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There were twenty-four dinner guests for Rachel's birthday, but most are unimportant. With a bit of wire, Franklin has made the Moonstone into a brooch for Rachel to wear. On Rachel's left at dinner is Mr. Candy, the Frizinghall doctor who entreats Rachel to let him take the diamond home and burn it in a scientific experiment. On Rachel's right is Mr. Murthwaite, an Indian explorer who does not speak much except to explain to Rachel that her life would be endangered in India if she brought the diamond there. The dinner conversation proceeds unusually awkwardly, as when Mr. Candy fails to comprehend that another guest, Mrs. Threadgall, speaks of her deceased husband. Through dinner, Godfrey speaks quietly of religion to a guest near him, and Franklin lets his foreign sides show through with whimsical, unreasonable comments to other guests. Franklin finally excuses himself to Mr. Candy by explaining that he has slept poorly since giving up tobacco.
After dinner, the Indians reappear outside with drums and juggling for the guests before Betteredge can dismiss them. Mr. Murthwaite startles the Indians by speaking to them in their own language, and they soon leave. Murthwaite explains to Franklin and Betteredge that the Indians are clearly high-caste Brahmins who are disguised as low-class jugglers. Murthwaite and Franklin agree that it is the Moonstone that has led them to sacrifice their caste. Murthwaite explains to Franklin that the Indians will undoubtedly kill for the Moonstone, which belongs in their idol. The men resolve to speak again with Lady Verinder the next day about disposing of the diamond and to let the dogs out in the yard overnight to guard the house.
After the dinner guests have left, Lady Verinder urges Rachel to lock up her diamond, but Rachel insists on keeping it in the Indian cabinet in her room for the evening. Godfrey and Franklin go up to bed together, and Godfrey urges the weary Franklin to take some brandy and water with him. Franklin orders the drink sent to his room instead.
Betteredge lies awake all night, but he hears no noise. The next morning, Penelope fetches him, screeching that the diamond is gone. Upstairs, Rachel confirms to him that "The Diamond is gone!" before retreating to her bedroom and locking the door. Franklin orders the house searched and tries to speak with Rachel, who refuses to see anyone. Franklin goes to Frizinghall to alert the police and order the arrest of the Indians.
Franklin returns to report that the Indians are innocent, as they had been held in jail all night for a minor offense. Superintendent Seegrave arrives and orders the servants questioned. The female servants indignantly crowd into Rachel's room, but Seegrave orders them downstairs, pointing out that they've already smeared the wet paint on the door. While Seegrave questions the household, Rachel refuses to see him, instead asking to see Franklin. The two meet outside, and Franklin seems astonished by their talk. Rachel returns in a tearful rage and still refuses to see Seegrave.
Seegrave questions Betteredge about the servants' characters, and Betteredge reveals nothing of Rosanna Spearman. Seegrave interviews them all again, and the servants become even more annoyed. Seegrave requests permission from Lady Verinder to search the servants' rooms, but she declines explaining it would be a betrayal. Betteredge steps in and offers his own keys, setting an example that the rest of the servants follow, though grudgingly.
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