MOTHER GOOSE : racist bitch?

          While working in the junior high library about a decade ago, I happened to discover this tarnished gem called Mother Goose's Nursery Rhymes, published in London in 1924, by Adam and Charles Black.  (I'll refrain from making an obvious joke about the publishers' last name, but you may do so if you wish)  I idly flipped through a few pages and luckily found the following illustration:
(Click to enlarge and read the charming caption)
          I think I probably said, "Oh, SHIT!" to myself, and took it straight to the Librarian.  But not before showing it to all of my teacher friends.  I think most people of my generation and older ones are familiar with the "Ten Little Indians" rhyme, which seems offensive enough by today's standards, but this may have been the precursor.  I wonder if it was changed from this version to the Indians version, to make it seem less offensive?  Or maybe there are various versions of this rhyme, one to offend everyone.  "Ten Little Homos" anyone?
It's just vile, right?  I mean, seriously.  WTF?
          Of course we immediately pulled it from the library's collection, and I do NOT feel bad about that.  Maybe I would have thought harder about whether or not to remove the book if it were found in a high school library, because older students would hopefully be mature enough to understand it in a historical context, and might even be able to use it in some kind of report on changing social perspectives or whatever.  But in the junior high library I think it would have the potential of hitting some poor kid like a punch to the gut.  Either that, or they'd read it and then punch ME in the gut, thinking I endorse that kind of thing.

          Apparently even way back in 1924 the Brits who published this book realized some of the content might be a little... edgy.  From the very last paragraph of L. Edna Walter's introduction:

                    If one or two of the rhymes strike a modern ear as
                    being somewhat crude, it must be remembered that they
                    are old, and it was felt that they ought not to be omitted
                    from so comprehensive an edition.