Wall Street hits a slump during the holiday season, and all investors, excepting Rosedale and Wellington Bry, suffer financial losses. Rosedale is rumored to have doubled his fortune, thus smoothing his path to acceptance in New York society. He has been friendly with Carry Fisher, who has been beneficial in introducing him to influential persons and to social customs. He desires, however, a more individualized woman in his life and has set his cap in Lily Bart's direction.
The narrator recounts a holiday party thrown by Mrs. Peniston to welcome returning newlyweds Jack and Gwen Stepney. Mrs. Peniston's cousin, Grace Stepney, had thought herself invited to the dinner, but discovered she had been removed from the guest list. She suspects that Lily is responsible for the slight, and the relationship between the two women becomes strained.
Seizing an opportunity to revenge her slight, Grace tells Mrs. Peniston about the rumors that are circulating about Lily and Trenor. Grace tells Mrs. Peniston that people are talking about an estrangement between Lily and Judy, a result of a flirtation between the younger woman and Trenor. Grace continues that people have been saying that Trenor is paying Lily's bills, including her gambling debts. This statement reveals to Mrs. Peniston that Lily is playing cards for money, an activity unheard of in Mrs. Peniston's limited purview. To further her point, Grace tells Mrs. Peniston that it was Lily's gambling that frightened Gryce away.
Grace also informs Mrs. Peniston that it is rumored that Lily has been seen with Dorset, another married man. She recounts that Evie had seen several expensive items of apparel that were being sent to Lily, indicating that Lily is spending extravagantly and beyond her limited means.
As Chapter XII opens, Lily has ingratiated herself with the Dorsets in the belief that mending fences with Bertha allows her to find "a subtler pleasure in making use of [an] antagonist than in confounding him." Lily spends much of her time humoring Dorset, an activity far simpler than keeping the increasingly difficult Trenor at bay.
Trenor's fortunes were negatively impacted by the stock market crash. Lily suspects that the rumors about her flirtation with Trenor may have gotten back to Judy, which may explain the woman's suddenly cold behavior toward her.
The Brys' newly acquired wealth prompts them to throw a large party at their estate with the assistance of Lily and Carry Fisher. Attending the party are Selden and Gerty, both of whom were invited by Lily. Gerty confides to Selden that Lily has donated three hundred dollars to Gerty's philanthropy, her Girls Club, and has convinced the other society women to contribute large amounts as well.
The party features a tableau vivant in which volunteers re-create famous scenes of art or history. Lily is featured as the subject of Sir Joshua Reynolds' Mrs. Lloyd, a depiction of such beauty that it elicits gasps of appreciation from the audience. The painting is known for displaying the voluptuous form of its subject in a transparent gauze gown while she carves her lover's name into a tree. Selden's admiration for Lily's portrait prompts him to think "for the first time he seemed to see before him the real Lily Bart, divested of the trivialities of her little world, and catching for a moment a note of that eternal harmony of which her beauty was a part."
While some in the audience are scandalized by the exposure of Lily's form, Selden is mesmerized. He looks forward to speaking with her for the first time after intentionally avoiding her since the Stepneys' wedding. The two walk outside, and Selden professes his love to her. The couple kisses, and Lily tells Selden to love her "but don't tell me so." She leaves him alone. Selden leaves the party, but not until he hears Trenor and Ned Van Alstyne discussing Lily's attractiveness.
Wharton makes light of the cyclical nature of the financial markets by comparing Wall Street to playing Cinderella. Rosedale's nouveau-riche status is emphasized by his purchasing the estate of a family ruined by the stock market crash. The narrator further uses Rosedale's Jewish heritage to disparage him: "The instincts of his race fitted him to suffer rebuffs and put up with delays."
Mrs. Peniston is parodied as a slave to social custom when the reader learns that the veracity of Grace's accusations are not as important as the fact that the accusations are being made in the first place: "It was horrible for a young girl to let herself be talked about; however unfounded the charges against her, she must be to blame for their having been made." In such a closed culture, all individuals are guilty until proven otherwise.
The tableau vivant presented by Lily reveals her as a truly beautiful woman, capable of enchanting most men. When Selden approaches Lily following the display, she feels "the quicker beat of life that his nearness always produced . . . [For] the moment it seemed to her that it was for him only she cared to be beautiful." Her love for Selden, however, does not fit her designs for herself, and she leaves him after their kiss.
Trenor delivers the last lines of Chapter XII. First, he complains that Lily's tableau was too revealing of her figure, and, second, he insults the nouveau riche hosts of the party: "My wife was dead right to stay away: she says life's too short to spend it in breaking in new people."
Girls Club a social and/or exercise club for young, single female laborors.
tableau vivant a parlor game in which a participant attempts to replicate a well-known piece of art, history, or literary scene.
Veronese Paolo Veronese (1528–88), an Italian decorative painter famous for his ceiling painting of such scenes as the Last Supper.