Mrs. Cheveley and Robert Chiltern walk into the living room as the others pass out. She tells him she wants to speak to him about the Argentine Canal Company, which, she says, is similar to the Suez Canal project he was once involved in. Robert explains that the Suez Canal was a worthwhile project, while the Argentine Canal is merely a hoax. Robert has organized a Commission to investigate it, and it has found the project to be fraudulent. Mrs. Cheveley explains that she invested very seriously in the Argentine Canal, on Baron Arnheim’s advice.
When we first meet Robert in the first act, his primary quality is his moral conscience. The difference between right and wrong is quite clear to him; there is no gray area. If a project is found to be fraudulent, it is of no value, no matter how many friends have invested in it. His politics leave no room for shady compromises.
Sir Robert thinks the investment a bad one, and mentions that he is to give a report to the House of Commons about the Canal the following evening. To his shock, Mrs. Cheveley tells him that he must lie about the Commission’s report and tell the House that the project is important and worthwhile. She offers to pay him, but he refuses her proudly. Suddenly, she reveals her trump card: she plans to blackmail him with a misdeed from his past. When he was very young, and a secretary to an important official, he sold a government secret: he advised Baron Arnheim to buy shares in the Suez Canal, knowing that the English government would invest heavily in it. If Sir Robert does not give a positive report to the House, says Mrs. Cheveley, she will disgrace him and ruin his career.
Robert’s first response to Mrs. Cheveley’s request is incomprehension. He has so carefully distanced himself from fraud and dishonesty, has taken such care to position himself as one who represents honesty and nobility, that he is almost unable to imagine fraud being thrust upon him. Yet his noble attitude is slightly hypocritical. His earlier crime at least partially disqualifies him from an attitude of such moral purity. When he is faced with evidence of his moral inconsistency, he is too shocked to react. He is not prepared to accept that his moral nature is complicated.
Robert is horrified and lost. He repeatedly refuses to do as Mrs. Cheveley asks, but he is also terrified by her threats: he wavers helplessly between bad and worse. He begs her for time, but she insists that he decide immediately. He finally consents to her demands and quickly leaves the room.
Meanwhile, the other guests return from dinner. Lady Markby chatters pleasantly to Mrs. Cheveley about the noble, upstanding character of the Chilterns, then leaves with Lord Caversham. Meanwhile, Lady Chiltern approaches Mrs. Cheveley and asks her what business she had with her husband. Mrs. Cheveley hints that she has convinced Robert to make a positive report about the Argentine Canal, and invites Lady Chiltern to come hear the report with her the following evening. Lady Chiltern is shocked to hear that her husband has changed his mind about the scheme. Mrs. Cheveley leaves triumphantly; Lady Chiltern stands thinking carefully at the top of the staircase.
Lady Markby’s comments about the Chilterns have a certain dramatic irony after the preceding scene. That is to say, they possess an added level of meaning for the reader, who, unlike Lady Markby, has just learned of Robert’s capacity for dishonesty. We also learn that Lady Chiltern is just as ignorant of her own husband’s past (and, by implication, moral complexity) as Lady Markby. Lady Chiltern idealizes her husband instead of knowing him in all his particularity.
Meanwhile, Lord Goring and Mabel Chiltern flirt pleasantly in the living room. Mabel finds a diamond brooch or bracelet stuck between the couch cushions. Lord Goring asks if he may keep it for now, because he wishes to know who has lost it – he recognizes it, having given it to someone as a present years before. Lady Chiltern reenters the room. Mabel says her goodbyes and leaves; Lady Chiltern complains to Lord Goring about Mrs. Cheveley’s scheming, and he says good night as well. He leaves just as Robert enters.
The conversations of dandies like Mrs. Marchmont and Mrs. Basildon are oblique and roundabout in their search for amusement and truth, and Lord Goring’s tactics are similarly indirect. He does not simply hold up the brooch and ask to whom it belongs: he devises a plan to discover its owner. As we will see, such indirectness has its purpose.
Lady Chiltern asks Robert, with some distress, why he has agreed to support the Argentine Canal scheme. At school, she says, Mrs. Cheveley was known for lying and stealing, and for her generally unpleasant and unkind nature – he should not trust her. Guiltily, Robert explains that he has changed his mind about the Canal, that “public and private life are different things,” and that politics are very complicated.
Like Sir Robert, Lady Chiltern makes clear distinctions between right and wrong, good and bad. Just as Robert finds no gray areas politically, Lady Chiltern finds no gray areas personally. Mrs. Cheveley steals and lies, is therefore bad, is therefore to be avoided: simple logic. Yet Robert’s logic seems to have suddenly become more forgiving.
Lady Chiltern insists that they are not complicated – one must simply be honest and upstanding in all matters. She tells Robert that she loves him for his pure and honorable nature, and begs him not to compromise himself – otherwise, she cannot go on loving him. She convinces Robert to write to Mrs. Cheveley and retract his promise.