After the party, Rearden goes to see Dagny and asks her to forgive him for coming with Lillian. He tells her that what he said at Wyatt’s house was wrong. Dagny has always known this, and she tells him there is nothing to forgive. Meanwhile, Lillian discovers that Rearden has a mistress, but she does not know who it is.
Dr. Floyd Ferris of the State Science Institute comes to see Rearden and tells him that if he will not fill the order for Project X, he will be arrested for his illegal deal with Ken Dannager. Rearden refuses, and both Rearden and Dannager are indicted.
Eddie Willers eats lunch with his worker friend. He worries about Dagny. She knows that Rearden is strong enough to stand trial, but she is afraid for Dannager. She thinks he is ready to break and will be taken by the destroyer. He tells the worker Dagny is going to see Dannager tomorrow afternoon. When Dagny reaches Dannager’s office, she is too late. He is with a visitor, and when he finally meets with her, he has already decided to retire. He assures her that even if she had reached him before his last visitor, she would not have been able to prevent his retirement. His only real regret is that he is leaving Rearden behind at such a dangerous time.
Francisco comes to see Rearden at his mill. He asks Rearden why he is willing to accept condemnation for his virtues and sanction the actions of his enemies. Francisco tells Rearden his only sin is to agree that his self-interest is wrong. Rearden should have reaped incredible benefits from his invention, but instead he is punished for it. His hard work has only empowered the looters. Francisco asks Rearden what would he say if he saw Atlas holding the weight of the world but losing strength. Rearden asks what Francisco would tell him to do. “To shrug,” Francisco answers. Rearden begins to think he understands Francisco. Francisco is about to ask Rearden what makes him continue his work, when suddenly an alarm rings and they must rush to fix a broken furnace. They work with skill and speed, each knowing exactly what to do. Afterwards, Rearden asks if Francisco wishes to continue his question. Francisco tells him that he knows now exactly why Rearden remains with his mills.
At Thanksgiving dinner with his family, Rearden begins to see them in a new light. He finally confronts his brother Philip, who has sponged off of him for years without respecting him, and tells him he no longer cares what happens to him. He realizes that he has allowed his family to inflict suffering on him by accepting their condemnation. He will no longer offer them his sanction by accepting their moral code over his own.
At his trial, Rearden refuses to participate. He offers no defense because he refuses to honor the proceedings or pretend the trial has merit. He declares that he does not recognize the court’s right to control the sale of his metal. He explains that he lives for the sake of creation and profit and that he refuses to apologize for his success. The crowd bursts into applause behind him. The judges are frightened and apologetic. They impose a $5,000 fine on him but suspend the sentence.