Dagny goes to the construction site of the Rio Norte Line to supervise the work because Ben Nealy, the contractor she found to replace the retired McNamara, is incompetent. Ellis Wyatt arrives, and the respectful manner with which he treats Dagny shows his recognition of the merit of her work. She discovers that Wyatt has been to the job site often and has helped offset Nealy's inefficiency. Rearden is also in Colorado on business of his own. He proposes to Dagny a bridge made of Rearden Metal to replace the old one that the railroad currently maintains. He shows her a design for a new truss that Rearden Metal makes possible, and Dagny agrees to build it.
Dr. Potter of the State Science Institute visits Rearden, informing him that the Institute does not want Rearden Metal to appear on the market at this time. Potter won't state the reasons for this request. When Rearden refuses, Potter offers him unlimited money in exchange for the rights to the metal. Rearden tells him to leave, but Potter gives him a warning: The Institute may issue a public denunciation of the metal. Furthermore, Potter reminds Rearden that the Institute is a government agency and that bills currently pending in the legislature would, if passed, harm Rearden's interests. The legislative votes will be close and may be swayed by Rearden's cooperation.
Rearden throws Dr. Potter out, and the State Science Institute publicly smears Rearden Metal. Its denunciation contains no shred of factual evidence based on laboratory research, focusing instead on innuendoes and unsupported assertions. Dagny visits Dr. Robert Stadler, head of the Institute. Stadler recognizes the contemptible nature of the Institute's statement, but he refuses to publicly state the truth regarding Rearden Metal. His reasons are clear: The public demands practical results in return for its funding, but the Institute's metallurgical department has created nothing of value. If a private individual produces a new metal that is tremendously successful, the public will question the need for a State Science Institute. Stadler will not put the Institute's funding at risk.
The stock of Taggart Transcontinental plummets because of the State Science Institute's attack on Rearden Metal. Dagny tells Jim that she will start her own company to complete the construction of the Rio Norte Line. She says that after the merit of the Rearden Metal track has been proven, the line's ownership will go to Taggart Transcontinental. Jim approves, and Dagny decides to call her railroad the John Galt Line. Rearden and the producers from Colorado invest in her company.
The legislature passes the Equalization of Opportunity Bill, which will strip Rearden of his ore mines and place their ownership in the hands of someone else. Wesley Mouch, Rearden's Washington man, didn't inform Rearden that the bill was being brought to the floor.
This chapter pits those people who are exploited against those who exploit. The State Science Institute, because it cannot match Rearden's achievement, seeks to keep his metal off the market so it doesn't lose credibility with the public. When Rearden refuses to give in to its pleas, bribes, or threats, the Institute denounces his metal, igniting a public response against Rearden. He and Dagny must struggle even harder to complete the John Galt Line on schedule. Furthermore, the government passes the Equalization of Opportunity Bill, prohibiting Rearden from owning any business other than his steel mills and requiring him to relinquish his ore mines. Despite the government's relentless persecution, Rearden creates a new bridge design that will take full advantage of his metal's properties. This chapter sets the creative abilities of two great industrialists in direct conflict with the destructive power of the increasingly socialist government.
Dagny and Rearden represent pure capitalism in action. They are innovative businesspeople, like the productive giants of American history. Rearden's invention of a new metal and Dagny's recognition of its merit reflect the independent thinking so prevalent among the great American industrialists. Henry Ford, for example, perfected the new technique of mass production, bringing the automobile to millions of customers. Thomas Edison invented an electric lighting system that changed the world and earned him millions of dollars. Pioneering industrialists like George Westinghouse, George Eastman, Andrew Carnegie, James J. Hill, and many others performed similar feats. In more recent times, the great innovators of the computer industry have brought positive changes into the lives of millions with their new products and made fortunes doing so. Rand emphasizes that the greatest capitalists are entrepreneurs with new ideas. In a free country, where Rearden and Dagny would have the liberty to promote this innovation, Rearden Metal would revolutionize industry, improve the general quality of life, and earn millions for Hank Rearden.
Unfortunately, Dagny and Rearden do not live in a free country. The government holds the premise that individuals must sacrifice themselves for the public welfare. When individuals do not volunteer that sacrifice, the state has the legal power to force them to do so. This premise robs Rearden of his ore mines using the justification that Rearden is already successful, so someone less successful should be given a chance. Furthermore, because Rearden intends to sell his metal on the open market, he poses a threat to the State Science Institute. In the government's view, he is dangerous to the "public welfare." The Institute's response is a smear campaign based on fabricated allegations regarding hypothetical problems with Rearden Metal. The unjust campaign is designed to hinder Rearden's success, weakening him until he agrees to obey the Institute's wishes. The rulers aren't interested in promoting the metal's benefits to raise the standard of living. Instead, they're interested in increasing their political power. Ayn Rand shows that in a socialist system, the government violates the rights of the most productive people. As a result, the economy suffers.
The title of this chapter employs the terminology of Karl Marx to promote an opposite meaning. Marx, the founder of communism, held that in a capitalist system, the wealthy oppress the poor. Rand, a defender of capitalism, shows that in a socialist or communist system, the government oppresses the productive. This chapter raises the question, "Who — and in which system — exploits whom?" In a purely capitalist system, Rearden and Dagny create superb products and services that benefit customers and provide employment for workers. Rand argues that with pure capitalism, the exploitation Marx describes does not exist. But in a socialist system, the government uses its power to shackle and stifle people like Rearden and Dagny. The socialist politicians, while relying on and benefiting from the great productiveness of Rearden and Dagny, enact legislation and policies that make it impossible for Rearden and Dagny to produce.