A History Of Thailand

by Baker Chris

  At the same time, these smallholder householders were linked to the international rice market, but rather remotely. Throughout the delta, there was no significant road. The rivers and canals were the only highways. The international rice demand was conveyed into the villages by petty traders, mostly Chinese, who paddled up the waterways to buy the surplus crop and arrange to transport it downriver by barge. Rice mills appeared on the banks of the Chao Phraya around Bangkok, at the railheads, and at junctions of the waterway system.

  By the early 20th century, paddy had become the major export crop and the major source (indirectly7) of the government’s tax revenue. The government, rice millers, and traders were interested in driving the frontier ahead and increasing the volume of paddy extracted from it. But their efforts were limited. The government set up a new land tax in the 1900s, and for two decades land and poll taxes levied on the peasantry were a significant part of revenues. But peasants gradually learnt how to blunt the land tax demand by petitioning for remissions on grounds of poor harvest and winning the sympathy of local officials. Siam failed to copy the colonial systems of land revenue administration, which forced peasants to increase both production and revenue. In the 1929 depression, the government was flooded with petitions for remission. It cut the land tax, never fully restored it, and finally abandoned both the land and poll taxes in 1938.

  Despite the rhetoric of ‘progress’, the government did almost nothing to promote agriculture. In the early 20th century, some in the elite pointed out that the citizens of the Siamese nation were overwhelmingly peasants, and that hence the progress of the nation revolved around the development of agriculture. In 1907, Dilok Nabarath, a son of King Chulalongkorn, completed a doctorate in Germany about Siamese agriculture. ‘It is odd’, he began the work, ‘that no monograph exists about agriculture in Siam, which has always been an agrarian state’. He concluded that ‘until recent times the farming population has hardly enjoyed any government support’, and then of very limited extent.8 He advocated education for farmers, transport networks, rural credit institutions, and research on agricultural technology. In 1911, Phraya Suriyanuwat, a former minister of finance, wrote Sapphasat, the first Thai treatise on economics, which also urged: ‘The progress of Siam is ever more dependent on paddy cultivation. Whether Siam will grow quickly or slowly is dependent on the benefits farmers will receive’.9

  But, in the early 20th century, the government gave agriculture a low priority behind railway building for defence, magnificent royal construction, and projects of nation-building. Dilok was considered ‘half-witted’ by his fellow princes for his enthusiasm for agricultural improvement; he committed suicide in 1913. King Vajiravudh reacted angrily against Sapphasat’s argument that Siam’s peasantry was poor and deserved help: ‘I am able to attest that no other country has fewer poor or needy people than Siam’.10 He had both Sapphasat and the study of economics banned to prevent such ideas spreading.

  The government also gave little help to the rice traders who had an interest in driving increased production. In his 1930–31 survey, Zimmerman was surprised to find that credit was insignificant. Farmers borrowed only for special occasions or disasters, not in the ordinary course of cultivation. Most loans came from neighbours. Only in the more commercialized areas were Chinese shopkeepers and paddy traders giving larger loans. When the depression hit, the government feared bad debts would result in foreclosure, landlessness, and social disorder. But the lack of land titling prevented this. The occupancy titles were not technically transferable. They were traded easily within the local community, but an outsider could get no legal help to enforce title in the face of local opposition. Traders might lend on mortgage, but found it difficult to foreclose for non-payment. In the 1929 depression and other downturns, peasants suffered hardship but did not lose their land. Instead, the traders and millers often went broke.

  The traders had to tempt smallholder families into the market with consumer goods – salted pork, dried fish, cloth, and household wares. But the villagers’ needs were limited. Until the Second World War, even in the areas most involved in the paddy export market, many households continued to weave cloth, at least for use in special occasions. Much local trade continued on a barter basis at occasional markets. Items such as carts and metal tools were made in the village by part-time specialists. In local folklore, the Chinese trader and shopkeeper became a focus of resentment for profiteering. But there was equally a recognition of mutual dependence. Nowhere did this resentment become violent, even during the market strains of the depression and the Second World War.

  Thus, the smallholders of the paddy tracts were drawn into the commercial rice economy only slowly and imperfectly. Gradually, more places became better connected to the market by improvements in transport, and more households made a greater commitment to the market. From the 1930s, transplanting began to replace broadcast in many areas, yields per rai rose, and households had a larger surplus to sell. Exports peaked on the eve of the Second World War at around 1.5 million tons, triple the volume at the start of the century.

  Some of the big landlords were unable to manage tenant demands and market swings, and their estates were broken up. Yet in the 1920s in the old canal tracts, there were still 127 landlords owning an average of 3000 rai apiece, including the Sanitwong family, the crown, and some other noble lineages. But outside these limited landlord tracts, this was a smallholder society with families owning plots of 25–40 rai, which they could operate with their own labour, growing rice for family consumption and a surplus for sale.

  Port city in the colonial era

  By the First World War, Bangkok and its hinterland of paddy tracts and teak forests were integrated into the economy of an Asia dominated by colonial powers, especially Britain. Three-quarters of Bangkok’s exports consisted of rice, and three-quarters of that was carried by British or German ships to the British ports of Hong Kong and Singapore.

  What had struck visitors to Bangkok in the mid-19th century was how rural the city seemed. A ‘wide expanse of paddy fields’ stretched almost up to the palace walls; a ‘shady wilderness’ was found just behind the bustling Sampheng market; and the whole city seemed like ‘a grove interspersed with houses, pagodas, palaces’.11

  In 1856, only a few months after the signing of the Bowring treaty, the British-owned Borneo Company set up shop in Bangkok. Yet colonial trade developed slowly. Initially, Borneo did little more than export pepper from Chanthaburi. In 1858, an American firm built a steam-powered rice mill, and in 1862 a British firm built a steam-powered sugar mill. Increasing trade caused a shortage of currency, so the government legalized the use of Mexican dollars and began minting silver baht in 1860. A decade later, more firms arrived, mostly branches of companies from colonial India or Java. By 1880 there were 12 rice mills, and the number expanded to reach 84 by 1925. As the junks faded from the scene, British and German steamship firms dominated shipping. In the 1880s, British timber firms moved into Lanna and began to float logs down the Chao Phraya river system. In 1889, the Borneo Company entered the teak business, and over the next 10 years British-owned sawmills clustered at the northern fringe of the capital.

  In 1890, H. Warrington Smyth arrived in Bangkok, expecting to find the elegant city described by earlier visitors:

  But where was the Bangkok I had read of – that Venice of the East delighting the soul with its gilded palaces and gorgeous temples? Before us lay but an eastern Rotterdam; mud banks, wharfs and jetties, unlovely rice mills belching smoke, houses gaunt on crooked wooden piles, dykes and ditches on either hand, steam launches by the dozen, crowded rows of native rice boats, lines of tall-masted junk-rigged lighters, and last, most imposing, towering even above the ugly chimneys of the mills, British steamers and Norwegian and Swedish barques and ships.12

  Once the teak and rice businesses were established in the 1880s, western bankers, managing agencies, retailers, and various service industries arrived to service a growing farang community, and
to supply a taste for western products pioneered by the court. As Smyth noted:

  In the tennis, cricket, dinners, and club life which centred around it, [Bangkok] was very much like any other settlement of the kind, except for its more cosmopolitan character. At one table would be seated Danes, Germans, Italians, Dutch, Belgians, Americans, and Britishers …13

  This cosmopolitan quality reflected the fact that Siam was increasingly part of the colonial economy but not a colonial subject dominated by a single master. This fact circumscribed the expansion of western business. In the teak industry, the government allowed western firms to dominate, but drew a perimeter around the area of logging concessions and restricted the extent of expansion. Western tin-mining firms overflowed from Malaya into southern Siam, but the government refused to extend the new railway network across to the western coast where the best deposits were, and most colonial tin firms concentrated on Malaya. The rubber industry also extended northwards from Malaya into southern Siam, but the government was reluctant to grant the large land concessions that western planters wanted. Railway promoters besieged the Siamese government with plans to build ambitious regional networks reflecting French and British commercial and imperial dreams, but the government prevaricated and then built its own system designed for its own strategic concerns. Imperial adventurers who wanted to cut a canal across the peninsula on the model of Suez or Panama were courteously humoured.

  By 1914, total western investments in Siam were estimated at a figure of US$65 million, less than half the amount in Indochina, one-third in Malaya, and one-tenth in the Netherlands Indies.

  Although this colonial economy was modest, it helped to undermine the jao sua, the great Chinese commercial families. Their traditional sources of income disappeared in stages over the late 19th century. The junk trade declined steeply after 1855. Most tax-farms were replaced by bureaucratic collection. Rivalry for the remaining tax-farms on opium, liquor, and gambling increased to the point that margins were thin and disastrous losses common. In 1906, the government also started to close down these tax-farms.

  The westward gaze of the court undermined the jao sua in other ways. The elite bought their status-defining clothes and trinkets from the western importers and emporiums, and no longer relied on the great jao sua to bring valuable items from China. The government hired western advisers rather than calling on Chinese with mandarin skills.

  Some of the great jao sua households reacted by moving into the booming rice trade, timber, shipping, and other ventures. The Chotikapukkana family built a modern rice mill and exported high-quality rice to Europe. Two other great jao sua lineages were among the pioneers of rice milling. Others bought land, built shophouses, ran markets, and benefited from rising property values as more immigrants crowded into the areas of Chinese settlement. The Phisolyabut family won a concession to dig the Sathorn canal on the southern edge of the city and to develop plots alongside the colonial-style mansions coming into vogue for Europeans and the local elite.

  In the 1890s, some of the great old jao sua households jointly resolved to set up banks and shipping companies. In part, they were seeking new opportunities to replace the tax-farms. In part, they were motivated by rising Chinese nationalism and wanted to outdo the Europeans. But they lacked the expertise required for these novel ventures and failed to provide enough capital to survive the ensuing price war with European firms. In addition, a series of poor harvests during 1904–08 meant that for several years very little rice could be exported and rice mills were without profit. The banks that financed them went bust. The ambitious shipping venture fell into debt and was sold in China. Many great households went down, including the Phisanbut family who had established the pioneer Chinese-owned rice mill, and the Phisolyabut family who had had a 40 per cent share of the rice business before this crisis.

  Some well-connected families appealed to the king for help. The Privy Purse Bureau had the unique advantage of accumulating its capital from tax returns. It formed the Siam Commercial Bank, which was strong enough to weather this crisis. It made loans to both aristocratic and jao sua entrepreneurs. Several of the jao sua households survived a little longer on these loans, but then lost the property accumulated over several generations – including rice mills, shophouse developments, and paddy tracts in Rangsit – under foreclosure by the Privy Purse Bureau or its Siam Commercial Bank.

  Following this crisis, none of the great Bangkok jao sua dynasties of the 19th century survived as leading entrepreneurs in the 20th. These crises rippled down through the lower levels of the commercial pyramid, as a Bangkok poet, Nai But, noted:

  In Sampheng, shops line the road so neatly.

  When profits are good, the heart blooms.

  But the bankrupt ones are closed,

  A notice of forced sale pasted on the door,

  An Indian standing guard.

  Pity the owners whose assets were seized

  Because they had no patron to fall back on.14

  Rice trade and early manufacturing

  While the great jao sua households were wrecked, a new business community developed over the late 19th and early 20th centuries, mainly among Chinese migrants who had arrived after 1850.

  Driven by poverty and disorder in southern China, the annual immigrant flow rose steadily. By the 1880s there were regular steamship services between Bangkok and the southern Chinese ports, and a regular supply of the poor and desperate ready to make the unpleasant trip. Between 1882 and 1910, 1 million immigrated, of which 370 000 remained permanently. After this surge, almost half of Bangkok’s population was Chinese. Around three-fifths were Teochiu, followed by Hakka and Hainanese.

  Although western firms dominated the first phase of the rice trade, this domination did not last. Former junk traders and tax-farmers discovered it was not difficult to buy the machinery and hire a Scottish or German engineer to run it. After some of the jao sua showed the way, more recent migrants followed. One of the most successful, Akorn Teng, had arrived in 1842, worked first as a coolie, opened a shop, and then made a good marriage, which enabled him to become a middle-ranking tax-farmer in the north. From the 1880s he invested the proceeds in five rice mills, a sawmill, and a dockyard. His son went on to invest in banks, shipping, and rubber in the early 1900s, and was reckoned one of the leaders of the business community. By 1912, there were 50 rice mills owned by Chinese, and by 1925, only one of the 84 rice mills was western-owned.

  Akorn Teng and others outcompeted the Europeans because they had direct links to the upcountry networks of Chinese traders who bought paddy from the farmers, because they could better manage the labour force of Chinese coolies, and because they developed trading networks in the markets around the region. Indeed, for some, such as the successful Wanglee family, Bangkok was simply one part of a regional network. By 1870, the Teochiu family had developed a coastal trading network based in Canton and connecting Hong Kong, Singapore, Bangkok, and Saigon. A son of the family, Tan Chi Huang, settled in Bangkok in 1871, married into one of the old jao sua households (Posyanon), established a rice mill with modern machinery, and exported rice to the family’s network around the region. Over the following years, the business expanded to four rice mills, cloth import, insurance, shipping, and property development.

  Several new entrepreneurs prospered quickly on the expanding rice trade, but also collapsed precipitously on the fluctuations in demand and exchange rates during a highly unstable period in the international economy. Akorn Teng’s family, which had joined in the doomed banking and shipping ventures of the jao sua, was crippled by the 1904–08 crisis, survived in a reduced state, and finally collapsed in a similar crisis on the price swings after the First World War.

  But those who did survive these swings emerged stronger. Some survived because they were part of strong regional networks. Others emerged from the lower ranks of rice traders as the jao sua firms disintegrated, and responded successfully to the volatility of the international market by building integrated bus
inesses and networks of mutual cooperation.

  The Wanglee family, with its extensive regional network, was the most successful. From the First World War onwards, it dealt with the fluctuations in the international market by forming its own bank to handle exchange and remittance, and its own insurance agency. A new wave of rice millers followed the same pattern. Ma Tong Jeng had arrived as a coolie in the late 19th century. He worked as assistant to a German engineer building and maintaining rice-mill machinery, and accumulated the skills and capital to open one of the largest rice mills in 1917. His son, Ma Bulakun, added another large mill in the 1920s, a bank, an insurance company, a shipping business, and a network of companies in Hong Kong and Singapore. The Lamsam family shifted from timber into the rice trade on the same integrated pattern in the 1920s. After the depression, a ‘Big Five’ of families (Wanglee, Lamsam, Bulakun, Bulasuk, and Iamsuri) controlled over half the rice trade. These families tightened links by exchanging marriage partners, crossing the usual boundaries of dialect groups. They also established a rice-millers’ association to control prices.

  By the 1920s, both western and Chinese firms had decided that Bangkok was now large enough to support local manufacture of matches, nails, soap, fireworks, patent medicines, tobacco, oil, textiles, paper, bricks, fireworks, shoes, furniture, and services (such as power, water, and transport). A few of the successful early entrepreneurs were among the descendants of the old jao sua families who had gained access to education, and who had a first-hand view of the consumption patterns of the new bureaucratic elite. Nai Boonrawd squeezed into one of the first palace schools, then worked for Akorn Teng’s rice-mill business and a colonial timber firm before starting his own timber trading business. After a trip to Europe, he tried importing cars, running river ferries, and founding an air service before hitting on the idea of a brewery, finally opened in 1933. One of Boonrawd’s distant cousins, Nai Lert, began as a clerk in a western firm, and then imported sewing machines and cars. From there he started a bus service and put the profits into land development. Other new entrepreneurs came from the same milieu of recent immigrants as the big rice merchants. Mangkorn Samsen had been a rice miller before moving into the manufacture of coconut oil and sugar. Koson Huntrakun had been a market owner before establishing one of the first ice factories.