The woman dies at midnight, and they cover her and her family members' bodies with rags and leave them in the house, as they are not permitted Christian burial. As they are leaving, they hear footsteps coming toward the house and hide so as not to be detected coming from the taboo place. They hear the woman's sons knock on the door and declare they've gotten free. The Yankee and the king leave before the sons enter the house and discover the bodies. Arthur is troubled; he thinks the men must have escaped from the lord, and it is his knightly duty to capture them for him, regardless of their innocence of the crime for which they were imprisoned. The Yankee finally manages to change the subject when he sees a fire in the distance.
They proceed toward the fire in the darkness and come across a group of bodies hanging from the trees. They find the flames are coming from the manor house, and they see men and women being pursued by mobs. A storm comes, and they slip away shortly before dawn and find the hut of a charcoal burner a few miles away. The king tells the inhabitants to sell him the hut and leave, as he has just come from a house with smallpox, but they have already had the disease (as has the Yankee, who has probably been vaccinated).
They find out from the cottagers that the master of the house was found murdered, and a local family who had been treated poorly by the lord of late was rounded up and hanged by lord's retainers and a mob of locals. The prisoners had been left to burn in the fire, so no one thought to see if any had escaped. The king declares three did escape and that these must have murdered the lord and fired the house. The cottagers pale at this, and the Yankee surmises the three boys must have been some relation to them. The king insists that the charcoal burner go and raise the law on the escaped prisoners, and the Yankee goes along with the excuse of showing him which way they were heading. Once they are alone, he learns from the man that the escaped prisoners are his cousins.
The Yankee tells him not to turn them in, as their killing of the lord was a righteous deed. The man rejoices at hearing the Yankee say this, and he reveals that the peasants bore the lord no real love and participated in rounding up the suspected family only out of fear of being killed themselves by the lord's retainers. The Yankee takes heart at the man's response and is encouraged in his plan to modify the monarchy during the remainder of Arthur's reign and then abolish it and the aristocracy forever. The Yankee walks along and talks with the man, whose name is Marco, killing time to make it look like they have gone to the village to do their duty. He watches Marco's reactions to passersby of different castes. He is reverent to a monk, servile to a gentleman, familiar with freemen, and haughty to a slave (to the Yankee's disgust).
They run into a group of children who beg their help, and they follow them to find one of their playmates choking to death in a makeshift noose--they had been imitating their parents' exploits of the previous night. They come to the town, and the Yankee talks to many people, especially about wages and buying power. He finds his new coins in circulation. He invites the blacksmith, Dowley, to dinner at Marco's on Sunday and tells Marco he will cover the entire expense. He also buys him and his wife, Phyllis, a new set of clothes, telling them they are from Arthur, whom he calls Jones. He says Jones is a successful farmer and he is his bailiff, and he tells Marco that Jones has some rather odd quirks and tends to forget his station.
He sends Marco to invite the wheelwright and the mason, and he orders the supplies for the banquet. Marco and his wife are astonished at all the fine things the Yankee has bought them. The guests arrive, and Dowley boasts of his success in financial matters. He condescends to offer his hand to the king as an equal; the king takes it with a reluctance that is interpreted by the guests as embarrassment at a great honor. Phyllis brings out the new table and stools and tablecloth and food, and the guests are dazzled. The Yankee signals for the shop clerk to bring the bill. He reads it out, and the Yankee nonchalantly pays him four dollars, which includes a sizeable tip. The guests are all utterly astonished at the extravagance, and Dowley's pride is considerably wounded. The king retires to take a nap, and the Yankee discusses wages with Dowley and the other guests, who live in the tributary kingdom of King Bagdemagus.