In rural Iowa, the government unveils the Thompson Harmonizer, a new super-weapon, the result of the mysterious Project X. Although he has known nothing of it, Dr. Robert Stadler finds himself being credited with its creation and coerced to speak at the unveiling event. The weapon uses sound waves to destroy all living things within its radius. Dr. Floyd Ferris convinces him it is necessary to control an increasingly hysterical population. The stunned and horrified audience watches as a farmhouse and some goats are torn to shreds by the machine, but no one comments. Wesley Mouch declares it to be a wonderful instrument of peace.
Dagny calls Rearden to tell him she is alive. When she returns to the office, she learns that the government has passed the Railroad Unification Plan. Under it, all the railroads will pool profits and distribute them according to the mileage of track each railroad maintains. Taggart stands to make a huge profit because it owns the most track. Eddie is meeting with Cuffy Meigs, the head of the Unification Board, who is in charge of the new plan. Under his orders, trains are being rerouted and used as favors for influential friends.
Jim insists that Dagny appear on a radio show that night to reassure the public that she has not deserted and that the railroads are safe. She refuses. Later, Lillian visits her and tells her that her affair with Rearden will be exposed if she does no go on the air. She agrees to appear. When she speaks on the air, she proudly tells the public about her affair with Rearden and about the blackmail used to force him to sign over the rights to Rearden Metal. When she sees Rearden later that night, he finally confesses his love for her, although he already knows he has lost her to the man she truly loves. Her speech on the radio had been delivered in the past tense. When she tells him that her love’s name is John Galt, he is astonished. He suspects where she has been.
Jim Taggart is pleased with a deal he has just arranged. Argentina has been declared a People’s State, and d’Anconia Copper will be nationalized in less than a month. Knowing this in advance, Taggart transfers his investments from d’Anconia Copper to a new company, which will control its assets after the nationalization. Aware that he will make a fortune he feels a vague desire to celebrate. He hopes that his wife, Cherryl, will give him the admiration he seeks, but she is no longer in awe of him, having realized his true nature in the year since their wedding. She has learned the true story of the John Galt Line, and suspects some terrible evil in Jim. When he drinks a toast to destroying Francisco, she leaves in disgust.
Cherryl goes to see Dagny. She offers an apology for accusing Dagny of being the weak and evil one at Taggart. She knows now it was Dagny who created all the success and Jim who was wrong. Dagny accepts her apology and offers to help Cherryl. She talks about the evil of giving to the undeserving and about the importance of justice, and Cherryl finally feels she is understood.
Back at Jim’s apartment, Lillian Rearden appears. She has come to ask Jim to use his influence to prevent Rearden from divorcing her, but he cannot help her. In a final attempt to hurt Rearden, she has emotionless sex with Jim.