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Spending the autumn at home rather than the Bellomont, Lily begins to save up her finances. She also takes interest in philanthropy after being introduced to charitable giving by Gerty Farish, something which will factor in more later in the novel. Meanwhile, Carry Fisher invites her on an outing to the Adirondack Mountains over Thanksgiving, to which Lily readily assents, enjoying the trip very much.
Upon returning, Lily receives a visit from Simon Rosedale, who invites her to the opera. He tells her that he knows of her investment successes, which angers Lily because she now knows that Gus Trenor has been telling people about her speculation. She goes to the opera in order to show off her beautiful looks, and she decides to forgive Trenor for telling people about her financial success. Nevertheless, Trenor confronts Lily and tells her that she does not spend enough time with him anymore; he thinks she is using him only to handle her finances. Trenor is very angry and blunt as he criticizes Lily, which scares her to some extent because she now knows that Trenor feels that she owes him something. Later on at the opera, Lily speaks with George Dorset, which reminds Lily that she still has the letters that Bertha Dorset wrote to Selden. Instead of using the letters against Bertha, Lily decides that she will forgive Bertha even though she ruined Lily's chances of marrying Gryce.
As the holiday season begins in New York, we learn that the autumn made for bad trading on Wall Street, leaving thousands of people poor. However, Rosedale has almost doubled his money after investing in the right stocks. He is beginning to look upon Lily as a potential bride.
Meanwhile, Lily is having troubles with her cousin, Grace Stepney. Both women are vying for the affection of Mrs. Peniston, and the resourceful Lily manages to deny Grace an invitation to one of Mrs. Peniston's big dinner parties. In turn, Grace tells Mrs. Peniston that Lily and Gus Trenor may be having an affair because they have been seen walking alone together in the park. Grace suspects that Lily has financial reasons for flirting with Trenor, and Grace further tells Mrs. Peniston that Lily plays cards for money and has accrued a gambling debt, news which infuriates Mrs. Peniston and makes her angry with Lily.
We see that Lily enjoys spending time with George Dorset, but she does not like being around Trenor, who is in an "unimaginable mood." Trenor married young and has had difficulty relating to women, making him unpredictable. He also lost a lot of money in the stock market over the preceding several months. Nevertheless, Lily decides to return to the Bellomont after the New Year, and she finds the house inhabited by a different brand of people, who do not play bridge and share little in common with one another. Lily tries to be a unifying force, but meets with resistance because the others seem unwilling to accept her leadership.
To establish the Bry family in the society, Mrs. Bry decides to put on a large fashion show, to be organized by Carry Fisher, in the Brys' conservatory. Lily is one of many people to participate in this "tableaux vivante"—an art form in which people wear costumes and pose in imitation of famous artistic works. (Tableaux vivants were sometimes part of social gatherings and can be thought of as art-inspired masquerade parties.) To prepare for the party Lily adorns herself in her finest dress. Her visage is described by attendees as both realistic and beautiful. At the show, Lily and Selden retreat to the garden briefly, where they sit and talk on a bench. Selden moves in and kisses Lily lightly, but Lily stresses that she cannot marry him for financial reasons. They return to the house together, where Trenor finds Lily and once again expresses his bitter feelings toward her for not spending more time with him.
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