During the reign of King Mongkut (Rama IV, 1851-1868), European and American merchants were rapidly expanding their businesses in the East. Siam’s (as Thailand was known) signing of the Bowring Treaty with England in 1855, was quickly followed by similar commercial treaties with France, Portugal, Denmark, the Netherlands, and Prussia.
Soon after, foreign mercantile vessel arrivals in Thailand increased to 300-400 per year. European traders tendered their own currencies in payment for the goods they purchased, but Thai merchants refused to accept them. Thus, the overseas businessmen were obliged to exchange their coins for pod duang money at the Royal Treasury. Unfortunately, because pod duang was hand-made, its production could not keep pace with the high demand for it. King Mongkut therefore gave permission to buy a minting machine from England to produce flat coins with differing values, including small change. In time, the use of cowry shells as currency declined and they ultimately disappeared from the monetary system.
The introduction of an international standard monetary system by King Mongkut permitted the construction of roads, the excavation of canals, and improvements over traditional ways of doing business. During the reign of King Chulalongkorn (Rama V, 1868-1910), many measures were implemented to improve national administration, public health, transportation, and the judiciary. Slavery was abolished and the corvee system of labour recruitment was changed to a system of military conscription. Taxes and revenue collection systems were introduced and the royal treasury was separated from the Ministry of Finance.
These constructive changes sped the development of trade and the economy, while increasing the country’s affluence. It also increased the demand for financial services, particularly in the form of loans, transfers, cash orders, and bills of exchange. Some foreigners sought permission to establish financial institutions in Thailand.