If John Galt is the shadowy, mysterious figure in the book, Francisco is the mystery man hiding in plain sight. We see a lot of Francisco in the first two volumes of the book, and each time he pops us he just seems to confuse us (and the other characters) more. Francisco is like a puzzle, really: we get a lot of separate pieces about him, but we can't assemble the whole thing until Volume 3, which should be called the volume where we finally get some freaking answers. Like most of the major characters in the book, Francisco is closely tied to some of the book's major themes and trends. So we'll break his character down accordingly.
Let's just get this out of the way: Francisco is hot. He's witty, he's charming, and he's described as ridiculously good-looking. You can't help but love the guy, as both Hank and Dagny discover, even when we think he's a sleaze. See, Francisco cultivates a public image as a spoiled playboy who completely mismanages his business. Aside from philandering and wasting money, his favorite pastimes seem to be mocking and manipulating people:
Then, raising his voice, Francisco said suddenly, in the gay, loose, piercing tone of a man of complete irresponsibility, "You won't grant me that loan, Mr. Rearden? It puts me on a terrible spot. I must get the money – I must raise it tonight – I must raise it before the Stock Exchange opens in the morning, because, otherwise -." He did not have to continue because the little man with the mustache was clutching at his arm...."Is [..] there something wrong, Senor d'Anconia? I mean, on...on the Stock Exchange?" Francisco jerked his finger to his lips, with a frightened glance....The man was running across the room, pushing people out of his way, like a torpedo shot into the crowd. "Watch," said Francisco austerely, turning to Rearden. (184.108.40.2060-50)
This is one of the best examples of Francisco's roller-coaster nature. He's a stellar actor, able to change his tone at the drop of a hat, to assume and drop his "irresponsible" persona at will. And he seems to take pleasure in watching the ensuing panic over his Stock Exchange rumor, like he's a sort of vindictive puppetmaster. He repeatedly tells Hank and Dagny that "contradictions don't exist," but he seems like a giant and unsolvable one much of the time. The only thing that saves Francisco from coming off as a total jerk are the scenes where he drops his playboy persona to reveal his pain. He doesn't seem to take pleasure in his acting all the time.
"Don't you want to see me crawling before you? Tell me what form of it you'd like and I'll submit."
He moved so swiftly that she could not notice how he started; it only seemed to her that his first movement was a shudder. He came around the desk, he took her hand and raised it to his lips....
He dropped her hand...he smiled, not bothering to hide that his smile held suffering, anger, and tenderness. (18220.127.116.11-32)
Francisco's relationship with the two people featured in the above scenes, Hank and Dagny, are central to understanding his character and his role in the novel. We'll start off with his relationship with Hank Rearden.
"My Greatest Conquest"
As far as nicknames go, this one kind of stinks. But Francisco does refer to Hank as his greatest conquest, and it is an apt description. See, Francisco is basically like a double-agent. He's sort of the public face of Galt's strike, hiding in plain sight and acting as a strike recruiter. It would seem that Francisco has called dibs on both Hank and Dagny in terms of recruitment.
Francisco has a really unique role in the strike. Most of the strikers live in obscurity, toiling away at menial jobs or hiding in Atlantis, which they often call Galt's Gulch. Francisco is the only one who is super famous and living a big fat lie. And this role is very important for readers, since Francisco provides us with the most clues as to what is really going on in the first two volumes. Francisco is also our introduction to John Galt's values, and he paves the way for Galt's arrival in Volume 3.
So in targeting Hank for strike recruitment, Francisco gives us important insight into Galt's value system. Francisco gives us mini-speeches on various topics that Galt will later pull into a unified, if longwinded, whole in his radio address: hard work, business, money, America, sex and love, guilt and sacrifice. The novel needs Francisco in this role because otherwise the mystery would really be too mysterious. Confusing as Francisco is personally, we'd have no idea what was going on in the big picture (i.e., the strike) if Francisco weren't around.
In his chats with Hank, Francisco not only gives us insight into Galt's philosophy, he also plays a major role in developing and evolving Hank's character. The two form a meaningful friendship that reflects their shared values, much as the book's various romantic relationships also demonstrate this theme. Every action and every relationship has some sort of philosophical meaning.
Francisco smiled, a smile of greeting to a childhood friend on a summer morning, as if nothing else had ever been possible between them – and Rearden found himself smiling in answer, some part of him feeling an incredulous wonder, yet knowing that it was irresistibly right. (18.104.22.1689)
In his interactions with Hank, Francisco is linked to the strike, the book's overall philosophy, and important themes of sex, America, money, etc. But the above passage references the childhood theme, and it is this one that is really central to Francisco's character.
"By the woman I love"
Francisco is repeatedly tied into the theme of the importance of the past. His shared history with Dagny is one of the book's central plots.
Francisco and Dagny mirror one another in some very interesting ways. Both are frequently described in terms of youthfulness. Both grew up together and subsequently developed and shared the same values. Both have ancestors who inspire them. (Francisco's ancestor Sebastián d'Anconia provides an important counterpoint to Dagny's Nat Taggart.) And both come from wealth, which contrasts to characters like Hank and John, who started out poor. Francisco and Dagny are heirs who will inherit family businesses rather than build their own from scratch.
It's clear that Francisco has a hugely formative impact on Dagny's character. He is the part of her past most highly emphasized. Their love affair, with its disastrous end, greatly shapes Dagny as an adult and paves the way for her eventual romances with Hank and John. That's ironic, or funny in a dark sort of way, because poor Francisco has been doing the entire strike thing for the sake of his true love, Dagny. Through Francisco and Dagny we learn that while the past is an influential and a driving force in people's lives, it can't ever be repeated or recaptured.
Francisco ties his childhood to history by using the legend of Sebastián d'Anconia as a guiding principle. Again, Francisco shows us connections between personal values, childhood, and romantic love here:
"I am thinking of the fifteen years that Sebastián d'Anconia had to wait for the woman he loved: He did not know whether he would ever find her again, whether she would survive...whether she would wait for him. But he knew that she could not live through his battle and that he could not call her to him until it was won....But when he carried her across the threshold of his house, as the first Señora d'Anconia of a new world, he knew that the battle was won." (22.214.171.124)
Just rip our hearts out and stomp on them, Francisco. Unlike his triumphant ancestor, Francisco loses his true love to another man. Dagny and Francisco will always share a past, but they can't ever fully return to it:
It was a moment's view of a morning they would have reached, if her vision of life had been fulfilled, if they had both gone the way she had then been so certain of going....She stood looking at him, not in the name of the present, but as a salute to their past. (126.96.36.199)
"That was my love, that state of the human spirit, and I left you to fight for it, and I knew that if I were to lose you, it was still you that I would be winning with every year of the battle. But you see it now, don't you? You've seen this valley. It's the place we set out to reach as children, you and I. We've reached it." (188.8.131.52)
More than anyone else in the book, Francisco illustrates the idea of maintaining the values of childhood. The past isn't pain, but a cause for celebration for Francisco. Just as his love for Dagny isn't really lost, since she serves as an ideal for him, which he has won even if he doesn't physically have her anymore.