This section of the novel comes as Hank and King Arthur decide to tour England in disguise to see the lives of the populace in action. They are surprised by the injustice and horrible acts that they witness, and ironically, even are captured themselves and made into slaves. Chapter 35 begins with a description of how an innocent woman is burnt for being a witch and how this opportune event is used by their slave master to warm his commodities.
One day, they run into a procession with lots of people in the suburbs of London. There was a cart with a coffin in it and a beautiful young girl of about eighteen years old was sat upon the coffin suckling her baby. Clearly the girl is suffering great distress as she is crying deeply. They are heading towards the gallows. A priest helps the girl climb up and then addresses the crowd, telling them the pitiful story of this girl's life and how she came to be there.
He begins by questioning the purpose of law, which is intended to "mete out justice," yet fails often, which "cannot be helped." Our only role is to grieve with those who face the "justice" of the law. However he questions the law that made the woman commit the crime that she is being hanged for:
A law sends this poor young thing to death--and it is right. But another law had placed her where she must commit her crime or starve with her child--and before God that law is responsible for both her crime and her ignominious death!
The priest continues, telling us the story of this girl. She was happily married with her child. Her husband was a hard worker and they were doing well. However, by "consent of a treacherous law" tragedy struck. One day the young husband was sent to sea. The wife was ignorant of this and searched everywhere for him. All of her possessions were sold for food. Becoming homeless she begged for food. Driven to desperation she stole a small piece of cloth to sell it for food for the child. However, she was spotted and reported. Even though everyone appealed for her case, the prosecuting officer declared that the law must be followed to the letter, and thus she has appeared before them all to be hanged.
This incident seems to question the "justice" of the legal system in England at the time, clearly pointing towards the injustice of such a legal system that can result in such a tragedy.
The episode you refer to is the saddest passage in the book.
The girl who is hanged is eighteen years old and has a young baby in her arms as she is brought to the gallows.
On the gallows, a priest tells the story of why she will be hanged. She and her husband lived happily until he was impressed into the navy (taken by force and made to serve -- this is how the British navy got its sailors at least up past the 1810s). At that point, she had no means of survival and eventually stole a piece of cloth worth a quarter of a cent.
She is convicted of the crime and sentenced to death. The man from whom she stole the cloth didn't realize she'd be executed and goes crazy and kills himself. Even so, she is executed after kissing and kissing her baby. She dies happy, though (sort of) because the priest promises to care for her baby.