Phoebe awakens in the Pyncheon house. She has already brightened the dingy home with her presence, and she immediately begins redecorating her room, making it more comfortable and easier to live in. Hepzibah tells her that she cannot stay, because the master of the house will be returning soon. When Phoebe naïvely asks if she means Judge Pyncheon, Hepzibah is incensed and angrily declares that the Judge will never cross her threshold. The master of the house, she tells Phoebe, is Clifford, Hepzibah’s brother and Phoebe’s cousin. She shows Phoebe a picture, and Phoebe remarks that he has a beautiful face. Phoebe is undaunted, however, by Hepzibah’s instruction that she leave. Buoyed by her cheery nature and excellent domestic skills, she quickly persuades Hepzibah to let her remain at the house for at least a few weeks. She then makes breakfast for Hepzibah. Phoebe shows herself to be particularly well suited to running the shop. By the end of the day she has sold most of the stock and is making plans to improve the store.

Hepzibah is thrilled with Phoebe’s cheerfulness and her skills, and mourns the fact that Phoebe’s humble background prevents her from being a lady. The novel notes that while Phoebe is, in fact, from a humble background, her grace and charm transcend such silly social distinctions. Hepzibah asks Uncle Venner if he has ever seen a Pyncheon like Phoebe before, and he replies that he has never had the good luck of seeing anybody so angelic before. As business slows down, Hepzibah gives Phoebe a tour of the house, showing her where Colonel Pyncheon died and claiming that if Phoebe could only find the treasure Hepzibah is convinced is buried in the vicinity, they would all be wealthy. Hepzibah also shows Phoebe a harpsichord played by Phoebe’s great-great-grand-aunt, a woman named Alice Pyncheon, whose ghost is believed to still haunt the house. Hepzibah makes sure to tell Phoebe about their lodger, Holgrave, who she says is something of a revolutionary with strange acquaintances. She adds, however, that Holgrave is charming. When Phoebe asks how Hepzibah can permit such a lawless figure to live in her house, her cousin replies that the young man seems to live by his own laws.

Phoebe heads out into the garden to see if she can help rejuvenate the plants. She finds a garden in an advanced state of decay, with an old summerhouse slowly crumbling in the center of it. She discovers a rooster, two hens, and a chick, and she starts to feed and take care of them. The chickens, we are told, are descendants of an old, noble race of birds once bred by the Pyncheons. When the family first began breeding them, the chickens were said to be the size of turkeys. The chickens have gotten smaller over time, but even though their line is increasingly feeble and diminished, it continues. As Phoebe feeds the chickens, she is surprised by Holgrave, who, unbeknownst to her, had been tending to another part of the garden. Holgrave shows some surprise at the way the chickens flock to and acknowledge Phoebe. He tells her that he feeds the birds constantly, but they have always ignored him. Holgrave says the chickens must like Phoebe because they recognize that she is part of the Pyncheon family.

As a result of Hepzibah’s warnings, Phoebe is initially cautious around Holgrave, but he is a compelling figure, and she is soon drawn in. Phoebe thinks very little of daguerreotypes and says that all of their figures seem overly stern, but Holgrave responds that his portraits reveal more than a painted picture does. Holgrave says that his daguerreotypes, rather than being simple pictures, can reveal the true nature of the individual depicted. He shows her a picture of a man that he says shows the stern, unforgiving character lurking beneath the subject’s smiling exterior. Phoebe thinks the portrait is that of old Colonel Pyncheon. Holgrave asks Phoebe to tend to the chickens and the flowers on his behalf, and she agrees. When Phoebe returns inside, she finds Hepzibah sitting, rather mysteriously, all by herself. Phoebe sits down with her and is troubled by the nagging feeling that there is another presence in the room. She thinks she hears Hepzibah speaking to someone and fancies she hears a low murmuring in reply, whispered phrases that sound almost like human speech.

Phoebe brings a breath of fresh air into the stuffy Pyncheon house, and the optimistic, bright, even pastoral vocabulary that surrounds every description of Phoebe seems to reflect her stalwart country values. Phoebe’s first action upon waking up is to make her room as cheery and airy as possible—to begin reshaping the house. She breathes new life into the shop as well, and her beauty, youth, and inherent cheerfulness transform a failing Pyncheon experiment into a commercial success; the store is almost unrecognizable under her command. By and large, Hepzibah seems to be swayed by Phoebe’s upbeat demeanor, but it is interesting to note that the she still harbors an old attachment to bloodline. She worries aloud to Uncle Venner that Phoebe is unlike any Pyncheon she has ever seen. Phoebe is, in fact, a Pyncheon, but she is not of the aristocratic strain, and though her modest country background brings a badly needed change to the house, she is allowed to begin making those changes only because of her family name.

The ramifications of the close-minded, accursed Pyncheon way of life are artfully illustrated by the description of the chickens, who are obvious symbols for the Pyncheon family. Like the Pyncheons, the chickens were once a large, hardy breed, but like the family that breeds them, they have suffered with time, shrinking in size. By their very nature, too, the chickens, whose clucking and fighting is more evocative of petty gossip than of serious discussion, seem like a rather unflattering metaphor for a ruined family. Nonetheless, the chickens also exhibit a rather admirable dignity, as their lineage has endured in the face of poor health and seeming neglect. As the narrator tells us, “So wise as well as antique was their aspect, as to give color to the idea, not merely that they were the descendants of a time-honored race, but that they had existed, in their individual capacity, ever since the House of the Seven Gables was founded, and were somehow mixed up with its destiny.” Not only do the chickens share the Pyncheons’ declining fortunes, but they are inextricably linked to the fate of the family’s house as well.

There are inherent contradictions in Holgrave’s character, too, and his conversation with Phoebe in the garden reveals that he is a polarizing figure, one who, for better or worse, disrupts the world around him. Holgrave’s politics are said to be wild and dangerous, but it is telling that Hepzibah, who seems to have such an austere conception of society, lets him live in her house; even her usual convictions seem to be overturned by this magnetic figure. In the garden, Phoebe’s hardy country goodness falls prey to Holgrave’s charm, making this figure, a man she would normally avoid, become increasingly compelling. Yet the real testament to how contradictory a figure Holgrave is comes when he shows Phoebe one of his daguerreotypes. The man in the daguerreotype, who strongly resembles Colonel Pyncheon, should be one of great pomp and respectability. Although he wears a smile, there is nothing amicable about this particular daguerreotype. Granted, the photograph’s subject, who in later chapters will prove to be Judge Pyncheon, supplies his own contradictions and hidden meanings, but it is noteworthy that these mysteries are first revealed by Holgrave.