From Hawick to Hawick: The story of The Economist founder James Wilson
“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.””