Vajiravudh - Financial Crisis

Financial Crisis

In 1917, price of silver rose and exceeded the face value of the (silver) coin. The coins were then melted down and sold out of Siam by individuals. The government solved this by changing the pure silver coin to alloy. Vajiravudh eventually forbade exports of Siamese coins. In 1918, the usage of 1-baht coins was nullified and the 1-baht banknotes were introduced. The coins were recalled and kept as national reserve. In 1919, Vajuravudh imposed his military-exemptation tax (Thai: เงินรัชชูปการ) that effected his popularity among the people.

Though the Siamese forces that joined the march at Versailles returned triumphant in 1919, the economic problems caused by World War I was serious - the Great Depression. In the same year, drought hit Siam and rice shortage ensued. The government forbade the export of rice - the main Siamese revenue since the Bowring Treaty. Queen Mother Saovabha, Vajiravudh's mother, died in 1919. Siamese participation in World War I opened the way to reconciliation, firstly with the United States in 1920, the unequal treaties imposed by Western Powers in the 19th century.

In spite of the financial crisis, the railway constructions continued. The trains reached Narathiwat and was expanded to the north and the east. The construction of Rama VI Bridge began in 1922 and the same year the railway reached Chiangmai. However, the national account was in such deficit that a large loan from Britain was taken. Also in 1922, an insurgency occurred in Pattani over the new taxation policies, which was readily subjugated by the Nakorn Sri Thammarat regiment. In 1923, Vajiravudh announced his six principles in the governance of Pattani Province, emphasizing local freedom and cautive tax measures,,,