Thomas Gradgrind, a wealthy, retired merchant in the industrial city of Coketown, England, devotes his life to a philosophy of rationalism, self-interest, and fact. He raises his oldest children, Louisa and Tom, according to this philosophy and never allows them to engage in fanciful or imaginative pursuits. He founds a school and charitably takes in one of the students, the kindly and imaginative Sissy Jupe, after the disappearance of her father, a circus entertainer.
As the Gradgrind children grow older, Tom becomes a dissipated, self-interested hedonist, and Louisa struggles with deep inner confusion, feeling as though she is missing something important in her life. Eventually Louisa marries Gradgrind’s friend Josiah Bounderby, a wealthy factory owner and banker more than twice her age. Bounderby continually trumpets his role as a self-made man who was abandoned in the gutter by his mother as an infant. Tom is apprenticed at the Bounderby bank, and Sissy remains at the Gradgrind home to care for the younger children.
In the meantime, an impoverished “Hand”—Dickens’s term for the lowest laborers in Coketown’s factories—named Stephen Blackpool struggles with his love for Rachael, another poor factory worker. He is unable to marry her because he is already married to a horrible, drunken woman who disappears for months and even years at a time. Stephen visits Bounderby to ask about a divorce but learns that only the wealthy can obtain them. Outside Bounderby’s home, he meets Mrs. Pegler, a strange old woman with an inexplicable devotion to Bounderby.
James Harthouse, a wealthy young sophisticate from London, arrives in Coketown to begin a political career as a disciple of Gradgrind, who is now a Member of Parliament. He immediately takes an interest in Louisa and decides to try to seduce her. With the unspoken aid of Mrs. Sparsit, a former aristocrat who has fallen on hard times and now works for Bounderby, he sets about trying to corrupt Louisa.
The Hands, exhorted by a crooked union spokesman named Slackbridge, try to form a union. Only Stephen refuses to join because he feels that a union strike would only increase tensions between employers and employees. He is cast out by the other Hands and fired by Bounderby when he refuses to spy on them. Louisa, impressed with Stephen’s integrity, visits him before he leaves Coketown and helps him with some money. Tom accompanies her and tells Stephen that if he waits outside the bank for several consecutive nights, help will come to him. Stephen does so, but no help arrives. Eventually he packs up and leaves Coketown, hoping to find agricultural work in the country. Not long after that, the bank is robbed, and the lone suspect is Stephen, the vanished Hand who was seen loitering outside the bank for several nights just before disappearing from the city.
Mrs. Sparsit witnesses Harthouse declaring his love for Louisa, and Louisa agrees to meet him in Coketown later that night. However, Louisa instead flees to her father’s house, where she miserably confides to Gradgrind that her upbringing has left her married to a man she does not love, disconnected from her feelings, deeply unhappy, and possibly in love with Harthouse. She collapses to the floor, and Gradgrind, struck dumb with self-reproach, begins to realize the imperfections in his philosophy of rational self-interest.
Sissy, who loves Louisa deeply, visits Harthouse and convinces him to leave Coketown forever. Bounderby, furious that his wife has left him, redoubles his efforts to capture Stephen. When Stephen tries to return to clear his good name, he falls into a mining pit called Old Hell Shaft. Rachael and Louisa discover him, but he dies soon after an emotional farewell to Rachael. Gradgrind and Louisa realize that Tom is really responsible for robbing the bank, and they arrange to sneak him out of England with the help of the circus performers with whom Sissy spent her early childhood. They are nearly successful, but are stopped by Bitzer, a young man who went to Gradgrind’s school and who embodies all the qualities of the detached rationalism that Gradgrind once espoused, but who now sees its limits. Sleary, the lisping circus proprietor, arranges for Tom to slip out of Bitzer’s grasp, and the young robber escapes from England after all.
Mrs. Sparsit, anxious to help Bounderby find the robbers, drags Mrs. Pegler—a known associate of Stephen Blackpool—in to see Bounderby, thinking Mrs. Pegler is a potential witness. Bounderby recoils, and it is revealed that Mrs. Pegler is really his loving mother, whom he has forbidden to visit him: Bounderby is not a self-made man after all. Angrily, Bounderby fires Mrs. Sparsit and sends her away to her hostile relatives. Five years later, he will die alone in the streets of Coketown. Gradgrind gives up his philosophy of fact and devotes his political power to helping the poor. Tom realizes the error of his ways but dies without ever seeing his family again. While Sissy marries and has a large and loving family, Louisa never again marries and never has children. Nevertheless, Louisa is loved by Sissy’s family and learns at last how to feel sympathy for her fellow human beings.