Tom Corey investigates the seriousness of Lapham's financial problems and is told that, in addition to all other known problems, Lapham is competing with a company in West Virginia that can undersell him on a nearly stagnate market. While Corey is pondering the problem, he receives a thank you note from Penelope in gratitude for his financial offer. He wants to come to see her, but she will not let him.
Tom's uncle, Jim Bellingham, advises Silas to place himself in the hands of his debtors; but Silas' pride deters him, and he puts the house up for sale in an act of desperation. Silas cannot, however, part with this last concrete aspect of his life's work and social dreams and declines an offer to sell the next day. Going up to the house that night, he lights a fire in the chimney which, accidentally, burns down the house. The insurance had expired the week before, and Mrs. Lapham is relieved that no one can suspect Silas of burning it down purposely.
Tom Corey's concern remains the most heartening element in the novel, but Silas and Penelope still have some justifiable pride; they refuse his offers of marriage and money. Lapham's pride, however, is still somewhat excessive, for instead of facing his brothers and the rest of the world as a bankrupt man, he puts his house into realtors' hands. The burning house symbolizes the destruction of Silas as a millionaire and the end of his social aspirations.
Penelope admits in this chapter that she has been excessively heroic. She reveals her reason for earlier sending a note to Tom Corey:
"I thought I ought to break with him at once, and not let him suppose that there was any hope for him or me if father was poor. It was my one chance, in this whole business, to do anything heroic, and I jumped at it. You mustn't think, because I can laugh at it now, that I wasn't in earnest, mother! I was — dead! But the Colonel has gone to ruin so gradually, that he's spoilt everything. I expected that he would be bankrupt the next day, and that then he would understand what I meant. But to have it drag along for a fortnight seems to take all the heroism out of it, and leave it as flat!"