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Book Two opens in Europe, where Selden is in Monte Carlo with Carry Fisher and some other less prominent people who appeared at the Bellomont. Also arriving in Monte Carlo are the Dorsets (George and Bertha), Ned Silverton, and Lily, who have been cruising on a yacht called the Sabrina all over the Mediterranean. Lily is looking her best, and she has been associating with old European friends, including Lady Skiddaw and the Crown Princess of Macedonia, as well as Lord Hubert.
Selden, anxious about seeing Lily after seeing her with Gus Trenor, learns from Carry that Bertha Dorset brought Lily along on the voyage to keep her husband, George, distracted while Bertha pursues her affair with the young Ned Silverton. However, Bertha is becoming jealous of Lily's success with persons of nobility, which leaves her with torn between wanting to kick Lily off the yacht and find other ways to hide her affair or letting Lily stay and putting up with Lily's success. To make things more complicated, George is beginning to take a real interest in Lily.
Selden decides to get away from that scene and returns to Nice, which will become his home base. However, later on he goes with Ned to see a show on the bay in Monte Carlo. He decides to leave in order to wander around thinking, but as he walks around the streets he sees Bertha and Ned walking together. Selden goes to the club, where he meets up with Lord Hubert, but he now knows that Lily is being used as a tool to keep George Dorset occupied while Bertha and Ned spend time together.
The next day, we see Lily by herself on the Sabrina. She feels a separation from her financial worries back home, which livens her spirits, but she realizes that she is running very low on money. Later on, she meets up with Carry Fisher, who tells Lily that a rumor is starting to spread that Lily and George are having an affair with one another after being seen together at the train station. Although Lily and George were waiting for Bertha to show up, Carry says Lily will "pay for it." We learn later that the rumors were started by Bertha as an excuse to kick Lily off the Sabrina.
As she goes around town, Lily meets George, who tells her that Bertha missed all the trains the previous night and left the two of them waiting as a result. Even though he is somewhat dense, Dorset has an emotional breakdown, knowing that his wife is having an affair with Silverton. He decides to get Selden to help legally end his marriage. Although Lily decides to forgive Bertha out of friendly sympathy, Bertha later lies and says that she and Ned were actually at the train station first, and did not wait for Lily and George. Bertha tells Lily that she is angry that Lily and George were seen together in public because of the rumors it will undoubtedly spur (most of which were started by Bertha).
Later on, Lily shares an awkward dinner with the Dorsets, which arouses suspicion because Ned does not appear and George avoids Lily. That night, Selden goes looking for Lily to speak with her, and he finds instead Lord Hubert and Mrs. Bry, who invite him to attend a dinner with the Duchess. Knowing Lily will be present, Selden decides to go, and when he finds Lily there he tells her to leave the yacht because he worries that people will gossip too much about Lily and George.
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