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Hugo awakes in a drunken daze and declaims: "The days grow hot, O Babylon! 'Tis cool beneath thy villow trees." He automatically denounces Parritt as a stool pigeon, demands a drink, and falls asleep. Larry notes Parritt's violent reaction suspiciously. He goes on to introduce the saloon's residents: Lewis and Wetjoen, washed-up heroes of the Boer War, ex-Boer War correspondent Jimmy Tomorrow, Ed Mosher, a former circus performer and Harry Hope's brother-in-law, his friend Pat McGloin, a police lieutenant ruined by a graft scandal, and Joe Mott, the one-time manager of a colored gambling house. When Larry neglects to introduce him, Willie rouses himself with mocking suavity, telling of his days at Harvard Law School and the ruin of his father. With his father's scandal, he was accepted at Harvard with the cordiality Longfellow would have shown a dancing black woman on Brattle Street. When Parritt refuses to buy him a drink, Willie sings a folk ballad about Jack the sailor and his adventures with a woman of questionable repute.
Willie's raps soon wake the group. Willie cowers in terror when Hope and Rocky threaten to send him to his room. Hope crankily complains of his guests, insisting that he will make them pay up. What follows is a chorus of each guest's fond reminiscences and pipe dreams. Wetjoen and Lewis jocularly recall their wartime days and imagine their happy return home. Jimmy joins them and pledges to clean himself up and get himself a job tomorrow. Joe Mott remembers his gambling house and dreams of a new venture. Notably, Joe ran his business as a white man. In an exchange with Lewis and Wetjoen, he explains how he takes nigger to be the gravest insult. Mosher announces his plans to return to the circus. McGloin speaks of his imminent reinstatement—everyone knew the scandal was a hoax—and Willie offers to take the case. It will certainly make his new legal career.
As Hope notes, the guests have nursed these pipe dreams for some time. Hope himself suffers from his own illusions. The memory of dear dead wife Bess automatically makes him sentimental. With her death twenty years ago, he renounced his plan to run for alderman and has not left the bar since. He is sure, however, that he will venture out tomorrow. Comically, Mosher and McGloin attempt to exploit his sentimentality over Bess for a free drink. Only Larry and Parritt remain outside this exchange of reminiscences and pipe dreams, Parritt attempting to insinuate himself into Harry's confidence. Larry observes his friends with sardonic pity ("The tomorrow movement is a sad and beautiful thing"). For whatever reason, their pipe dreams bother him immensely today, threatening to drive him mad.
As noted above, the residents of the saloon uniformly appear determined by the "essential action" of the pipe dream. The name of the saloon's owner, "Hope," is especially appropriate in this respect. Here the pipe dream primarily involves a fond wallowing in the past and the consequent fantasy of a future that might return them to their glory, with a future endlessly deferred. As Larry notes, here "tomorrow is yesterday." In interweaving these stories, O'Neill reverts to an earlier moment in his development, spinning an all-but-plotless play primarily in the confessional mode. These fond, nostalgic, and somewhat desperate confessions, though at times solipsistic, most often appeal to the group, and the drinking partner, for collusion in their maintenance. The pity of the group's broken, regret-filled lies threatens madness. Thus, Hope's allusion to delirium tremens and Larry's outburst on being driven insane, a remark Hope quickly rebukes.
As the continuous references to the saloon as morgue suggest, the pipe dreamers suffer a sort of "living death." Thus Willie's song evokes a raising of the dead in a graveyard. This living death is analogous to the residents' drunken slumber, their persistent delusions and anesthetic relation to the world. The poem Larry quotes to Parritt, Heine's ode to morphine, makes this similitude clear, posing a "mirror likeness between those two shining, youthfully-fledged figures" of sleep and death. As we will see, the arrival of an even worse death, a brutal "waking death," is imminent. Willie's three raps also prefigure the coming of their anxiously awaited guest, Hickey, who would promise the group a respite from their misery. His new gospel of salvation, demanding the demystification of the pipe dream, will condemn them to a hopeless existence and the ugly reality of their desires. The group's good-natured, intimate relations of sociability break down, leaving them as automata who drink mechanically to benumb themselves to the world. Thus the play already aligns Hickey with Death: "Would that Hickey or Death would come" cries Willie.
The presence of death on both sides of Willie's knock points toward the permeability of boundaries such as life and death, sleep and waking life, dream and material reality in this play. A metaphor for this principle of permeability appears here with the image of the tide pool. Note that the saloon's name is "The Bottom of the Sea Rathskeller." Again, Harry Hope's is a world that, as Travis Bogard notes, "barely holds to the fringes of consciousness." It is not for nothing that the players first appear passing in and out of drunken slumber: this movement marks the permeability between the pipe dream and waking life in the play. The pale light that filters through the dirty windows from the street only barely separates day from night. Voices continually drop out and re-emerge in these half-comatose exchanges. One of these voices that distinguishes itself here is Hugo's. Hugo is the foreigner, the "alien radical" at once point compared to the Robespierre of the Reign of Terror. His heavily accented voice raucously interrupts the group's dialogue with its at once comic, longing, and increasingly horrifying automatism: Hugo yearns for Babylon, curses and threatens those around him, sings the Carmagnole, and demands a drink. As we will see, Hugo will come to serve as a sort of mirror to the residents, one that de-familiarizes their image. In Hugo, the pipe dreamer becomes a creature of desperate yearning, a cruel tyrant, as well as a broken wind-up doll.
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