Betteredge arrives back at the house, and Penelope reports to him that Rosanna has acted strangely happy and sad since returning from the Shivering Sands. Penelope guesses that she has fallen in love with Franklin Blake at first sight.
Franklin returns from Frizinghall and reports that nothing unusual has happened to him. Since Betteredge does not serve at dinner in the household, he hears only reports from lower servants that Rachel and Franklin were charmed by each other.
Betteredge begins to lock up for the night. Standing outside, he sees a man's shadow in the moonlight from the side of the house. Betteredge hears several pairs of feet running away before he can surprise them. He patrols the grounds and finds no one, but a small bottle of black, "thick sweet-smelling liquor." Remembering Penelope's report of the Indians putting black liquid into the English boy's hand, Betteredge assumes the intruders were the Indians.
The next morning, Betteredge shows the vial of black liquid to Franklin, who agrees it belonged to the Indians and suggests that they use it for clairvoyance.
In the next several days, Rachel and Franklin amuse themselves by decoratively painting the door to Rachel's room with a smelly paint substance that Franklin had invented.
By the first week in June, the servants wonder to themselves if Franklin and Rachel will become engaged. Betteredge narrates a description of Rachel as small, dark-haired, stubborn, and independent. Even as a child, she never lied and never told on a friend. Betteredge disagrees with the other servants and thinks that Rachel will marry her cousin Godfrey Ablewhite. Godfrey is rich, respectable, tall, and good-looking. He is an "accomplished philanthropist" and public speaker, who leads many Ladies' Charities.
Franklin continues to try to win Rachel's heart and has even given up smoking at her request, though he sleeps badly without his habit. His chances seem diminished, though, when, on June 16, a foreign gentleman visits him at the Verinder house about business— Betteredge presumes business of a woman or a debt. The servants overhear Rachel reprimanding Franklin for his conduct in Europe, though they are painting happily again in several days.
Rosanna has been rude to Rachel and has been seen snooping around Franklin Blake. Betteredge has covered for Rosanna's strange behavior by telling Lady Verinder that Rosanna is sick. Lady Verinder sends for the doctor on 19 June and suggests she be moved to a farm inland, but Rosanna pleads to be allowed to stay.
On the morning of Rachel's birthday, Betteredge and Franklin consult about the Moonstone. Franklin is indecisive, but Betteredge reassures him that he must bring the diamond for Rachel and suggests that he ride with Godfrey Ablewhite and Godfrey's sisters on the way back from the bank.
At three o'clock, Franklin and Rachel finish painting her door, and Franklin leaves for Frizinghall. When Franklin returns with the Ablewhites, Betteredge notices that Godfrey, like Franklin earlier, seems to be out of sorts. Penelope is sent to tell Rachel that Franklin wants to see her.
Several minutes later, Betteredge hears a scream from the drawing room and enters to find Rachel holding the diamond, with everyone around her fascinated. Franklin is not fascinated, as he looks anxiously out the window, and nor is Lady Verinder, who is busy reading Herncastle's will. Lady Verinder frowns and tells Betteredge to come to her room in a half hour. Rachel shows Betteredge the diamond, which seemed "a yellow deep that drew your eyes into it so that they saw nothing else." Betteredge becomes as excited as everyone else, except Godfrey, who sensibly proclaims the diamond "mere carbon."
Betterege reports to Lady Verinder, who wants to consult with him about Herncastle's possible motives in leaving the diamond to Rachel. Soon afterwards he hears from Penelope that Godfrey Ablewhite has proposed to Rachel and that Rachel has refused him. Betteredge goes into the hall to meet the dinner guests.
In these chapters, Betteredge's narrative skims over a time period of several weeks, stopping only to report important events. One of the characteristics of a detective novel is that nearly every element of the narrative will relate to the investigation and resolution of the crime. Details which seem out of place now—such as Rachel's and Franklin's painting of Rachel's bedroom door—will be seen to bear upon events related to the crime. This rule of inclusion also includes descriptive detail. When Betteredge describes Rachel, his seemingly unremarkable anecdote of her refusal as a child to tell on another playmate will turn out to work as Rachel's main function in the novel.
In these chapters, the romantic interest between Franklin and Rachel is set up. Collins is somewhat remarkable as a Victorian novelist in that his heroes and heroines (as well as his minor characters) are not unrealistically idealized. Franklin is shown to have his character flaws—specifically, his inability to put forth a unified character. Betteredge repeatedly emphasizes the contradictoriness of Franklin's various (European) sides and his ineffectual "dabbling in everything." Betteredge's description of Rachel certainly gives an impression of her beauty. Betteredge's dissatisfactions with Rachel's various features are clearly not meant to be taken seriously by us, yet the entire effect is still to acknowledge that beauty is evaluated individually. Thus Rachel is not presented as the unquestionably gorgeous heroine of other Victorian novels.
No single narrator of The Moonstone is meant to be respected as an absolute authority. Yet some narrators are meant to be read more seriously than others. With the narrative of Betteredge (and Miss Clack, the second narrator), we can see some distance between the author and the narrator. In other words, the narrator is himself being satirized to some extent by the larger figure of the author. When Betteredge expresses his opinions that Godfrey Ablewhite will win Rachel's heart over Franklin Blake, or that Rosanna's love for Franklin is laughable, we are not meant to agree with him. Elements of the text signal this to us, such as specific details like Ablewhite's birthday verses for Rachel, which are shown to be laughable in the eyes of other characters. In addition, in this instance, Betteredge's daughter Penelope emerges as a figure of narrative authority—when Betteredge relates their disagreements, we realize that Penelope's opinions are valid.
Already in these early chapters, hallucinogenic drugs and drugged states of mind emerge as a recurring motif. The bottle of black liquid dropped by the three Indians that Betteredge finds is meant to evoke opium or another substance used to achieve an altered state of mind (as with the young English boy's entranced, clairvoyant state). The motif occurs even in the symbol of Rachel's decorated door paneling. The painting itself could be said to be of the "grotesque" genre, in which plants blend into animals in imagery that is simultaneously realistic and unrealistic. Thus the imagery itself pictures an altered state from reality. Additionally, Betteredge, evoking a drugged state of mind, remarks "you felt [the images] unpleasantly in your head for hours after you had done with the pleasure of looking at them."