Eddie tells Dagny that McNamara, their contractor, quit and disappeared. Though inwardly despairing, Dagny promises that they will find another contractor for the Rio Norte Line. Leaving the office, Dagny walks the streets of New York and back to her apartment. She puts on Richard Halley’s Fourth Concerto and notices in the newspaper that Francisco d’Anconia is in town. He is involved in a sex scandal that is about to break wide open, and he says he has come to see the farce.

James Taggart hurries his mistress out of his apartment so that he can dress for the Board of Directors meeting where he intends to corral Dagny. Right before the meeting, however, he receives a call from Mexico informing him that, just as Dagny had warned, the Mexican government nationalized the railroad lines. It has also nationalized d’Anconia’s copper mines, which means that the Argentinean business man has lost millions.

At the board meeting, Taggart takes complete responsibility for Dagny's own foresighted actions. At the National Alliance of Railroads, the committee passes the Anti-Dog-Eat-Dog Rule, which ostensibly is a means of self-regulation in reducing competition among the railroad companies, but in fact puts Dan Conway’s Phoenix-Durango Line out of business. Dagny is furious with Taggart when he informs her. She talks personally with Dan Conway, urging him to fight it. Conway, however, is willing to go along with the majority vote and makes plans to retire. Dagny admits that she would have entered into competition with him in Colorado but had decided not to on the premise that there was business enough for both. He tells her to get the Rio Norte Line up and running as soon as possible because Wyatt Oil needs that line. Ellis Wyatt, who owns Wyatt Oil, comes to see Dagny and demands that since Taggart Transcontinental was the one responsible for eliminating Phoenix-Durango, she must provide transportation for him within nine months. If she does not, her company will fall along with his. She promises him that he will have his transportation within nine months. Dagny goes to Henry Rearden, telling him that the rail she had ordered for twelve months must now be delivered in nine. Rearden quietly assures her that he can deliver it. He tells her that he is impressed with her, as she is with him. Rearden tells her that it is people like them who will pull the world through these troubling times.