Joshua and Edward come out onto the verandah at dawn, where Joshua tells a story of the creation of the Earth and its moon by a "great spirit." Joshua admits, however, that his story is false. "Adam and Eve is true," he tells Edward.
Clive enters with Harry, discussing with him the last night's skirmish between British soldiers and African natives. He describes the soldiers setting a building on fire, thankful that none of the Brits were hurt. Clive then leaves for breakfast with Joshua, leaving Harry and Edward on the verandah. Edward, hurt that Harry has not been talking to him, threatens to tell Clive about their relationship. Harry begs Edward not to, and Edward promises not to let anyone know. Harry upsets Edward again when he tells Edward he will be departing soon, but the discussion ends quickly when Harry leaves as Ellen arrives to get Edward for breakfast. Betty enters when Edward refuses to come to breakfast. When she encounters more resistance from Edward, she threatens to tell his father. Edward remains stubborn, but goes inside.
Ellen stops Betty from following Edward inside to ask about her future as a governess with the family. Betty assures that Ellen will find a good husband and will become a dutiful mother. Ellen again proclaims her love for Betty, even claiming that she would "rather die" than leave Betty. Ellen goes inside, as Clive comes onto the verandah with Harry. When Betty tries to speak with Clive, he dismisses her sharply.
Clive tells Harry that he knows of Harry's romance with Betty, but he quickly assures Harry that their friendship cannot be destroyed by "the weaker sex." Clive then speaks of his pride in England, and lectures Harry on the importance of male comradeship. Harry, perhaps taking Clive's rhetoric the wrong way, "takes hold" of Clive. Clive draws away in disgust, attacking Harry's "perversion" as a "disease." Harry begs for Clive's understanding, but Clive demands that Harry marry Mrs. Saunders.
Clive summons Mrs. Saunders and steps aside to watch as Harry proposes to her. Mrs. Saunders dismisses Harry's request and turns to Clive, informing him that British soldiers have killed Joshua's parents in the recent skirmishes. Harry calls for Joshua. When Joshua arrives, Clive makes a weak attempt to comfort him by offering him the day off.
Betty arrives with Edward to find out what is happening as Joshua exits. Edward asks Harry what has happened, but Harry tells him to leave. Ellen comes out to help Harry and Betty get Edward inside. Finally, Clive insists that Edward go inside. Edward goes, along with Betty and Ellen, as Maud comes outside. Clive forces Maud to go back inside and calls for Ellen to come back outside. At Clive's nudging, Harry proposes to Ellen, and, although she never officially says yes, Clive urges them off to discuss their engagement. Joshua brings Clive a drink and tells Clive of Ellen's miscreant feelings for Betty. Clive cannot accept this and orders Joshua to leave.