Some four months have passed since the first act, and a peace treaty has just been signed. The setting for this act is in Major Petkoff's garden. Louka is standing onstage in a disrespectful attitude, smoking a cigarette and talking to Nicola, a middle-aged servant who has "the complacency of the servant who values himself on his rank in servitude." The opening dialogue informs us that Nicola is engaged to Louka, but that he has reservations about her deportment. He refuses to marry a person who is "disrespectful" to her superiors; he plans to open a shop in Sofia, and he thinks that the success of the shop will depend on the goodwill of his employees, and he knows that if they spread bad reports about him, his shop will never be successful. When Louka maintains that she knows secret things about the mistress and the master, Nicola reminds her that all servants know secrets about their employers, but the secret of being a good servant is to keep these things secret and to always be discreet; if servants begin telling secrets, then no one will ever employ them again. Louka is furious and says that Nicola has "the soul of a servant"; Nicola agrees — "That is," he says, "the secret of success in service."
Their discussion is interrupted by the entrance of Major Petkoff, an "insignificant, unpolished man" who has just returned from the war. He sends Louka into the house to get his wife and to also bring him some coffee. Catherine comes out and welcomes her husband, and he tells her that the war is over, the peace treaty is signed, and all is now peaceful. When he inquires about his wife's health, she tells him that she has a sore throat. The Major maintains that the soreness comes "from washing [her] neck every day." He himself does not believe in these silly modern notions of washing. "It can't be good for the health; it's not natural. There was an Englishman at Philippopolis who used to wet himself all over with cold water every morning when he got up." He maintains that the English climate is so dirty that the English have to wash, but others don't; his father, for example, lived to be ninety-eight years old and never had a bath in his entire life.
As Catherine is explaining to her husband about the installation of an electric bell in the library, the Major is confused over its use because — in his opinion — if he wants someone, he will shout for them. At this time, Major Sergius Saranoff arrives; he is "a tall romantically handsome man" and is the original of the portrait in Raina's room in the first act. He is roundly congratulated for his famous charge against the Serbs. Sergius, however, does not appreciate the compliment, because even though he was successful, he participated in a maneuver where the Russian consultants failed; thus, he did not accomplish his great success by the rulebook. "Two Cossack colonels had their regiments routed on the most correct principles of scientific warfare. [Furthermore,] Two major-generals got killed strictly according to military etiquette," and now the two colonels who failed are promoted to generals and he (Sergius) who succeeded is still a major; therefore, he has resigned.
As Catherine is protesting that Sergius should not resign — the women, she says, are for him — Sergius suddenly asks, "Where is Raina?" At that very moment, Raina enters sweepingly, announcing, "Raina is here." Sergius drops chivalrously on one knee to kiss her hand. While Raina's father is impressed with the fact that Raina "always appears at the right moment," her mother is annoyed because she knows that Raina always listens at doorways in order to make her entrance at exactly the right moment. Catherine pronounces it to be "an abominable habit."
Raina then welcomes her father home, and again they discuss Sergius' military career. Sergius now views war in a very cynical manner; according to him, there is nothing heroic nor romantic about it. "Soldiering is the coward's art of attacking mercilessly when you are strong, and keeping out of harm's way when you are weak. . . . Never fight [your enemy] on equal terms." Furthermore, he now views soldiering as having too much of the taint of being a trade business, and he despises trade; this is, of course, an allusion to Captain Blutschli, who, of course, is in trade, and it is also a reference to Louka's fiancé, Nicola, who wants to go into trade. To prove his point, Sergius asks them all to consider the case of the Swiss officer (Bluntschli) who was able to deal very shrewdly and to make clever bargains concerning prisoners. As a result, soldiering has been "reduced to a matter of trading and bartering." He adds that the man was merely "a commercial traveler in uniform."
Since the subject has come up, Major Petkoff encourages Sergius to tell the story about the Swiss officer who climbed into a Bulgarian lady's bedroom in order to escape capture. Raina, recognizing herself as the woman of the story, pretends to be offended. Major Petkoff therefore tries to get Sergius to help him with some army details, and Catherine instructs Sergius to remain with Raina while Catherine discusses some business with her husband. By this ruse, she is able to leave the two young people alone.
Alone together, Raina looks upon Sergius with admiration and worship: "My hero! My king!" — to which he responds, "My queen!" Raina sees Sergius only in terms of the knight of olden times who goes forth to fight heroically, guided only by his lady's love. She believes that the two of them have truly found what she calls the perfect "higher love." When Louka is heard entering the house, Raina leaves to get her hat so that they can go for a walk and be alone. In Louka's presence, Sergius swaggers a bit and then asks Louka if she knows what "higher love" is. Whatever it is, he says, he finds it "fatiguing" to keep it up: "one feels the need of some relief after it." He then embraces Louka, who warns him to be careful, or, at least, if he won't let her go, he should step back where they cannot be seen. After she makes a sly comment about the possibility of Raina's spying on them, Sergius defends Raina and their "higher love," and Louka maintains that she will never understand "gentlefolk" because while Sergius is professing love for Raina, he is flirting with her behind Raina's back, and, furthermore, Raina is doing the same thing. Sergius tries to reprimand Louka for gossiping so about her mistress, but he is visibly upset and dramatically strikes his forehead. He insists that Louka tell him who his rival is, but she will not do so, especially since he has just reprimanded her for talking about her mistress. She tells him that she never actually saw the man; she only heard his voice outside Miss Raina's bedroom. But she knows that if the man ever comes here again, Raina will marry him. Sergius is furious, and he grips her so tightly that he bruises her arm; he reminds her that because of her gossiping, she has the "soul of a servant," the same accusation which she made earlier about Nicola. Louka retaliates by pointing out that Sergius himself is a liar, and, furthermore, she maintains that she is worth "six of her [Raina]." As Louka begins to leave, Sergius wants to apologize for hurting a woman, no matter what the status of that woman is, but Louka will not accept an apology; she wants more. When Sergius wants to pay her for the injury, Louka says that she wants him to kiss her bruised arm. Surprised, Sergius refuses, and Louka majestically picks up the serving pieces and leaves, just as Raina enters, dressed in the latest fashion of Vienna — of the previous year. Immediately, Catherine calls down that her husband needs Sergius for a few minutes to discuss a business matter.
When Sergius is gone, Catherine enters, and she and Raina express their irritation that "that Swiss" told the entire story of his night in Raina's bedroom. Raina maintains that if she had him here now she would "cram him with chocolate creams." Catherine is frightened that if Sergius finds out the truth about what happened, the engagement will be broken off. Suddenly, however, Raina reveals that she would not care, and that, furthermore, she has always wanted to say something dreadful so as to shock Sergius' propriety, "to scandalize the five senses out of him." She half-hopes that he will find out about her "chocolate cream soldier." She then leaves her mother in a state of shock.
Louka enters and announces the presence of a Serbian soldier at the door, a soldier who is asking for the lady of the house; he has sent his card bearing his name, "Captain Bluntschli," thus giving us for the first time the name of the "chocolate cream soldier." When Catherine reads the name and hears that the caller is Swiss, she realizes that he is the "chocolate cream soldier" and that he is returning the old coat of Major Petkoff's which they gave him when he left. Catherine gives Louka strict instructions to make sure that the library door is shut; then, Louka is to send in the captain and have Nicola bring the visitor's bag to her. When Louka returns with the captain, Catherine frantically explains that her husband and future son-in-law are here and that he must leave immediately. Captain Bluntschli agrees reluctantly and explains that he only wants to take the coat out of his bag, but Catherine urges him to leave it; she will have his bag sent to him later. As Bluntschli is writing out his address, Major Petkoff comes in and greets the captain warmly and enthusiastically. Immediately, Major Petkoff tells the captain that they are in desperate need of help in working out the details of sending troops and horses to Philippopolis. Captain Bluntschli immediately pinpoints the problem, and as they are about to go into the library to explain the details, Raina enters and bumps into the captain and surprisedly exclaims loudly: "Oh! the chocolate cream soldier." She immediately regains her composure and explains that she was cooking a kind of dessert and had made a chocolate cream soldier for its decoration and that Nicola sat a pile of plates on it. At that moment, Nicola brings in the captain's bag, saying that Catherine told him to do so; when Catherine denies it, Major Petkoff thinks that Nicola must be losing his mind. He reprimands Nicola (for doing what Nicola has been commanded to do), and at this point Nicola is so confused that he drops the bag, almost hitting the Major's foot. As the women try to placate the Major, he, in turn, urges Captain Bluntschli to remain as their houseguest until he has to return to Switzerland. Even though Catherine has been subtly suggesting that Captain Bluntschli leave, Bluntschli agrees to remain.
Arms and the Man is an early Shavian play, and in it, Shaw used certain techniques that he was never to use again. In the first act, for example, the entire act has a farcical note about it and the use of a screen or a curtain for a character to hide behind was a traditional technique used only in comedies. The coat episode in the third act is a contrived bit of farce that amuses the audience, but it cheapens the intellectual aspect of the drama because it contributes nothing other than its own farcical element.
In Act II, the structure of the act is more serious, but it also uses several traditional farcical elements. For example, there is the use of the exaggerated means whereby Sergius can deceive Raina while trying to make love with Raina's maid, the story told in the army camp about the soldier who escapes into a lady's bedroom (while the ladies of the story have to listen in pretended dismay), the sudden appearance of the captain and the hasty decisions which the ladies must undertake, and finally the sudden surprise that occurs when we discover that Captain Petkoff knows Bluntschli — all of these circumstances are elements of melodrama or farce.
In the early part of the act, we see Louka as an ingenious maid who refuses to acknowledge that she has "the soul of a servant," a fault that she accuses Nicola of having. Later, however, when Sergius tells her that she possesses the soul of a servant, his comment stings. We do, however, admire the way that Louka is able to dismiss Nicola and to manipulate the supposedly superior and aristocratic Sergius.
When we meet Sergius and hear of his total disillusionment with war and with "soldiering [which] is the coward's art of attacking mercilessly when you are strong and keeping out of the way when you are weak," we are then prepared for the fact that Sergius will not be a romantic idealist for long. His new views on war should prepare us for a significant change in his total outlook on life; thus, he will soon reject Raina's idealistic "higher love" in favor of a more direct love with the attractive and practical Louka, a maid who says forthrightly that if Sergius is going to embrace her, then at least they should stand back where they can't be seen.
With Louka, Sergius can admit that there are at least six different people occupying himself and then wonder aloud, "Which of the six is the real man? That's the question that torments me." We now know that the real Sergius is not the one with whom Raina has fallen in love, the one with the "higher love." Thus, by the end of this act, Shaw has set up all of the necessary motives and reasons for Sergius and Raina to break off their engagement and marry someone else.