Lillian throws a party for the Reardens' wedding anniversary. Hank Rearden doesn't feel like celebrating but, of course, duty dictates that he must attend. He would prefer to devote his time to the mills, because the superintendent of his rolling mills has resigned suddenly and without explanation. Rearden must find a suitable replacement quickly, because the mills are rolling the Taggart rail.
Dagny attends the party and feels that she and Rearden have legitimate cause to celebrate the Rearden Metal track that's progressing across Colorado. She is puzzled and mildly disappointed when Rearden treats her with rigid formality.
Francisco appears unexpectedly, and Rearden tells his wife that he doesn't wish to meet him. However, Francisco approaches him with such simple sincerity that Rearden speaks to him. Francisco says that Rearden's family wields a weapon against Rearden that he must learn to recognize. Francisco adds that it is crucial for Rearden to take a stand and tell his family that he works for his own happiness. Although Francisco won't explain the purpose behind his appearance at the party or his advice, he claims that he wants to arm Rearden with ideas that he'll need in order to defend himself. Rearden recognizes that Francisco is offering him something crucial, but he also despises this playboy because he squanders his talents and lives an unproductive life. Rearden ends the conversation by insulting Francisco.
At the party, Dagny overhears Lillian's criticism of the Rearden Metal bracelet that Hank gave her. Dagny offers Lillian a diamond bracelet in exchange, which Lillian accepts. The two women exchange angry words and Rearden sides with his wife. Also, several guests at the anniversary celebration discuss the activities of Ragnar Dannesjköld in Delaware Bay. Dannesjköld is a modern pirate who preys on ships carrying welfare payments from the United States to the Peoples' States around the world. No one has been able to catch him.
