In the office of Kenge and Carboy, Mr. Guppy feels jealous of Richard, who has established himself in Mr. Kenge’s rooms. In fact, Mr. Guppy is paranoid of everyone. Another clerk by the name of Young Smallweed (called “Chick”) is only fifteen but knows the ways of the world. A man named Jobling comes to see Mr. Guppy, and they go out to dinner with Smallweed. It is evident that Smallweed is well known and respected. Jobling complains of his job situation, and Mr. Guppy tells him of Mr. Krook, who might be able to rent Nemo’s old chambers to him. They go to see Mr. Krook, who is (as always) not quite sober. Mr. Jobling agrees to take the room. Mr. Guppy introduces Mr. Jobling to the Snagbys, who offer him a position. Mr. Jobling moves into his new quarters and becomes the subject of speculation that he will come into Mr. Krook’s fortune.

The Smallweed family is composed of the grandfather; his wife; and their twin grandchildren, Judy and Bart (the clerk in Kenge and Carboy). Grandfather Smallweed does nothing but sit in his chair before the fire and torment his wife. Charley, the young orphan girl who is taking care of her small brother and sister, is their servant. Judy has never known a real childhood; she has never had friends her own age or even learned how to laugh. Mr. George, a large man who evidently was once a trooper (soldier) arrives to claim his bimonthly pipe. As he smokes his pipe, he talks with Grandfather Smallweed and shakes the old man up, at his request. George asks Grandfather Smallweed if the man in the city (whose name begins with D) would foreclose on him if he was one day late with his loan payment, and the old man agrees that he might. George discusses another man who did not pay his loan, a Captain Hawdon, who either fell overboard or jumped to avoid the consequences.

George returns to his business after having stopped to attend the theater. He runs a shooting gallery, where there is also an occasional boxing match. Phil, who works for him, is lame but strong; he must lean against the wall in order to move about. George gives Phil a few orders and then retires to bed.

Mr. Tulkinghorn questions Mr. Snagsby about Jo’s story concerning the mysterious lady. Mr. Snagsby notices that there is another man, named Mr. Bucket, in the room. The three men go to Tom-All-Alone to find Jo. They encounter two women with a baby; they discuss the desperate situation that would cause a mother to be glad her child is dead so it does not have to endure the cruel world.

When Jo arrives, Mr. Tulkinghorn takes him back to his office and questions him. Jo begins to describe the lady when all of a sudden a woman, dressed in servant’s clothes and wearing a veil, appears in the room. Jo says this is not the woman he met. The woman removes her veil and reveals herself to be Hortense, the former maid of Lady Dedlock. Mr. Tulkinghorn concludes that the woman who had Jo guide her to Nemo’s grave must have been Lady Dedlock.