gold from Tibet, he revealed his shrewd, pragmatic mind:
“If they give pure gold for 16 rupees per tola, buy it… If they don’t give it for 16, add a quarter-rupee… If much gold is available, don’t go above 17… but if 10-12 thousand tolas can be had and sold at a profit, then buy it even for 18 rupees per tola.”
Long before his final assault on the capital, Prithvi Narayan Shah engineered an economic crisis from the outside, ensuring the Malla kingdoms were financially weakened and internally fragile when the decisive battles came.
2. The Unlikely Global Traders of the Himalayas
Before Prithvi Narayan Shah’s rise, the region’s bustling trade was controlled by a remarkably diverse group of merchants. Prominent among them were the Newar traders of Kathmandu, who had established deep commercial ties with Tibet, and the well-connected Kashmiri Muslim merchants, whose trading houses spanned from India to Lhasa.
Most surprisingly, a key group of international traders were the Gosain ascetics. These revered holy men used their religious status and freedom of movement to travel across borders, acting as powerful merchants of high-value, low-volume goods. The blockade crippled their business, and these influential traders, namely, the Gosains, Kashmiris, and Newars turned against Prithvi Narayan Shah. In their desperation, they became his fierce opponents, even instigating the British East India Company to launch a military expedition against him.
3. A Radical Vision to Keep Foreign Powers at Bay
After completing his conquest, Prithvi Narayan Shah implemented a radical economic policy of protectionism. His unwavering goal was to ensure all profits from trade remained within Nepal and in the hands of Nepalis. His plan was to prohibit foreign traders from entering the country’s interior. Instead, he envisioned designated trading posts at the border, such as Parsa, where all international business would be conducted.
This policy was driven by a deep and prescient fear of European colonialism. He saw how commerce was being used as a pretext for political and military subjugation across Asia. His view of the British East India Company was captured in a powerful warning:
Maintain relations with the emperor of the southern seas, but he is a great thief.
He understood that allowing foreign traders free rein was an invitation for a powerful entity to gain a foothold. This wasn’t just theory; it was policy enforced with an iron fist. After his victory, he didn’t just restrict foreign traders—he expelled them. Just as he had removed the Capuchin missionaries, he cast out the powerful Gosain traders, demonstrating his absolute resolve to eliminate any external group with its own network of influence.
4. Forging a Nation, One Coin at a Time
For centuries, the silver coins minted by the Malla kings of the Kathmandu Valley were the trusted, dominant currency of the Himalayas, essential for the lucrative Tibet trade. But over time, their quality had degraded as rulers began debasing them with cheaper metals, eroding that centuries-old trust.
Recognizing a strategic opening, Prithvi Narayan Shah launched a direct assault on the Mallas’ economic sovereignty. Starting in 1749, he became the first king in the hill regions to mint his own high-quality silver coins. This was a masterstroke of economic subversion. To ensure acceptance in Tibet, he mimicked the general style and weight of the Malla coins. This new, pure currency was not just a medium of exchange; it was a disruptive innovation designed to shatter the Mallas’ prestige.
5. The Surprising Reason Tibet Sided with Nepal, Not the British
After Prithvi Narayan Shah’s blockade sealed off the traditional trade route through Nepal, the British East India Company saw an opening. The governor, Warren Hastings, eager to establish a direct commercial link with Tibet, dispatched an envoy named George Bogle in 1774 to negotiate with the Panchen Lama.
The outcome was counter-intuitive. The Tibetans, wary of the British and influenced by China’s staunchly anti-British policies, were deeply suspicious of their intentions. Despite the disruption caused by the Gorkha conquest, they ultimately preferred to stick with their centuries-old, if temporarily broken, trade relationship through Nepal. They saw the known Nepalis as a better partner than the unknown and potentially dangerous British. Bogle’s mission was a failure, a testament to the enduring strength of the age-old Nepal-Tibet economic connection that not even the British Empire could easily break.
Conclusion: An Empire of Commerce
Prithvi Narayan Shah’s legacy is far more complex than that of a mere military conqueror. He was a visionary economic architect who understood that nations are built not only on battlefields but also in marketplaces and mints. From the commercial strangulation of the valley and the subversion of its currency to the exclusion of powerful foreign traders and the outmanoeuvring of the British Empire itself, his blueprint for unification was as much a triumph of economic warfare as it was of military might.
His story leaves us with a profound question to ponder: How might the economic trajectory of Nepal and the region have been different if this fiercely protectionist vision had been maintained for centuries?