Coverdale muses on the paradoxical views that he has about Hollingsworth. On the one hand, he esteems him highly and counts him as one of his closest friends. On the other, he has a certain fear of him, distrustful of his motives. He realizes that Hollingsworth is so caught up in his philosophy that he cannot see people except through that lens.
Coverdale also speculates about the nature of Priscilla. She is definitely a free spirit, much loved by other men and women of Blithedale, but completely incapable of managing or accomplishing anything. She is clumsy, irresponsible, flighty, incapable of taking life as seriously as Coverdale thinks it needs to be taken.
As he talks with Priscilla, he determines that she is completely enraptured with Blithedale and its residents. She wants no home and no friends except those associated with Blithedale. Coverdale waxes cynical, contemplating what the real world will offer her outside of the community. But Priscilla merely laughs at Coverdale’s cynicism, and dances off, until Zenobia calls to her for a "little talk."
Rumor begins to develop that Hollingsworth and Zenobia are lovers. They are together frequently, and Coverdale expects that soon they will build a cottage for themselves within the Blithedale community set apart from the others. But Hollingsworth states that, no, he will build it on the hilltop, to make a proclamation to all the world.