Robert Stadler attends and sanctions a demonstration of the government's previously top secret Project X. The project, housed in rural Iowa, is a new weapon that employs sound waves and is capable of mass destruction. Floyd Ferris convinces Stadler that the weapon is a necessary instrument of control at a time when hysteria and rebelliousness grip the American people.
Dagny returns from the valley to find the railroad in the grip of Washington's latest dictatorial policy: the Railroad Unification Plan. The plan pools all railroad profits together and distributes income based on need rather than production. A gangster named Cuffy Meigs is the Director of Unification.
The looters want Dagny to speak on the radio and reassure the country that the railroad industry isn't disintegrating. Initially, Dagny refuses, but Lillian Rearden visits Dagny and informs her that the rulers know of her affair with Rearden and will announce it publicly if she refuses to make the address. Dagny goes on the radio and speaks openly and proudly about her relationship with Rearden. She states that the government blackmailed Rearden into signing over the rights to his metal. Dagny sees Rearden that night. She cannot tell him where she has been, but Rearden realizes that she met the man she truly loves while she was gone.
Rearden now feels free from the grip of the altruist ethics and yearns to see the man who helped release him — Francisco. Rearden laments that he will never see Francisco again.
The Railroad Unification Plan is a desperate ploy that James Taggart and the socialist politicians brokered in an attempt to save Taggart Transcontinental from its own irrational policies. The plan's purpose is to prevent Taggart's bankruptcy by means of feeding off other weaker competitors. For example, because its track was severed by the Colorado tunnel disaster, Taggart Transcontinental uses the transcontinental line of the Atlantic Southern railroad without charge. The competitor pays for the track's upkeep without help from Taggart. Under the Railroad Unification Plan, railroads are paid according to how many miles of track they own rather than how much service they provide. Taggart Transcontinental owns by far the most miles of track (although much of it now sits unused), so Jim's plan ensures that his company gets most of the pooled railroad income. Taggart Transcontinental gets the money while the smaller rail lines go bankrupt. Cuffy Meigs, the director of the plan, is a blatant thief who uses his authority to provide train service to his friends in exchange for a share of their profit.
Dagny refuses to reassure the public about the state of the rail industry because she understands the disastrous long-term consequences of the plan. After the smaller rail lines go bankrupt, nothing can save the larger companies from a similar fate. The looters' policies have strangled industrial production, so the railroads are transporting a mere trickle of freight. The future of the railroad industry is grim, and Dagny wants the public to know the truth. Her broadcast enables her to tell the country the facts regarding the looters' socialist policies.
The broadcast also proves Dagny's pride for her relationship with Rearden and her utter rejection of the mind-body dichotomy. Realizing that their attraction was based on their achievements — on a mutual reverence for the accomplishments of the human mind — Dagny regards Rearden's desire for her as a badge of honor. She proclaims to the world that she has earned the right to sleep with Hank Rearden.
Robert Stadler's acceptance of the horrific Project X is the final destruction of a once great mind. Stadler now openly embraces the rule of brute force. The purpose of the project is to rule by terror a populace that has every right to rebel against the destructive policies of the government. Stadler's endorsement shows that this great mind, which once fought for the freedom of thought, now fights on behalf of a dictatorship.
xylophone a musical percussion instrument consisting of a series of wooden bars graduated in length so as to sound the notes of the scale when struck with mallets. In this novel, xylophone is used as a name for a weapon employing sound waves: Project Xylophone. The weapon's purpose is to rule the American people by terror.
epoch-making an adjective describing an event that ushers in a new historical period. It is used approvingly by Floyd Ferris in this novel to mean the new period in American history introduced by Project X, in which the government will rule the people by brute force.