These matters, however, were not the only ones I discussed with Lytton and his subordinates. Sir John Strachey, his finance minister, put me through a course of instruction on Indian finance and Indian economics, the methods of dealing with famines, the land revenue, the currency, the salt tax, and the other large questions then under discussion – Strachey being the chief official advocate of what was called the forward policy in public expenditure – and with the unexpected result that my faith, up to that moment strong in the honesty of the Indian Government, as the faithful guardian of native interests, was rudely shaken. The following extracts from letters written by me at the time from Simla will show how this short glimpse of India at headquarters was affecting me: "I am disappointed," I wrote, "with India, which seems just as ill-governed as the rest of Asia, only with good intentions instead of bad ones or none at all. There is just the same heavy taxation, government by foreign officials, and waste of money one sees in Turkey, only, let us hope, the officials are fools instead of knaves. The result is the same, and I don't see much difference between making the starving Hindoos pay for a cathedral at Calcutta and taxing Bulgarians for a palace on the Bosphorus. Want eats up these great Empires in their centralized governments, and the only way to make them prosper would be to split them up and let the pieces govern themselves." Also to another friend, Harry Brand, Radical Member of Parliament, now Lord Hampden, "The natives, as they call them, are a race of slaves, frightened, unhappy, and terribly thin. Though a good Conservative and a member of the Carlton Club I own to being shocked at the Egyptian bondage in which they are held, and my faith in British institutions and the blessings of British rule have received a severe blow. I have been studying the mysteries of Indian finance under the 'best masters,' Government secretaries, commissioners, and the rest, and have come to the conclusion that if we go on developing the country at the present rate the inhabitants will have, sooner or later, to resort to cannibalism, for there will be nothing but each other left to eat. I do not clearly understand why we English take their money from these starving Hindoos to make railroads for them which they don't want, and turnpike roads and jails and lunatic asylums and memorial buildings to Sir Bartle Frere, and why we insist upon their feeding out of their wretched handfulls of rice immense armies of policemen and magistrates and engineers. They want none of these things, and they want their rice very badly, as anybody can see by looking at their ribs. As to the debt they have been saddled with, I think it would be honester to repudiate it, at least as a Debt on India. I never could see the moral obligation governments acknowledge of taxing people for the debts they, and not the people, have incurred. All public debts, even in a self-governing country, are more or less dishonest, but in a foreign despotism like India they are a mere swindle."
On the whole, this brief visit to India at headquarters had considerable influence with me in the shaping of my ideas on the larger questions of Imperial policy, and giving them the direction they afterwards took. I still believed, but with failing faith, in the good intentions, if no longer in the good results, of our Eastern rule, and I thought it could be improved and that the people at home would insist upon its being improved if they only knew.
One of my last recollections of my two months' stay with Lytton at Peterhoff, as the Viceregal residence was then called at Simla, was of a dinner at which I sat next to Cavagnari the evening before he set out on his fatal mission to Kabul. He was an interesting man, the grandson, so he told me, of a Venetian merchant who, when the French Republican army occupied Venice, lent a large sum of money to Bonaparte, which was never repaid. The Emperor, however, rewarded him by making his son his private secretary, who became a devoted adherent of the Imperial family. Lewis Napoleon Cavagnari, the grandson, was also a strong Bonapartist, and believed himself, on account of his name, to have before him a very high destiny. He had faith in his "star," and I can testify that in his talk to me that night – and it was long and intimate – the last thing he seemed to think of was failure or danger in his mission. Yet only a few days before he must have had an admonition in the tragic news, of which we also talked, of the Prince Imperial's death in South Africa. When we parted it was with an engagement on my part and on my wife's that we would go in the autumn to visit him at Kabul. "You must not come, however," he said, "before the autumn, because I shall not have got the Residency comfortable or fit to receive ladies." Of any more dangerous reason he gave us no kind of hint.
Another acquaintance at that time with whom a tragic history is connected was Colley, then Lytton's military secretary, who the year following was to die on Majuba Hill. Lytton had the highest possible opinion of his military talents, and between them they had in large measure directed the Afghan campaign from Simla. His fault was, I think, too great self-confidence and too much ambition. He occupied Majuba because he could not bear to let the campaign end without gaining some personal success. Melgund again, who is now Lord Minto, Pole-Carew, and Brabazon, Lytton's aides-de-camp, were all three, with Lord Ralph Kerr, among our friends of that time, and Plowden and Batten, the husbands of their two fair wives. We made the voyage back from Bombay in Melgund's company and that of Major Jack Napier, leaving India on the 12th of July in full monsoon and arriving at Suez on the 25th, and on the same day by train to Alexandria.
I think it was at Aden, as we passed it to the Red Sea, that we learned the great news of the day in Egypt, the deposition of the Khedive Ismaïl, a subject to us of great rejoicing, and no sooner had we arrived at Alexandria than I learned the full details of his share in the affair from that other intimate friend of my diplomatic days, Frank Lascelles, whom I found acting Consul-General at the British Agency. What he told me does not differ much from the account of it officially published, and I need not repeat it here. What, however, is not generally known is the part played in it by the Rothschilds, which Lascelles did not at that time know but which I heard later from Wilson. Wilson, indeed, was able to boast that through these he had had his full revenge. On his return, he told me, from Egypt, crestfallen and abandoned by his own Government, he had gone straight to the Rothschilds at Paris and had represented to them the danger their money was running from the turn affairs had taken at Cairo and Alexandria. The Khedive intended to repudiate his whole debt and to shelter himself in doing so by proclaiming Constitutional government in Egypt. If they did not prevent this, all would be lost. He thus succeeded in alarming the Rothschilds and in getting them to use the immense political influence they possessed in favour of active intervention. At first, however, they had pulled the strings both at Downing Street and on the Quai d'Orsay in vain. The English Government was no longer in an intervening mood, trouble having broken out for them in South Africa; and at Paris, too, there was an equal unwillingness. In despair for their millions the Rothschilds then made supplication at Berlin to Bismarck, who ever since his Frankfort days had extended a certain contemptuous protection to the great Hebrew house, and not in vain. The French and English Governments were given to understand by the then all-powerful Chancellor that if they were unable to intervene effectively in Egypt in the bond-holders' interests the German Government would make their cause its own. This settled the matter, and it was agreed that, as the least violent form of intervention, the Sultan should be applied to to depose his too recalcitrant vassal. To the last moment Ismaïl refused to believe that the Porte, on which he had lavished so many millions and was still appealing cash in hand – for he had hidden treasures – would desert him. The pressure from Europe was too great. Wilson claims to have had the question of Ismaïl's successor submitted to him as between Halim, whom the Sultan much preferred, and Tewfik, and to have decided in favor of the latter as being known to him to be of weak character and so the more convenient political instrument. But be that as it may, the fatal telegram was despatched