A dismayed Morrison announces Undershaft's arrival. A strong and gentle man, he appears slightly shy at finding himself in such a delicate situation. Failing to recognize Stephen, he greets Lomax and then Cusins as his son before realizing his error. He admits to a certain embarrassment. If he plays the part of the father, he will produce the effect of an "intrusive stranger"; if he plays the "discreet stranger," he will appear the "callous father." Britomart suggests that he is sincere and natural.

A painfully conscious pause follows. Lomax explodes into laughter when Barbara makes a funny face. Britomart threatens to throw him out. Barbara suggests that he fetch his concertina to entertain them. Undershaft then asks Barbara about her work at the Salvation Army. He notes that his firm could easily share the Army's motto: Blood and Fire. "My sort of blood cleanses: my sort of fire purifies" intones Undershaft.

When Barbara suggests that her father come visit the Army and sees its work firsthand, a scandalized Lomax protests crudely that salvation is not exactly Undershaft's line. Lomax tries, however, to be lenient toward Undershaft's work. He questions whether, in making war more destructive, his weapons facilitate war's quick end. Undershaft disagrees and states that war becomes more "fascinating" as it becomes more destructive. His morality and religion must have a place for cannons in it.

Stephen bristles at his father's sense of moral relativism. "There is only one true morality for every man" responds his father, "but every man has not the same true morality." Invoking Euripides, Cusins concurs. Stephen protests that some men are honest and others scoundrels all the same. Barbara counters that men are neither good nor bad but children of one Father.

Barbara and Undershaft strike a bargain. Undershaft will visit Barbara's shelter and Barbara his factory—each will attempt to convert the other to their cause.

Suddenly Britomart interrupts the discussion. If everyone is determined to talk about religion, they should do so properly. To everyone's amazement, an exasperated Britomart calls for prayers. Undershaft proposes a compromise, and says that Barbara should give a service in the drawing room. The family begins to move to the next room. A frustrated Britomart gladly sends Charles out but insists that Cusins stay. He responds that he could not bear to hear her make penance before the servants and departs. An offended Britomart retorts that she knows how Cusins has been systematically "humbugging her." She knows he has only joined the Army to worship to Barbara.