'September 22nd_.—We decided with reference to Egyptian finance that Chamberlain should write a strong letter to Lord Granville protesting against any British advance to Egypt, unless accompanied by a cutting of the coupon. He did so, and on September 25th sent me a copy, and I sent the copy to Childers, and wrote myself to Lord Granville. On the 27th I received a memorandum from Chamberlain as to Lord Granville, Lord Derby, and Bismarck.
'Chamberlain's memorandum was a fierce denunciation of the principles laid down in Northbrook's despatch No. 4, dated September 13th, and received September 22nd.' [Footnote: Lord Northbrook had arrived in Egypt.]
Controversy now raged over Lord Northbrook's scheme, and added to the difficulties of the Cabinet, which was divided on the question of lowering or not lowering the rate of interest.
'On 19th November the second matter mentioned was Northbrook's scheme, against which I fought hard…. I pointed out that early in April, when Mr. Gladstone had wished to borrow on the future value of the Canal shares, that proposal had not been accepted, and we laid down the principle that it was for the bondholders to make sacrifices. On July 3rd we had decided that the coupon must be "cut." On July 18th the whole Cabinet had taken the same view except Harcourt and the Chancellor, and four members—Childers, Spencer, Chamberlain, and I—had advocated distinct bankruptcy. On August 2nd we had seen Baring to lay our plans for bankruptcy. On August 5th Northbrook himself had proposed a reduction of the interest. On August 29th there had been a general agreement to the same effect. Northbrook's policy had enormously sent up Egyptian stocks. After my strong observations the opinions stood: Mr. Gladstone, Childers, Chamberlain, Harcourt, Trevelyan, and Dilke against Northbrook's scheme; for it, Lord Granville, the Chancellor, Hartington, Spencer, Kimberley, Derby, Carlingford, and Northbrook himself. All the Lords on one side, curiously enough, and all the Sirs and Mr.'s on the other; eight to six against us. But I noted: "Mr. Gladstone is so strong that we shall win." "As we did."' [Footnote: Letter from Sir Charles to Mr. Brett (afterwards Lord Esher):
Local Government Board, Whitehall, November 19_th_, 1884.
'My policy has always been bankruptcy and stand the shot, and if we had stuck to that we should have had no trouble with the Powers; but indiscretions have made that difficult. It is not pleasant to be called in too late. I quite agree in your general view, but how can the bondholder be got to make sacrifices without his consent?']
'At the meeting of the Cabinet of December 2nd, Egyptian finance again came up. We were informed that Prince Bismarck suggested oral communications among ambassadors. For this Malet proposed Paris, and we replied Berlin.'
IV.
During this time the Government continued to waver as to the Soudan expedition.
On June 21st