Henry Rearden remembers at the last minute that he promised to attend the anniversary party planned by his wife. Rushing home, he throws on his dinner clothes and walks into the gathering. The guests are mostly people Lillian assumes to be his friends but are not. Most are intellectuals who support government regulation over such things as literature and industry. They believe that such oversight will in fact lead to greater competition.

James and Dagny Taggart arrive together, though James is inconsequential next to his “famous” sister. Another surprise guest is Francisco d’Anconia, whom James confronts about the San Sebastian copper mines. D’Anconia tells James that he was simply doing what the rest of the world is preaching: he created jobs for the benefit of workers, not to produce any product, an argument that frustrates James. D’Anconia approaches Rearden; he accepted the invitation to the party just so that he could meet Rearden. Rearden unwillingly becomes interested in D’Anconia’s conversation. D’Anconia asks Rearden why he tolerates the leaches that feed off of his labors. Rearden replies that he does not mind it.

In response to a guest’s use of the phrase, “Who is John Galt?”, a woman claims to know someone who actually met Galt. She tells the party that John Galt discovered the lost city of Atlantis sunken in the middle of the Atlantic Ocean. Dagny, ever irritated by the mention of John Galt, dismisses the story, but Francisco responds to it.

Lillian is wearing the gift from her husband, a bracelet made from the first pouring of Rearden Metal. Thinking it tawdry, she has decorated herself with jewels and precious metals to provide a contrast to the cheap-looking green-blue metal. She says that she would gladly exchange it for a diamond necklace. Dagny approaches and takes a diamond bracelet off her own wrist and gives it to Lillian. At first shocked, Lillian eventually trades, placing the diamonds on her wrist but telling Dagny that she can have it back whenever she wants it. Dagny says nothing and walks away, feeling for the first time a stab of feminine vanity: she wants to be seen wearing the bracelet of Rearden Metal.

After the party, Rearden enters Lillian’s bedroom. He says nothing but looks at her, thinking that he has not actually desired her since the first week of their marriage. Since then, he has viewed her (as she has viewed herself) as an inanimate object that fulfills her husband’s physical needs. Rearden decides he does not want to touch her and leaves.