Stephen does not come, although many days pass. Sissy goes to sit with Rachael in the evenings to comfort her. Most of the town has turned against Stephen, believing that he is guilty, and even Rachael feels her mind slipping at times. Yet she will always trust Stephen. That never fails. Still, she worries that something horrible may have happened to Stephen. No one can find him. Sissy and Rachael agree to walk out in the country on Sunday morning.

As Rachael and Sissy walk back toward the Gradgrind home, they see Mrs. Sparsit pulling Mrs. Pegler toward Mr. Bounderby’s town home. The neighbors gather to watch and file into the Bounderby dining room. When Mr. Bounderby enters, he is thoroughly astonished. Mrs. Sparsit proudly presents the mysterious woman she has now caught, but instead of being thrilled, Mr. Bounderby roars at her with a “Why don’t you mind your own business, ma’am?”

Mrs. Pegler turns to Mr. Bounderby, calling him “My dear Josiah” and saying that Mrs. Sparsit threatened her into coming. She has kept her end of the bargain all these years, living quietly and secretly and never telling anyone that she is his mother. Yet she has watched him and is proud of him and loves him.

Mr. Gradgrind, who has been with Mr. Bounderby, begins to scold Mrs. Pegler for her horrible treatment of her son, leaving him in the gutter and then with his drunken grandmother. Mrs. Pegler, however, soon sets him straight. Her mother died before Mr. Bounderby was even born, and she brought her son up with all the advantages she could possibly give him even after his father died. She had a little store of her own, and now her son gives her more than enough money every year for her to live comfortably on the condition that she remain out of the picture.

The bystanders are shocked, and Mr. Bounderby has been turning redder and redder. He ushers them all out of his house. Rachael and Sissy leave, too. Mrs. Pegler remains with her son for the evening. Mr. Gradgrind thinks that Mrs. Pegler’s true identity will work in Stephen’s favor. Louisa has a horrible suspicion about the robbery, as does Sissy, and no one knows why Stephen has not returned.