Lapham has nearly decided that he cannot sell the mills at an unfair price even if the English do make an offer. He stops work on the house and shuts down the paint works that have been operating twenty-four hours a day since he began. Heavy competition from an underselling West Virginia paint company and an overstocked market force Silas to admit his defeat.
After Silas tells Persis of these new developments, she remembers the slip of paper she has found and returns it to him. She asks who "Wm. M." is. Silas says it is nothing, tears the paper into small pieces, and drops them in the fire. The next morning, Mrs. Lapham finds a scrap of paper on the hearth with the name "Mrs. M." on it. Wondering what dealings her husband could have with a woman, and remembering his confusion about the paper, she asks him who "Mrs. M." is.
"I don't know what you're talking about," he answers.
"Don't you?" she returns. "When you do, you tell me." The matter is dropped.
At the office that day, Silas tells Tom Corey to get out of the business for his own good. Tom offers Lapham a loan, but Silas refuses.
After Lapham's conference with Corey, Zerrilla Dewey's mother invades his office to demand money to pay her rent and buy groceries. Lapham forces Mrs. Millon to leave but later gives Zerilla money. Zerrilla reveals the reason for the need of money; her husband, Dewey, returning from a sailing voyage, spent the night before drinking with her mother. Zerrilla tells Silas that she cannot divorce her husband, as she wishes, because he does not drink habitually or leave for longer than a year.
Lapham visits Zerrilla's home that evening to tell Dewey that he will support Mrs. Millon and Zerrilla, because Jim Millon took a bullet meant for him; but, he will not support anyone else, including Dewey.
Upon returning home, Silas tells Mrs. Lapham that he has lost money in the stock market in addition to his other financial problems. He mentions Tom Corey's offer of a loan, and Mrs. Lapham resolves to tell Penelope of Tom's offer.
In the meanwhile, Walker has indicated to Tom Corey that he believes there is something amiss in Lapham's relationship with Mrs. Dewey. Neither he nor Corey know the exact nature of the situation, but Walker says, "Accidents will happen in the best regulated families." He hints that Zerrilla might be Lapham's mistress, yet Corey is not willing to make such a quick assumption.
Mrs. Lapham's discovery of the slip of paper with "Mrs. M." written on it lays the groundwork for her later suspicion that "Mrs. M." is Silas' typist. Because she believes it to be part of a payment slip, she later concludes, Howells hints, that the girl has been Silas' mistress.
Silas' visit to Mrs. Millon's home is realistically described and tends toward theatrical "naturalism," a kind of play that deals with the lower classes. Many critics found this repulsive in a day when romanticism, which upheld the noble and the beautiful, was still popular.
Tom shows his generosity and faith in Silas by offering him a loan. He has compassion and understanding that the rest of his society does not.