The United States has no more copper producers. d'Anconia Copper is the last producer on earth, but none of its ships can reach America because Ragnar Dannesjköld sinks them. Consequently, no more electric appliances are being manufactured in the United States.
Rearden Steel experiences the first failure in its history. Because he cannot get copper, Rearden can't deliver the Rearden Metal rail for Taggart Transcontinental's disintegrating mainline track. As a result, Taggart Transcontinental's track crumbles, train wrecks proliferate, and shippers go out of business. Virtually no important shippers remain on the Rio Norte Line, and the formerly booming industrial towns in Colorado are now destitute. Finally, Dagny is forced to close that line.
James Taggart finds himself squeezed from all sides by the demands of his company and various groups that seek to profit from it. Taggart seeks a raise in shipping rates to keep his company afloat, but the shippers demand a rate reduction. The railroad unions demand a wage increase, and the government grants Taggart Transcontinental permission to close the Rio Norte Line only in exchange for acceptance of the union's demands. The politicians hold the threat of reduced shipping rates over the railroad's head.
The government is ready to launch a new piece of legislation, and it wants no trouble from Rearden. Taggart knows that if he has valuable information about Rearden, he can trade the information to keep shipping rates steady. Taggart goes to Lillian for help. Lillian discovers that Rearden's mistress is Dagny. When Lillian demands that Rearden give Dagny up, Rearden responds that he would rather see Lillian dead first.
