Where does the King’s property come from? The accumulation of royal wealth in the Rattanakosin era

Ever since the people came out to demand the resignation of General Prayut Chan-o-cha from the position of Prime Minister, the drafting of a new constitution and reform of the monarchy, the topic of the King’s assets has been a matter of interest and has become an topic of increasing discussion among the general public. Some groups of protestors have gone into detail on how to reform the monarchy: revoke the 2018 Crown Property Act and clearly divide the assets into the assets of the monarchy under the management of the Ministry of Finance and His Majesty’s personal assets; cut the national budget allocated to the monarchy to reflect the country’s economic status; and abolish all royal donations and charity projects so that the people can check the monarchy’s expenses, especially those that were allocated from the people’s taxes.

However, this suggestion was opposed by comments that all the King’s property already belonged to the King. The King’s property was restructured in the reign of King Rama X to repossess property that was stolen by “those hungry for power and money since 1932-” and was bit by bit being returned to its real owner, according to a Facebook post by Mom Chao Chulcherm Yugalain July 2017:

“After being stolen by those hungry for power and money since 1932 until now, the ‘city, palace, treasury, farm’ [the 4 ‘pillars’ or departments of traditional Thai government} have now bit by bit started to return to their real owner, no longer belonging to any one person who will come and seize them or seek benefits from them. Long live the king. Mom Chao Chulcherm Yugala”

To understand the discussion of the part of monarchy reform related to the King’s property, Prachatai invites you to find the answers through academic data – so, where do the king’s assets really come from? This account is taken from the Thai version of “The Rise and Decline of Thai Absolutism” (Rabop somburanyasitthirat : wiwatthanakan ratthai) translated by Kullada Kesboonchoo-Mead and “Phraphrom chuai amnuai hai chuencham setthakit kanmueang waduai sapsinsuanphramahakasatri lang 2475” (Brahma brings the refreshing rain; political economy through crown property after 1932) edited by Chaithawat Tulathon.

Initial era: trade monopoly

In the early Rattanakosin era, the royal court and the government were still not separated. The main agency in this era was the Royal Treasury, with its main duty of controlling trade with other countries. The people could not directly do business with other countries, but must take goods, especially rare goods such as sugar, sappanwood, ivory or forest goods and sell them to the Treasury. The Treasury would then sell these items to other countries through royal junks and bring back foreign goods to sell to the people.

Kings in the early Rattanakosin would use the income from selling these goods at their pleasure. Most was used to pay allowances to royal family members and the nobility. The expenses for infrastructure or national development came from duties, taxes, levies and fees collected from the people.

Era of tax farmers: income from taxes and trade

Early in his reign, King Rama III cancelled the monopoly of the Treasury and focused on earning national income through taxes. Private individuals had to tender for the rights to collect some forms of tax and became known as tax farmers. The taxes collected were, for example, export taxes, taxes on goods that were once monopolised by the Privy Purse and taxes on consumer goods.

In addition, tax farmers had a similar position to middlemen by monopolising goods that they collected taxes on and selling them to foreign countries. An important tax base in this era was Chinese migrants and farmers. This new tax system gave the state a more stable income and the King used this money to pay allowances to royal family members and nobles.

Even though the Treasury monopoly was cancelled, King Rama III continued the junk trade of the early Rattanakosin era but in the form of a private business. He also paid taxes like other merchants. Income from this trade went to the Privy Purse which His Majesty could use at his pleasure, creating a culture where the Privy Purse was money for the personal use of the King before later being separated from the Royal Treasury.

During King Rama IV’s reign, the Royal Treasury continued to receive income from tax collection fees paid by tax farmers. Nobles became the controllers of the nation’s income and were responsible for 5% of the income from tax collection which was sent to the Privy Purse.

Era of the Privy Purse Department: income from state finance and investments

During King Rama V’s reign, His Majesty centralised power to the King and established the Ministry of Finance to control tax collection and look after state money collected from the people, greatly improving the country’s financial status.

15% of public revenue collected each year had to be sent to the Privy Purse Department, which was considered to be a government agency, but directly under the King’s command. This, for the first time, shows a clear separation between the government’s money and the King’s personal money.

Other than this income of 15% of public revenue each year, the Privy Purse also made money from giving out loans to merchants, royal family members and aristocrats close to the king at an interest rate of 7.5% per year. Although there were many cases where the principal and interest were not repaid, the mortgaged land which was confiscated was worth more than the principal.

The Privy Purse also invested in public infrastructure, which expanded greatly in King Rama V’s reign, such as railways, maritime transportation and the Siam Commercial Bank.

Immovable property is another type of asset that brought a great amount of income to the Privy Purse. Land which belonged to the Privy Purse had 4 different origins: land titles claimed since the reign of King Rama IV and rented to the people for farming; foreclosed land; land bought in areas where a road was being built or land bought in advance of a road being ordered built through the property; and land transferred from the state to personal ownership, such as Chaophraya Bodindecha’s house, which had belonged to the Ministry of Finance, and was transferred to the Privy Purse Department in order to be given to HM Sukhumala Marasri. If the Ministry of Finance wanted to use land of the Privy Purse Department for government service, they would need to find another piece of land as compensation.

After 1932: separating crown property from the King’s private property

After the 1932 revolution, parliament passed the 1936 Crown Property Act to separate the “King’s private property”, “public property” and “crown property” and provided the following definitions:

The “King’s private property” meant property or rights attached to property that were in existence or created in any part of the kingdom if:

(a) that property or right belonged to the King before His Majesty’s ascension to the throne and the King has the right to dispose of it before ascending the throne;

(b) that property or right fell into the possession of the King during or after ascending the throne by any means from any predecessor or any person who is not the King of this kingdom.

(c) that property or right was acquired or bought with the King’s personal money.

“Public property” means property of the King which is used exclusively for the benefit of the State, e.g. palaces.

“Crown property” means property of the King other than the King’s private property and public property.

Originally, according to the 1936 Crown Property Act, the Ministry of Finance was responsible for crown property and would transfer income, after subtracting expenses, to His Majesty to spend as the monarch. Structuring the crown property by trying to transfer the Privy Purse’s property as crown property was an important cause in King Rama VII’s abdication and led to a lawsuit afterwards.

The Ministry of Finance during Field Marshal Plaek Phibunsongkhram’s term of office filed a lawsuit against King Rama VII and Queen Rambhai Barni, claiming that while the two were King and Queen, they had transferred assets under the crown to their own names without legal authority and with no countersignature on the Royal command as the constitution required. For example, deposits under the Privy Purse were transferred to his own name. The total damages including interest were more than 6 million baht; the court ruled the defendants guilty on 30 September 1941.

While the administration of the crown property in order to pass the assets on to King Rama VIII was very difficult, many of King Rama VII’s personal assets in England ended up with Prince Suprabhat Chirasakti, King Rama VII’s adopted child, who had to sell them in order to pay inheritance tax to the British government; they did not return to the monarchy.

After the 1947 coup: seeking benefits through the Crown Property Bureau

The 1947 coup is considered to be the end of the Khana Ratsadon (People’s Party). The 1936 Crown Property Act was amended in 1948. Crown property was removed from the responsibility of the Ministry of Finance, and the Crown Property Bureau was established as a legal entity, with the duty to maintain and manage crown property. The Minister of Finance was the Chair ex officio and the Board, comprising at least 4 members, was appointed by the King.

The main income of the Crown Property Bureau has been from investment and real estate; after subtracting expenses, it is for the King to use at the royal pleasure. The King’s private property, including assets conferred by the state, are maintained and managed at his discretion. The royal assets were administered under this structure throughout the reign of King Rama IX.

King Rama X’s reign: property management at the royal pleasure

The management of crown property was again restructured during King Rama X’s reign through the enactment of the 2017 Crown Property Act [this is the official name of the Act; a literal translation would be ‘Act on the Organization of Property on behalf of the Monarch’] which amalgamated public property into the crown property. The administration, maintenance, management, and operations related to the property are all to be subject to royal command. The result is that the Crown Property Bureau, which was originally responsible for maintenance and management, was demoted into an organisation that does only to what the King assigns.

The 2017 Crown Property Act was in effect for only about a year when the 2018 Crown Property Act [literally the ‘Act on the Organization of the Property of the Monarch’] was passed, revoking the 2017 Act. The key change was that all crown property was gathered under the same administration, with the result that the administration, maintenance, management, and operations concerning all property is now at the King’s discretion.

The King still receives money from the state budget for expenses. It has also been observed that land, immovable property and shares have started to be registered under the name of His Majesty himself instead of that of the Crown Property Bureau as in the reign of King Rama IX.

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