James Taggart travels to Washington to join with others involved with the government to discuss the future course of the nation. Mr. Thompson, the Head of State, is also present. They decide to enact Directive 10-289 to theoretically stop the economical decline. There are several severe implications of the Directive: all workers must remain in their present positions, neither resigning nor being fired; all businesses and industries must remain in operation; all patents and copyrights will be turned over to the government; no new devices or products may be produced or sold; all businesses will sell the same amount of goods and services as they have been selling; all people will be required to spend the same amount of money as they had previously; all wages and prices will be frozen; all decisions will be made by the Unification Board. Fred Kinnian, the head of the Amalgamated Labor of America, expresses concern that if conditions are frozen during this national emergency, there will be no means of economic recovery. The others dismiss this thought. In addition, there will be no more research performed except by the State Science Institute because it is attached to the government. The one concern is Henry Rearden. James Taggart promises that he will deliver Rearden and his patent on Rearden Metal to the government.

At her office, Dagny receives a call from Francisco d’Anconia, who tells her to look at the papers. Eddie Willers brings in a copy and she sees the news about Directive 10-289. She is furious. She storms into James’s office, throws the newspaper in his face, and announces her resignation. She says she will not be a slave or a slave driver. She tells Eddie what she has done, and Eddie regrets that he cannot bring himself to resign as well. Dagny plans to retreat to her cabin in the Berkshires.

Laborers at Rearden Steel begin to resign in anticipation of the government takeover of the company. The Wet Nurse begs Rearden not to sign over his patent. Dr. Ferris arrives with the “gift certificate” that will transfer ownership of the patent. He expects Rearden to sign. When Rearden refuses, Dr. Ferris says his affair with Dagny Taggart is well known and will be published in such a way as to destroy the reputations of both. Rearden does not want to have Dagny’s name drawn through the mud for him, so he signs the gift certificate, transferring ownership of Rearden Metal to the government.