From Hawick to Hawick: The story of The Economist founder James Wilson

It is that time of the year when market participants and the media alike go beserk making predictions about the Budget – something that is meant to be annual account of the government’s finances. But yet this year the Budget is indeed of significance given the government like most across the world had to bust its finances to help tide over the Covid caused crisis and hence the government’s plan to repair its finances will have repercussions on the economy and perhaps on the markets. The finance minister has added to the excitement by promising a ‘never before budget’. But this piece by a former central banker is about a trivia – the first Indian budget back in 1860 under the British rule, was actually presented by the founder of the iconic magazine/newspaper, The Economist. G Sreekumar, who was formerly with the RBI, brings us this little piece of history tracking the life of James Wilson, the first finance member of the Viceroy’s Executive Council India. Wilson reluctantly took up the job leaving The Economist to be run by his son-in-law Walter Bagehot (readers would be familiar with the column named after him).
“Bagehot would later author, among other classics, Lombard Street: A Description of the Money Market (1873), his lasting contribution to central banking. Wilson left England on October 20, 1859.
Soon after reaching Calcutta in December, Wilson travelled up to Lahore, meeting with revenue officials on the way, deciding “it was a fine country to tax.” His plan of putting order into chaos involved five points. First, taxing the trading classes. Second, a government paper currency. Third, reform of the financial system with budgets and estimates, a Pay Department, and audit. Fourth, a civil police. Fifth, public works and roads. Wilson would claim great progress in the first four. He also set up a Military Finance Commission and a Civil Finance Commission.
Wilson presented his Budget — India’s first — on February 18, 1860, and a Minute detailing the paper currency framework, completed with his idea of currency circles, on March 3. He rationalised various duties, and announced an income tax, licence tax and tobacco duty. The taxes were to remain stable for five years. It was so well received for ending uncertainty in taxation that Wilson called himself “the most fortunate of tax-gatherers”. The dissenting voice came from Charles Trevelyan, governor of Madras, who made public his disapproving Minute. He was promptly recalled for insubordination. But, the damage was done. Charles Canning forced Wilson to drop the licence tax and tobacco duty.
A disappointed Wilson would say: “Firmness and justice are the only policy for India: no vacillation, or you are gone. They like to be governed; and respect an iron hand, if it be but equal and just.” Wilson compared the Indian exchequer to a huge machine, the English treasury being nothing in comparison for complexity, diversity, and remoteness of points of action. He assessed the Indian administration as follows: “Time, distance, and divided authority, with the sacrificing consequences of procrastination and shirking responsibility and the tendency to get rid of difficulties by compromise or delays are fatal elements in the character of the Government of India.””