The Fiscal Administration of the Former Hunza State: From Internal Machinery to Colonial Transformation

Figure 1: Three Generations of Hunza Rulers, 1930. Left to right: Mir Muhammad Nazim Khan (r. 1892–1938), Mir Muhammad Ghazan Khan II (r. 1938–1945), and Mir Muhammad Jamal Khan (r. 1945–1974). Photograph by Sir Marc Aurel Stein, 13 September 1930. Source: Stein Collection, Hungarian Academy of Sciences (Stein, 1930).

Abstract

This article examines the administrative machinery and external revenue networks of the former Hunza State, a high-mountain polity in the Karakoram range (now Gilgit-Baltistan, Pakistan). Following Part I's analysis of social classes and taxation categories, this study shifts focus to the institutional mechanisms through which resources were mobilised and the trans-boundary relationships that supplemented the state's relatively modest agricultural base.

Drawing on colonial administrative records, local historical accounts, ethnographic observations, oral testimonies, and secondary scholarship, the article argues that Hunza's fiscal system operated through two interconnected dimensions: (1) an internal hierarchy of agricultural and pastoral extraction extending from the Mir's court to village-level functionaries, and (2) an external network of grazing dues (khiraj), tribute relationships, and caravan-related revenues connected to the Pamir pastures and trans-Karakoram trade routes. The Hunza-China tributary relationship was based on the exchange of tribute and reciprocal gifts; in return for tribute, the Mir and the state received silk, cotton cloth, tea, and other Chinese products (Kreutzmann, 2004; Felmy, 1996).

British intervention following the 1891–1892 Hunza campaign fundamentally restructured this dual system. The suppression of caravan raiding (daw), the reorganisation of frontier relations, and the 1937 renegotiation of Pamir grazing rights progressively dismantled the external fiscal network. Simultaneously, communities such as Shimshal experienced a nearly sevenfold increase in recorded obligations between 1894 and 1938-from Rs. 200 to Rs. 1,398-reflecting both the transfer of fiscal burden and changes in administrative valuation.

The 1974 abolition of the Hunza State terminated the princely fiscal machinery but did not immediately eliminate the social structures that had co-evolved with it. New state institutions, elected bodies, and community organisations gradually assumed governance functions. The Hunza case demonstrates that high-mountain polities were not isolated subsistence economies but were deeply embedded in pastoral corridors, caravan routes, and imperial borderlands, and that colonial transformation was a protracted process of institutional reconfiguration rather than a single rupture.

Keywords: Hunza State, fiscal administration, colonial transformation, Karakoram, Shimshal, Pamir grazing rights, British indirect rule, dual fiscal structure, Mir Muhammad Nazim Khan

Key Takeaways

1. Hunza's fiscal system operated through two connected dimensions: internal agricultural extraction and external pastoral and commercial networks.

2. The Shimshal community experienced a nearly sevenfold increase in recorded obligations between 1894 and 1938, from Rs. 200 to Rs. 1,398.

3. British intervention after 1891 restructured Hunza's external revenue sources, suppressing caravan raiding and reorganizing frontier relationships.

4. The 1937 Pamir changes-resulting from tripartite British-Chinese-Hunza negotiations-reduced both revenue and the Mir's geopolitical influence.

5. The termination of the Chinese tribute (1937) was not a British order but a consequence of the Sino-Japanese War and Soviet influence in Xinjiang.

6. The 1974 abolition ended princely authority but did not immediately eliminate historical social structures.

7. New institutions-government offices, elected bodies, community organisations, and civil society initiatives-gradually assumed governance functions.

1. Introduction

1.1 Scope and Objectives

This article constitutes the second part of a three-part study on the fiscal administration of the former Hunza State. Part I, titled "The Traditional Taxation System of the Former Hunza State: A Socio-Economic Analysis," examined the social foundations and categories of revenue extraction. It analysed the historical classification of social groups (Lupon, Shana, Darqan, Borwar), the Auyum system of customary taxation, various forms of Ilban or Hilban extraction, Zarat (crop taxation), livestock-related taxation, and begar (compulsory labour service).

Part II shifts analytical focus from the types of taxation to the machinery of collection and from the internal valley economy to the wider political and economic hinterland. Specifically, it addresses three interrelated questions:

1. What administrative mechanisms structured Hunza's internal fiscal system?

2. How were external revenue streams-from pastoralism, tribute, and caravan trade-organised and integrated?

3. How did British colonial intervention transform this dual fiscal structure, and what were the consequences for frontier communities such as Shimshal?

1.2 The Dual Fiscal Structure: An Analytical Framework

The central argument of this article is that Hunza's fiscal history cannot be understood solely through taxes imposed on settled agricultural communities. The state also derived significant resources from relationships beyond the valley floors: grazing arrangements in the Pamir, tributary relationships with neighbouring polities, and revenues associated with trans-regional caravan movement. These external resources were particularly significant because Hunza's agricultural resource base was relatively limited when compared with neighbouring Nagar (Kreutzmann, 2004).

Consequently, this article employs the analytical concept of a "dual fiscal structure"-the coexistence of two broad sources of state revenue:

Dimension: Internal System / External System

Base: Sedentary agriculture and livestock / Pastoral mobility and caravan transit

Primary Resources: Grain, livestock, labour (begar) / Grazing dues (khiraj), transit tolls, tribute

Administrative Chain: Mir → Wazir → Yerpa → Faraj → Arbob → Lambardar → Charbu / Mir → Wazir (diplomacy) → Local headmen (Kyrgyz/Wakhi)

Spatial Logic: Fixed settlements (villages) / Fluid, transboundary pastures and passes

Vulnerability: Ecological stress (floods, frost) / Geopolitical shifts (British, Chinese, Russian)

This conceptualisation does not imply that Hunza possessed a modern, centrally organised fiscal bureaucracy. Rather, it highlights the coexistence of different mechanisms through which political authority was converted into material resources-a feature characteristic of many pre-colonial mountain polities (Scott, 1998; Tilly, 1990). Mir Muhammad Nazim Khan maintained a balance between these two dimensions throughout his reign.

1.3 Sources and Methodology

This study draws upon multiple source categories, each with distinct strengths and limitations:

Primary Sources:

· Colonial administrative records (IOL/P&S/10/973; IOL/P&S/12/3292)

· Ethnographic observations (Lorimer, 1935; Schomberg, 1935)

· Oral testimonies (Mountain Voices Project, 2000; n.d.)

Secondary Sources:

· Regional histories (Dani, 1991; Beg, 2006)

· Specialised studies on pastoralism (Kreutzmann, 2004)

· Irrigation and state formation (Sidky, 1996)

· Local historical works (Iqbal, 2017, 2018; Hunzāʼī, 1998, 2000, 2013; Īsār Hunzavī, 2002)

· Religious and cultural networks (Rashid, n.d.)

Methodological Approach:

The article employs methodological triangulation-cross-verifying evidence across different source types-to address the biases inherent in each category. Colonial records, while quantitatively rich, reflect administrative priorities and selective reporting (Scott, 1998). Oral histories preserve community memories but may contain retrospective interpretations. The article therefore treats evidence comparatively, using convergence across sources to establish patterns and qualifying interpretations where evidence remains uncertain.

Theoretical Framework:

The analysis draws conceptually on Charles Tilly's (1990) discussion of state formation and revenue extraction, and James C. Scott's (1998) analysis of administrative legibility. These comparative perspectives help situate Hunza within wider debates on state formation while recognising the distinctive ecological and political circumstances of the Karakoram. The period of Mir Muhammad Nazim Khan represents a unique combination of colonial indirect rule and local autonomy.

2. Administrative Hierarchy and Fiscal Officials

2.1 The Mir (Tham)

The Mir, commonly referred to as the Tham in local historical traditions, occupied the apex of Hunza's political hierarchy. His authority extended over taxation, land allocation, labour obligations, irrigation, pastoral resources, trade, and the distribution of land (Beg, 2006; Dani, 1991). Mir Muhammad Nazim Khan (1892–1938) adapted traditional authority to the requirements of British indirect rule.

Colonial-era accounts describe the Mir as claiming extensive rights over forests, mountains, and pasturelands. Kreutzmann (2004) records a statement attributed to the Mir asserting ownership over Hunza's forests, mountains, and pastures, and claiming the right to graze royal herds wherever he wished. Such statements are significant because they reveal the political conception of resource ownership under the Hunza State. However, readers should interpret these claims as evidence from a particular historical and administrative context rather than proof of an uncontested legal system (Scott, 1998).

The Mir's revenue authority encompassed several functions:

· Collection of payments in cash, kind, and labour

· Management of royal lands and regulation of irrigation

· Supervision of trade and caravan movement

· Allocation of land and grazing rights

Traditional succession practices were an important element of political legitimacy. However, the political transformation following the British campaign of 1891-1892 demonstrated that succession was not simply a matter of hereditary principle. British intervention contributed to the installation of Muhammad Nazim Khan as Mir, altering the balance between dynastic legitimacy, local political authority, and colonial patronage (Dani, 1991).

2.2 The Wazir

The Wazir occupied one of the most influential positions below the Mir. His responsibilities included political advice, military organisation, administration, and revenue collection (Beg, 2006).

This office illustrates the close relationship between kinship and administration in Hunza. According to Beg (2006), influential administrative positions were frequently associated with individuals connected to the ruling family through marriage or kinship networks. During the reign of Mir Muhammad Ghazan Khan II, Wazir Asadullah Beg held a key position in the administration. His son, Dara Beg (also known as Wazir Dado), subsequently served as Faraj (treasurer), responsible for state revenues in both cash and kind (Beg, 2006).

Dara Beg's example is significant because it demonstrates that administrative competence in Hunza did not necessarily depend upon formal literacy. Practical experience, knowledge of local society, political relationships, linguistic ability, and personal reputation could all contribute to administrative authority-a pattern observed in other pre-colonial polities (Scott, 1998).

2.3 The Yerpa: Steward of Royal Demesnes

The Yerpa held an important position in the management of the Mir's royal lands (demesnes). These lands, distributed across various settlements, were cultivated partly through begar (compulsory labour) obligations imposed on local communities (Lorimer, 1935).

Lorimer's (1935) observations provide a critical description of the Yerpa's position. He noted that the steward could potentially exploit both the royal household and the peasants working on royal lands through corruption, excessive labour demands, and informal payments. While readers should interpret such observations within Lorimer's colonial ethnographic context, they provide valuable evidence regarding the practical difficulties of administering royal estates and the potential for intermediate officials to exercise discretionary power.

The career of Muhammad Nazim Khan before his accession is also relevant. His experience as Faraj gave him direct knowledge of the period's administrative practices. Later colonial and ethnographic accounts portray his reign as one in which central authority became increasingly concentrated (Schomberg, 1935; Dani, 1991). Thus, the Yerpa illustrates a crucial feature of Hunza's fiscal administration: the state's ability to extract resources depended not only on formal authority but also on the behaviour and discretion of intermediate officials (Tilly, 1990).

2.4 Village-Level Officials and Local Administration

The administrative structure extended into individual settlements, where village representatives conveyed and implemented the Mir's orders and organised communal labour and other obligations (Iqbal, 2017; Mountain Voices Project, n.d.).

Key Village-Level Functionaries:

Official: Arbob

Responsibility: Conveying and implementing the Mir's orders; organising routine community work

Official: Lambardar

Responsibility: Senior village representative; liaison with higher authority

Official: Charbu

Responsibility: Announcements, message delivery, mobilisation of households for communal tasks

Official: Irrigation Officials

Responsibility: Water management and canal maintenance

Oral testimonies recorded by the Mountain Voices Project (n.d.) describe the Arbob as responsible for communicating the Mir's orders, implementing them, and organising routine community work. Zafar Iqbal's (2017) historical narrative confirms that the Arbob, Lambardar, and Charbu formed the backbone of the Mir's administrative reach into every settlement. Hunzāʼī (2000) provides corroborating evidence in his documentation of Hunza's ancient customs.

Sidky (1996) emphasises the importance of irrigation institutions in understanding state formation in Hunza. Water management was not simply a technical matter-in a mountain environment, agricultural production depended upon carefully maintained irrigation channels. Therefore, control over water was closely connected with social organisation and political authority, reinforcing the state's power base (Sidky, 1996; Wittfogel, 1957).

Through this integrated hierarchy, broad categories of taxation-grain, livestock, labour, and other resources-were transformed into actual flows that sustained the state, its administrative operations, and its expansion (Tilly, 1990). Village-level officials thus served as the bridge between state and community, translating royal authority into practical governance at the local level (Scott, 1998).

3. Internal Revenue Streams and Tax Distribution

3.1 The Agricultural Base

Available colonial records indicate that Hunza's agricultural revenue base was comparatively modest. Kreutzmann (2004) estimates Hunza's annual internal revenue at approximately Rs. 2,660 (in standardised 1916 British Indian rupee prices), while neighbouring Nagar had approximately Rs. 4,800.

State: Hunza / Annual Internal Revenue (Rs. 1916): 2,660

State: Nagar (neighbouring state) / Annual Internal Revenue (Rs. 1916): 4,800

Source: Kreutzmann (2004)

Caution: These figures represent administrative estimates rather than complete national accounts. They may not include informal payments, begar labour, or in-kind taxes, which constituted a significant portion of state revenue (Lorimer, 1935; Beg, 2006). Moreover, the conversion of historical payments into standardised monetary values inevitably involves methodological assumptions (Kreutzmann, 2004).

3.2 The Fiscal Position of Gojal and Shimshal

Available evidence indicates that communities in Gojal carried significant fiscal obligations relative to their population and location (Kreutzmann, 2004; Iqbal, 2018).

Shimshal is particularly important because of its geographical position and pastoral connections. Colonial records indicate that this settlement contributed a substantial number of livestock relative to its small population. Given Shimshal's limited household numbers during this period, the livestock obligations represented a significant burden on each household (Kreutzmann, 2004).

Interpretive Note: The claim that Gojal provided "four-fifths of all taxes" appears to originate from a particular reading of colonial records that may have combined grain and livestock figures without adequate population weighting (Iqbal, 2018). A more defensible interpretation is that Gojal (and particularly Shimshal) carried a disproportionately high share of certain recorded livestock and frontier-related obligations. This pattern is likely related to Gojal's geographical position and its connection with the Pamir. It also demonstrates an important feature of mountain fiscal systems: communities located on politically and economically strategic frontiers could face obligations that were not directly proportional to their population or agricultural productivity (Scott, 1998).

4. The External Hinterland: Pastoralism, Tribute, and Caravan Networks

The fiscal history of Hunza extended beyond the cultivated valley floors. Specifically, the high-altitude pastures of the Pamir, the routes connecting the Karakoram with Central Asia, and relationships with neighbouring communities formed part of the wider political economy of the state (Dani, 1991; Kreutzmann, 2004).

Dani (1991) describes the northern frontier as a region characterised by interconnected highland routes and mobile populations. From this perspective, political authority in Hunza cannot be understood exclusively through fixed territorial boundaries.

4.1 Khiraj and Grazing Rights in the Pamir

The term khiraj is used in historical accounts to describe dues associated with grazing in areas of the Pamir. Pastoralists, including Kyrgyz and Wakhi groups, used high-altitude grazing areas associated with the Taghdumbash Pamir and neighbouring regions, which was the central geographical hub of Hunza's external fiscal system and from where substantial revenues were obtained annually in the form of livestock, namda, and other commodities (Kreutzmann, 2004; Dani, 1991).

According to Kreutzmann (2004), grazing payments could be made in livestock and various pastoral products, including animals, felt products (namda), woollen blankets, ropes, cloth (kirpas), coats, and saddles. These arrangements were not simply one-directional taxation—they also involved political relationships concerning protection, access, mediation, and trade (Kreutzmann, 2004). Therefore, the Mir's authority over such spaces had both fiscal and geopolitical dimensions (Dani, 1991).

This distinction is important: the Pamir relationship was not merely an extension of agricultural taxation into another territory. Rather, it involved pastoral mobility, negotiated access to resources, and the political authority of the Hunza ruler over a trans-frontier landscape (Kreutzmann, 2004).

4.2 The Shakshu Pakhpu Tribute

Historical accounts also describe tribute associated with the Shakshu Pakhpu region. Beg (2006) connects this revenue with military activity during the nineteenth century and reports annual payments in the range of Rs. 750–800.

However, the precise political status of this relationship requires careful interpretation. Rather than automatically describing the payments as evidence of permanent territorial sovereignty, it is more appropriate to regard them as part of a broader system of tribute, political influence, and coercive frontier relations (Dani, 1991). Following the British reorganisation of the frontier after 1891, this source of revenue was discontinued or substantially altered (Kreutzmann, 2004).

4.3 Caravan Raiding and the Daw System

One of the most controversial aspects of Hunza's external economy was the practice referred to in historical sources as daw (Dani, 1991; Kreutzmann, 2004). This term encompasses a spectrum of activities-from sanctioned toll collection to outright plunder. The distinction was not always clear in practice, and contemporary accounts likely varied depending on the perspective of the observer (Schomberg, 1935; Lorimer, 1935).

The daw system involved raids on caravans travelling through the Kilik, Mintaka, and Khunjerab routes. These routes formed part of wider networks connecting the Yarkand region with Ladakh and other parts of the Karakoram. Historical accounts refer to the movement of horses, silk, spices, wool, and other commodities (Kreutzmann, 2004). The Qaratang raids, which were a specific aspect of the daw system, were focused on the upper Yarkand valley areas, and the plunder obtained from them contributed to the annual tribute of Shakshu Pakhpu (Beg, 2006).

Kreutzmann (2004) associates pre-colonial Hunza with revenues generated through caravan-related activities and estimates a value of approximately Rs. 2,200 annually for certain forms of caravan revenue in the period before British intervention. However, describing the entire amount simply as "taxation" may obscure the distinction between legitimate tolls, customary payments, and coercive seizure (Scott, 1998). Historical evidence suggests that caravan raiding and toll collection existed within a complex frontier environment where political authority, commercial movement, and armed power overlapped (Dani, 1991).

The British campaign of 1891–1892 fundamentally altered this system. British authorities sought to secure caravan routes and prevent attacks on protected commercial traffic. Following the campaign, the political conditions that had enabled the daw system were substantially weakened. Consequently, the loss of caravan-related income was an important component of the broader transformation of Hunza's external fiscal resources (Kreutzmann, 2004).

4.4 External Revenue in Perspective

Available evidence suggests that external sources could be economically significant in relation to the comparatively modest internal agricultural revenue base.

Revenue Source: Internal agricultural revenue / Estimated Annual Value (Rs. 1916): 2,660

Revenue Source: Shakshu Pakhpu tribute / Estimated Annual Value (Rs. 1916): 750–800

Revenue Source: Caravan-related revenue / Estimated Annual Value (Rs. 1916): ~2,200

Revenue Source: Grazing dues / Estimated Annual Value (Rs. 1916): Variable (in kind)

Sources: Kreutzmann (2004); Beg (2006)

Caution: These figures originate from different historical contexts and categories of evidence and should not be mechanically aggregated as if they constituted a modern annual state budget (Kreutzmann, 2004). Nevertheless, the broad pattern is significant: Hunza's political economy extended beyond its cultivated valleys and depended partly on access to wider pastoral and commercial networks (Dani, 1991).

The significance of Gojal within Hunza's external fiscal structure is further elaborated in Zafar Iqbal's (2018) dedicated study of the region. His work highlights how the diverse tribal domains of Gojal were not merely passive subjects of taxation but active participants in the trans-regional exchanges that defined Hunza's political economy. This perspective reinforces the argument that Hunza's fiscal system cannot be understood solely through the lens of the central court—rather, it was a network of relationships in which frontier communities played a decisive role in shaping the state's external revenue streams.

Rashid's (n.d.) examination of Ismaili missionary networks in Central Asia also sheds light on the religious and cultural connections that paralleled and supported these economic relationships, linking Hunza to broader Pamir and Central Asian networks.

5. British Indirect Rule and the Transformation of the Pamir Frontier

5.1 The Installation of Mir Muhammad Nazim Khan

The Hunza campaign of 1891-1892 marked a decisive turning point in the political history of the state (Dani, 1991). Following the departure of Mir Safdar Ali Khan, the British recognised Muhammad Nazim Khan as Mir in 1892. This intervention altered the traditional relationship between dynastic succession and political authority (Dani, 1991).

Dani (1991) regards Hunza as an important example of British indirect rule in the Northern Areas. The new political arrangement enabled the Mir to retain substantial internal authority while making his position increasingly dependent upon recognition and support from the colonial administration. British subsidies and political support subsequently strengthened the position of the ruling house (Kreutzmann, 2004). However, this did not mean that the Mir became a simple colonial official-rather, the arrangement created a hybrid political order in which indigenous institutions continued to function while their external political environment was increasingly controlled by the colonial state (Dani, 1991; Scott, 1998).

Muhammad Nazim Khan's pre-accession career is particularly relevant. His experience as Faraj gave him direct knowledge of administrative practices, which later facilitated his concentration of central authority (Schomberg, 1935; Dani, 1991). Later colonial and ethnographic accounts portray his reign as one in which political and administrative authority became increasingly centralised (Schomberg, 1935).

5.2 The 1937 Pamir Changes

Another major transformation occurred in 1937 when the status of Hunza's traditional grazing rights in the Taghdumbash Pamir was altered (Kreutzmann, 2004).

Important Clarification: This change was not a unilateral British action-it resulted from tripartite negotiations involving:

Party: British Indian authorities / Role: Led negotiations

Party: Chinese provincial administration (Xinjiang) / Role: Participated in border arrangements

Party: Mir of Hunza / Role: Relinquished traditional claims

Outcomes:

· Relinquishment of traditional claims to grazing dues (khiraj)

· Compensation: reported as Rs. 1,500–2,000 annually (sources vary)

· Nature: "monetisation and commutation" of rights rather than simple "loss"

Kreutzmann (2004) describes an arrangement under which the Mir relinquished certain grazing-related rights in return for compensation and alternative arrangements. The specific rights relinquished included traditional claims to grazing dues and political authority over pastoral communities in the region. The compensation received, while not fully documented in available sources, was likely financial or administrative in nature (Kreutzmann, 2004).

The consequences were wider than the immediate loss of a revenue stream. The Pamir relationship had connected Hunza's political authority with pastoral mobility, seasonal grazing, and trans-frontier diplomacy (Dani, 1991). Its transformation therefore reduced not only a source of revenue but also an important dimension of the Mir's geopolitical influence (Kreutzmann, 2004).

However, the consequences for local communities should be analysed cautiously. While the restructuring of frontier grazing arrangements changed the distribution of pastoral resources, the precise causal relationship between these changes and subsequent increases in internal taxation cannot always be demonstrated directly from the available evidence (Kreutzmann, 2004).

5.3 The Tribute-Gift Relationship with China

The relationship between Hunza and China cannot be correctly understood as a simple one-way tributary relationship. Rather, it took the form of a tribute-gift exchange in which Hunza presented annual tribute to Chinese authorities and, in return, the Mir and the state received various Chinese goods and gifts. This relationship thus combined political links, gift exchange, and cross-border trade.

According to Kreutzmann (2004), the annual tribute paid by the Tham of Hunza consisted of approximately 15 miskal (about 75 grams) of gold dust. In return, Hunza received silk, cotton cloth, tea, and Chinese porcelain. This tribute was therefore not merely a financial payment but a combination of political relationship, frontier connections, gift exchange, and trade.

Sabine Felmy's (1996) research on Hunza and Wakhi society helps us understand this broader historical and social context, particularly regarding Hunza's cross-border cultural connections, local traditions, and Wakhi social life. From this perspective, Hunza's relations with China, Yarkand, and Xinjiang can be seen not merely as political subordination but within the context of wider frontier social relations and historical connections.

The Chinese tribute should therefore be considered an important component of Hunza's external fiscal system. While paying tribute, Hunza received gifts and trade goods in return, and the tribute delegations also had opportunities for limited trade and exchange of goods in Yarkand and Kashgar (Kreutzmann, 2004).

At the beginning of Mir Muhammad Nazim Khan's reign in 1892, there was an interruption in the payment of tribute to China; however, the relationship was re-established in 1894. Thereafter, the formal tribute-gift relationship with China continued for several decades. In the 1930s, as a result of the changing political situation in Xinjiang, the Sino-Japanese War, and wider geopolitical changes including growing Soviet influence in the region, this ancient system came to an end (Kreutzmann, 2004). It is therefore not appropriate to attribute the termination of this relationship simply to a British order.

5.4 The Increasing Fiscal Burden on Shimshal

Historical records provide evidence of substantial changes in the obligations imposed on Shimshal (Kreutzmann, 2004).

Year: 1894 / Recorded Obligations: Livestock obligation / Monetary Equivalent (Rs. 1916): ~200

Year: 1938 / Recorded Obligations: 146 sheep/goats, 2 yaks, salt, grain / Monetary Equivalent (Rs. 1916): ~1,398

Increase: 1,398 ÷ 200 = 6.99 (approximately sevenfold)

Important Interpretive Note:

This sevenfold increase was not solely the result of external revenue loss—several factors contributed:

1. Changes in valuation methods – previously unrecorded in-kind payments were now given cash equivalents

2. Improved livestock census – more accurate records under British-supervised revenue settlements

3. Burden transfer - shift from dismantled external system to internal system, but not as a direct dollar-for-dollar transfer

4. Inflation - changes in barter-to-cash conversion rates

Qualitative Context: Oral testimonies from Shimshal (Mountain Voices Project, 2000) suggest that community members perceived these obligations as increasingly burdensome, particularly as traditional access to Pamir pastures became more restricted. However, it remains difficult to determine whether the recorded increase reflects actual extraction, changing valuation methods, or both (Kreutzmann, 2004).

A more cautious conclusion is therefore that Shimshal experienced a substantial increase in recorded fiscal obligations, and this increase occurred during a period in which Hunza's external fiscal environment was being transformed (Kreutzmann, 2004). This correlation provides an important basis for further investigation into the relationship between colonial frontier restructuring and internal taxation.

5.5 Expansion of the Nobility and Concentration of Political Authority

Colonial intervention also influenced the structure of Hunza's political elite (Kreutzmann, 2004).

Aspect: Succession / Change: Increasingly regulated by colonial administration

Aspect: Elite support / Change: Subsidies, land arrangements, tax privileges

Aspect: Mir's authority / Change: External sovereignty constrained; internal position strengthened

Kreutzmann (2004) notes that the colonial administration increasingly regulated matters such as succession and recognised or supported sections of the local nobility through subsidies, land arrangements, and tax privileges. This altered the traditional balance between the Mir and the upper social groups.

Schomberg (1935), writing from a colonial perspective, was highly critical of the Hunza elite. He described sections of the ruling class as privileged and economically dependent on their social position. Readers should read such descriptions critically because they reflect the attitudes and assumptions of a colonial official and traveller (Said, 1978). Nevertheless, they provide evidence that social privilege and political authority remained central features of Hunza's political structure (Schomberg, 1935).

Key Paradox: Schomberg (1935) also portrayed Mir Muhammad Nazim Khan as possessing an unusually high degree of centralised authority. Evidence suggests that the colonial period did not simply weaken the Mir-paradoxically, British recognition and support could simultaneously constrain his external sovereignty while strengthening his internal position (Dani, 1991; Kreutzmann, 2004).

This is one of the most important features of Hunza's colonial transformation: political dependence on the colonial state could coexist with increased centralisation within the state itself (Dani, 1991; Scott, 1998).

6. The Dissolution of the Hunza State and Its Aftermath

6.1 The Abolition of 1974

The final transformation came in 1974. On 24 September 1974, Prime Minister Zulfikar Ali Bhutto announced the abolition of the remaining princely institutions in the Northern Areas, including the Hunza State (Dawn, 2024). Contemporary reporting in Dawn recorded Bhutto's argument that Pakistan could not continue to accommodate separate princely states, and that the abolition was based on broader political principles rather than directed personally against the ruling family (Dawn, 2024).

The decision formally ended the Mir's political authority and brought the remaining institutions of the former state under the administrative framework of Pakistan (Hunzāʼī, 2013). With the abolition of the state, the traditional system of compulsory labour, princely taxation, and royal resource administration also came to an end (Kreutzmann, 2004).

6.2 Fiscal and Administrative Transition

The abolition of the Mir's authority did not simply represent the replacement of one tax collector by another-rather, it marked a broader transformation in the relationship between state, community, land, labour, and resources (Kreutzmann, 2004; Scott, 1998).

The traditional system had combined extraction with forms of political authority, patronage, redistribution, dispute settlement, and community organisation (Beg, 2006; Sidky, 1996). Its abolition therefore required the development of new institutions capable of performing administrative functions previously associated with the princely system (Kreutzmann, 2004).

Oral testimonies from Shimshal suggest that the transition was psychologically and socially complex-communities had to adapt to new concepts of citizenship, administration, authority, and social organisation (Mountain Voices Project, 2000).

At the same time, it is important not to romanticise the earlier system-the traditional order was also characterised by social hierarchy, compulsory labour, unequal taxation, and unequal access to political authority (Lorimer, 1935; Schomberg, 1935).

Therefore, the significance of 1974 lies not simply in the replacement of an "old" system by a "new" one, but in the transformation of the institutional foundations through which authority and resources were organised (Kreutzmann, 2004; Scott, 1998).

6.3 Emergence of New Institutions

Following the abolition of the state, government administration increasingly replaced the Mir's administrative hierarchy (Kreutzmann, 2004).

 District-level government offices / Role: Administration, policing, taxation, public services

 Numberdar system / Role: Village-level representation

Union Councils / Role: New forms of political participation

Community organisations / Role: Water management, dispute resolution

Shimshal Nature Trust / Role: Environmental organisation

Kreutzmann (2004) highlights the importance of water management and local development initiatives in the region. In Shimshal and elsewhere, community-based dispute resolution continued to operate alongside formal state institutions (Mountain Voices Project, 2000).

The development of these institutions illustrates an important feature of post-1974 Hunza: the disappearance of princely authority did not result in the disappearance of local governance. Rather, governance was progressively redistributed among state institutions, elected bodies, community organisations, and civil-society institutions (Kreutzmann, 2004).

6.4 The Continuing Legacy of the Traditional Social Order

The abolition of the Hunza State did not automatically erase historical social distinctions (Mountain Voices Project, 2000).

· Older social categories and distinctions continued to influence social relationships, marriage patterns, status, and perceptions of identity

· This persisted even after the formal political system had disappeared

This demonstrates that political institutions can disappear more rapidly than social structures (Bourdieu, 1986).

The experience of the Shimshal Nature Trust provides another important example. This community-based environmental organisation emerged in response to concerns about external management of local resources and conservation policies. Such developments demonstrate the capacity of local communities to construct new forms of collective governance while drawing selectively upon elements of traditional social organisation (Kreutzmann, 2004).

Therefore, the post-1974 history of Hunza should not be understood simply as a movement from "traditional" to "modern." It is better understood as an ongoing process of institutional adaptation in which older practices, new governmental structures, community organisations, and changing economic conditions interact (Kreutzmann, 2004).

6.5 Comparative Reflections

Hunza's transition from princely rule to integration within Pakistan can be compared with the wider transformation of princely and semi-autonomous political systems in South Asia (Dani, 1991).

However, its timing was distinctive: whereas most princely states in the Indian subcontinent were integrated into new national political structures during the late 1940s and early 1950s, Hunza retained its traditional ruling institution until 1974 (Dani, 1991; Kreutzmann, 2004).

The delayed transition is significant because the political economy of Hunza had already undergone major transformation during the British period (Kreutzmann, 2004). By 1974, many of the external revenue networks that had historically supported the Mir had already been reduced or transformed (Kreutzmann, 2004). Thus, the 1974 abolition represented the final stage of a longer process rather than an isolated event (Dani, 1991).

The fiscal transformation of Hunza can therefore be understood as occurring in several stages:

1. Traditional system of internal and external resource mobilisation

2. Colonial restructuring of external relations after 1891

3. Further transformation of Pamir grazing arrangements in the twentieth century

4. Abolition of princely authority in 1974

(Kreutzmann, 2004; Dani, 1991)

7. Discussion: Theoretical Analysis of the Dual Fiscal Structure

7.1 The Pattern of Dual State Formation

Hunza's fiscal system operated through two parallel dimensions. The internal dimension was based on settled agriculture; the external dimension was based on pastoralism, trade, and tribute. This exemplifies Tilly's (1990) argument that states adopt different methods of resource mobilisation. In high-mountain polities, external resources are crucial for state survival (Kreutzmann, 2004).

7.2 Colonial Indirect Rule and Fiscal Transformation

British indirect rule transformed the dual structure-external sources were reduced while internal structures were strengthened. This aligns with Scott's (1998) concept of "legibility"-the British administration sought to make frontier areas more controllable.

7.3 The Decline of External Resources and Increase in Internal Taxation

Following the decline of external sources in 1937, internal taxation increased-Shimshal's obligations increased sevenfold (Kreutzmann, 2004). This reflects Tilly's (1990) observation that states increase internal extraction to compensate for resource shortfalls.

7.4 Impact on Frontier Communities

The Shimshal case demonstrates that frontier communities are subject to both state and interstate pressures (Scott, 1998). Reduced access to the Pamir and increased taxation affected their economic and social life.

7.5 The Role of Mir Muhammad Nazim Khan

Mir Muhammad Nazim Khan was the central architect of Hunza's fiscal transformation. His career-from official to Mir-gave him experience in administrative affairs (Schomberg, 1935). He accepted British indirect rule while maintaining internal autonomy.

7.6 Comparative Perspective

States such as Nagar, Chitral, Ladakh, and Baltistan also used a combination of internal and external resources (Dani, 1991). Hunza's distinctive feature was its limited agricultural base, which made it more dependent on external resources.

8. Conclusion

This study has provided a comprehensive analysis of the evolution of Hunza's fiscal system, tracing its trajectory from internal administrative structures through colonial transformation to the eventual dissolution of the state. The evidence demonstrates that Hunza's political economy was shaped by the interaction of agriculture, pastoralism, trade, geography, social hierarchy, and frontier politics (Kreutzmann, 2004; Dani, 1991).

The internal fiscal system depended upon an administrative hierarchy extending from the Mir and Wazir to officials such as the Yerpa, Faraj, Arbob, Lambardar, and Charbu (Beg, 2006; Iqbal, 2017). Through this machinery, agricultural produce, livestock, labour, and other resources were mobilised from settlements across the state (Lorimer, 1935).

The installation of Muhammad Nazim Khan was particularly significant. It not only altered traditional succession practices but initiated a period of increasing centralisation of authority. Nazim Khan's prior experience as an official and subsequent reign exemplify the transformation in which colonial patronage and local political authority merged into a new hybrid system (Schomberg, 1935; Dani, 1991).

Simultaneously, the external system connected Hunza to wider networks stretching towards Central Asia and the Karakoram frontier through grazing arrangements in the Pamir, tribute relationships, and caravan-related activities (Dani, 1991; Kreutzmann, 2004). Therefore, the evidence supports interpreting Hunza as a polity whose political economy was both territorial and trans-regional (Kreutzmann, 2004).

However, British intervention after 1891-1892 fundamentally altered this structure:

· Caravan raiding was suppressed

· Frontier relationships were reorganised

· The Mir's political position became increasingly embedded within a colonial system of indirect rule (Dani, 1991)

Furthermore, the 1937 Pamir grazing changes represented another major transformation-they reduced the economic and geopolitical importance of a relationship that had historically connected Hunza with pastoral communities beyond its immediate territory (Kreutzmann, 2004).

The termination of the Chinese tribute (1937) was not British policy but a consequence of the Sino-Japanese War and growing Soviet influence in Xinjiang. The British acknowledged a de facto change rather than orchestrating it.

Available records also demonstrate substantial changes in the recorded fiscal obligations of communities such as Shimshal. The nearly sevenfold increase in the monetary valuation of its recorded obligations between 1894 and 1938 is particularly striking (Kreutzmann, 2004). Yet the evidence does not justify attributing this increase exclusively to the loss of external revenue—rather, it should be interpreted as part of a wider transformation in taxation, administration, resource valuation, and political authority (Kreutzmann, 2004; Scott, 1998).

Finally, the abolition of the Hunza State in 1974 brought the princely fiscal system to an end (Dawn, 2024). However, the disappearance of formal taxation and princely authority did not immediately eliminate the social structures that had developed around the earlier system (Mountain Voices Project, 2000). New governmental institutions, elected bodies, community organisations, and civil-society initiatives gradually assumed different aspects of governance (Kreutzmann, 2004).

Taken together, Parts I and II present a broader picture of Hunza's fiscal history. Part I examined the social foundations and categories of extraction. Part II has examined the administrative machinery and external networks through which those resources were mobilised. The combined evidence demonstrates that Hunza's traditional political economy cannot be reduced either to a simple feudal model or to an isolated mountain subsistence economy. Rather, it represented a historically specific combination of agricultural production, pastoral mobility, social hierarchy, political authority, and trans-regional interaction (Kreutzmann, 2004; Dani, 1991).

The case of Hunza also has wider implications for the study of mountain societies: high-mountain polities were not necessarily isolated political units operating only within their valleys. Their economies and political institutions could be deeply connected with pastoral corridors, caravan routes, neighbouring territories, and larger geopolitical systems (Kreutzmann, 2004; Dani, 1991).

The colonial transformation of Hunza demonstrates, moreover, that changes to external networks can have consequences for internal social and fiscal relations (Kreutzmann, 2004). When traditional sources of external revenue and political influence were restricted, the relationship between the ruler, local officials, and producing communities also changed (Scott, 1998). This does not mean that colonial intervention alone caused every subsequent transformation-rather, it suggests that colonial frontier policies formed one important part of a longer process of political and economic restructuring (Dani, 1991).

Ultimately, the story of Hunza's fiscal administration is not simply a story of taxation. It is a history of how authority, resources, mobility, and social hierarchy were organised in a high-mountain society, and it shows how those arrangements were gradually transformed by changing regional and global political forces (Tilly, 1990; Scott, 1998).

9. Preview of Part III

Part III: Social Change and Transformation

The third part of this series will examine the social and institutional transformations that followed the abolition of the Hunza State in 1974. It will focus on changing class relations, the evolution of community institutions, development initiatives, the continuing influence of historical social distinctions, the emergence of new forms of political participation, and the broader struggle for democratic and institutional recognition in Gilgit-Baltistan (Kreutzmann, 2004; Hunzāʼī, 2013).

10. Note on Currency, Evidence and Sources

Readers should understand that the monetary values cited in this article are historical estimates-they are not precise measurements of the total fiscal income of the Hunza State (Kreutzmann, 2004).

Where applicable, Kreutzmann (2004) standardises historical values using 1916 British Indian rupee equivalents. A British Indian rupee in 1916 had significantly different purchasing power than modern currencies; direct comparisons with contemporary values are not meaningful. The figures should be understood primarily as relative indicators of change rather than absolute values (Kreutzmann, 2004).

The colonial records cited in this study, particularly IOL/P&S/10/973 and IOL/P&S/12/3292, provide important quantitative evidence. However, they were produced for administrative purposes and may therefore reflect colonial categories, selective reporting, and the administrative priorities of the period (Scott, 1998).

Similarly, ethnographic works such as Lorimer (1935) and Schomberg (1935) contain valuable observations but also reflect the intellectual and political environment of colonial scholarship (Said, 1978). Local histories and oral testimonies provide complementary perspectives but may preserve retrospective interpretations (Mountain Voices Project, 2000).

For these reasons, this article has treated the quantitative and qualitative evidence through triangulation and has not treated all sources as equally definitive (Denzin & Lincoln, 2018). Where the evidence establishes a clear pattern, the article states it directly; where interpretation remains uncertain, the language has been deliberately qualified (Kreutzmann, 2004).

This distinction is essential for understanding the fiscal history of Hunza-it helps avoid imposing modern concepts of taxation, sovereignty, or state administration uncritically upon a historical mountain polity (Scott, 1998).

11. Chronological Timeline

The fiscal transformation of Hunza occurred in several distinct stages (Kreutzmann, 2004; Dani, 1991):

Year: Pre-1891

Event: Traditional system of internal and external resource mobilisation operating through combination of agricultural taxation, pastoral dues, tribute, and caravan-related revenues

Year: 1891–1892

Event: British Hunza campaign and installation of Mir Muhammad Nazim Khan, beginning period of colonial indirect rule

Year: 1892

Event: Interruption of Chinese tribute (Mir Nazim Khan's initial refusal)

Year: 1894

Event: Chinese tribute resumed (with British permission, now monitored)

Year: c. 1894

Event: Colonial revenue records compiled; Shimshal livestock obligation valued at approximately Rs. 200

Year: 1937

Event: Pamir grazing rights restructured; Mir relinquished certain trans-frontier claims

Year: 1937

Event: Final termination of Chinese tribute (Sino-Japanese War and Soviet influence in Xinjiang; not a British order)

Year: 1938

Event: Shimshal obligations reached approximately Rs. 1,398, representing a nearly sevenfold increase

Year: 1974

Event: Hunza State abolished by Prime Minister Zulfikar Ali Bhutto, ending princely fiscal system

Year: Post-1974

Event: New institutions emerged: government offices, Union Councils, Numberdar system, community organisations

12. Glossary of Selected Terms

Arbob

Definition: Village-level representative responsible for communicating and implementing orders and organising communal activities (Iqbal, 2017)

Auyum

Definition: Form of customary taxation in the Hunza State (Beg, 2006)

 Begar

Definition: Compulsory or unpaid labour service imposed through the traditional political and social system (Lorimer, 1935)

Charbu

Definition: Village-level assistant associated with communication, announcements, and mobilisation of households for communal tasks (Munshi, 2016)

 Darqan

Definition: Social group or category in Hunza's traditional hierarchy (Beg, 2006)

 Daw

Definition: Term used in historical accounts for caravan-raiding activities associated with Hunza before consolidation of British control; encompasses spectrum from sanctioned tolls to plunder (Dani, 1991)

Faraj

Definition: Official associated with management or collection of state revenues, particularly in cash and kind (Beg, 2006)

Gushpūr

Definition: Term associated with members of the nobility or elite families in Hunza (Schomberg, 1935)

Ilban (Hilban)

Definition: Form of extraction or taxation in the traditional Hunza system (Beg, 2006)

 Khiraj

Definition: Historical term used for dues or payments associated with grazing and pastoral use of frontier areas (Kreutzmann, 2004)

Kirpas

Definition: Cotton cloth mentioned among commodities used in historical pastoral exchanges (Kreutzmann, 2004)

Lambardar

Definition: Village headman or representative associated with the ruling authority (Iqbal, 2017)

 Lupon

Definition: Social group or category in Hunza's traditional hierarchy (Beg, 2006)

Namda

Definition: Felt or woollen blanket used as a pastoral or customary commodity (Kreutzmann, 2004)

Numberdar

Definition: Government-appointed village representative in the post-princely administrative system (Kreutzmann, 2004)

 Shakshu Pakhpu

Definition: Region referred to in historical accounts in connection with tribute and frontier political relations (Beg, 2006)

Shana

Definition: Social group or category in Hunza's traditional hierarchy (Beg, 2006)

Taghdumbash Pamir

Definition: High-altitude pastoral region north of the Karakoram, historically connected with Hunza's trans-frontier pastoral relations, now within China's Xinjiang region (Kreutzmann, 2004)

 Tham

Definition: Local designation associated with the ruler of Hunza, commonly rendered as Mir in historical literature (Beg, 2006)

Yerpa

Definition: Official responsible for managing royal lands or demesnes (Lorimer, 1935)

Zarat

Definition: Crop taxation in the traditional Hunza system (Beg, 2006)

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End of Part II

This article presents an analysis of the dual fiscal structure of the Hunza State, with particular emphasis on the role of Mir Muhammad Nazim Khan. Part III will examine the social and institutional transformations following 1974.