James Taggart wants to celebrate. In several weeks, Argentina will be declared a People's State. Taggart has helped bring to fruition a deal between American, Argentinean, and Chilean politicians, whereby all the holdings of d'Anconia Copper in those South American countries will be nationalized. The politicians have set up a new corporation to manage all the industrial properties of South America. Taggart will sell his shares of d'Anconia Copper and buy stock in the new company, which will earn him a fortune.
However, Cherryl refuses to celebrate such a victory. In the year since her wedding to Jim, she has discovered the truth about him and is tortured by the question of why he married her. Cherryl, disgusted by her husband's desire to break Francisco's spine, leaves their apartment. Later, Lillian Rearden arrives. She pleads with Taggart to use his political pull to prevent her impending divorce from Rearden, which will cut her off without a penny. But Taggart has no power to prevent the divorce. In an attempt to hurt her husband one last time while she is still Mrs. Rearden, Lillian has sex with Taggart.
Cherryl returns home and knows that her husband has been unfaithful. Taggart tells her that he'll never grant her a divorce; he'll use his connections to prevent one, so Cherryl is stuck with him for life. In the ensuing argument, his motive for marrying her becomes clear. Cherryl understands that her husband is a killer who thrives on crippling people's spirits. She races blindly out of their home and into the street. A social worker accosts her and preaches that her despair is caused by selfishness. This encounter is the last straw for Cherryl, who throws herself into the river and drowns.
The nature of James Taggart's character is the focus of this chapter. He believes that he'll make a fortune from his latest deal, which will allow him and his political friends to rob Francisco d'Anconia. However, Taggart doesn't want to celebrate the promise of financial gain. He wants to celebrate the blow struck against Francisco — the wound inflicted on a great man. Taggart savors this type of destruction. He has hated Francisco from the earliest days of his childhood. Francisco is a prodigy who excels at every endeavor — physical and intellectual. Jim hates him, not because of any flaw, but because of his joyous, life-giving ability. Jim is riddled with envy, an emotion that Ayn Rand describes as hatred of the good for being good. Taggart recognizes Francisco's genius and nobility of spirit and hates him because of it. For this same reason, he hates Dagny, Ellis Wyatt, and Hank Rearden.
Lillian Rearden resembles Taggart closely. She has only one goal in life: to use guilt, psychological manipulation, and treachery to harm her husband. She wants to hurt him in any way that she can — by criticizing his work and character, by making his home life miserable, by simultaneously refusing him a divorce and forbidding him Dagny, by scheming to rob him of his metal, by aligning herself with the looters, and so on. Like Taggart, she hates Rearden because of his stature. The only reason she has sex with Taggart is to try to hurt her husband. Taggart knows this, and the only words spoken during the act come from Taggart, who calls Lillian "Mrs. Rearden." To wound or disfigure greatness is the desire motivating both characters, but both lack the power to damage Rearden now. Rearden despises Lillian, and her actions no longer affect him. He can defend himself completely against the hatred of such empty souls.
Cherryl is a different story. Unlike Rearden, she is still capable of being hurt by Taggart. Cherryl resembles Eddie Willers in a fundamental way. Both characters have the soul of someone like Dagny or Rearden, but they lack the intellect of such great producers. They understand and worship the achievements of genius, but they can't create Rearden Metal or build the John Galt Line themselves. Cherryl has the pure soul of a hero worshipper. She reveres man at his highest and best. She loves the very greatness that James Taggart seeks to destroy.
Because Taggart has no power to harm Rearden or Dagny, he channels his hatred toward the one person who admired him. With no capacity to defeat the heroes, Taggart takes his revenge by destroying a hero worshipper. Cherryl lacks the intellectual prowess required to defend herself against Taggart, which is the reason he married her. Cherryl is a helpless stand-in for Francisco, Dagny, Rearden, and all the other great people that Taggart hates. Because Taggart's motives are so monstrous, they've remained hidden from Cherryl until now. Before, her purity wouldn't allow her to imagine that such evil exists. When she finally realizes her husband's true nature — and that she is trapped in her marriage — she flees the apartment. However, Cherryl has no place to go because Taggart and his cronies rule the world as well as her home. When the social worker utters the same slogans of self-sacrifice that Taggart and the socialist rulers endorse, Cherryl feels trapped. She senses that she doesn't have a place to go, that the code of evil dominates the globe, and that she'd rather die than exist under such conditions. James Taggart has succeeded in his quest to lash out at those whom he knows to be good.