Some men are having a business meeting in a fancy skyscraper club that looks like a root cellar, for some reason. Perhaps the cave-like atmosphere is in this season?
The men are James Taggart, ineffective steel mogul Orren Boyle, Paul Larkin (last seen at Hank Rearden's pad), and Wesley Mouch, who has an unfortunate last name.
They are all discussing, in a very roundabout way, What Is Wrong With America.
Basically, all these guys sound like they've been reading a lot of Karl Marx. They keep saying things like capitalism is bad, monopolies are evil, "anti-social" attitudes are bad, and progressive social policy is super cool. We gather from their discussion that they're communists.
Historical Context Lesson Time! When this book was published in 1957 the Cold War was still going strong. In the Cold War you basically had democratic, capitalist America pitted against the communist Soviet Union. This book never comes out and makes a direct reference to the Cold War, since it's more of an alternate universe America, but readers at the time would have recognized the stuff Taggart and Co. are saying as communist ideas. A lot of Americans at the time thought that the Soviet Union was basically hell on earth, so they would have seen Taggart and Co. as pretty evil.
Back to the Super Secret Communist Club Meeting.
This is the vaguest meeting ever. The guys all hint around about "preserving the steel industry" and suggest that they are going to force Hank Rearden to cooperate with them and their communist ways. Doom! (We think, at least. This is all really vague and weird.)
Also, everyone pressures Paul Larkin to promise his "friendship" to them in the future. There is clearly some shady, backroom business dealing going on here. Favors are being traded and whatnot.
The group then starts discussing Orren Boyle's trip to Mexico. Mexico is a "People's State" now, which basically means that it's communist. (Like the "People's Republic of China" today.)
Orren asks James what's up with the terrible train service on the Taggart line in Mexico.
James is shocked to find out that Taggart Transcontinental is only running one junky old train a day in Mexico.
We learn that Wesley Mouch works for Hank Rearden as his Washington connection – sort of like a lobbyist.
The club meeting adjourns and James runs off to yell at his sister about the train in Mexico.
It's flashback time! We learn that Dagny, at age nine, decided she was going to run Taggart Transcontinental one day.
Dagny was bored as a child since she was so much smarter than everyone around her and had big dreams.
She told Eddie about her plans for the future at age twelve, but at age fifteen she realized that women didn't usually run gigantic businesses. That bothered her for about two seconds, then she decided that she'd run her railroad anyway.
Dagny started working for the railroad as a night operator at sixteen, while James went to work for the public relations department.
Dagny studied engineering in college, which was also unusual for a girl at the time.
We learn that Dagny skyrocketed up the ranks of Taggart Transcontinental, since she was so much smarter than everyone else. She couldn't figure out why all the rest were such talentless hacks, and found herself constantly facing off against inept morons.
More flashback info: we learn that the shortcomings of the San Sebastián line are mainly the fault of a man named Francisco d'Anconia, an international playboy/heir. He runs a giant copper company out of Argentina.
Turns out Francisco opened up the San Sebastián mine in Mexico and James decided, for some inexplicable reason, to build a line from Texas to the mines. The line was a terrible idea and cost Taggart Transcontinental tons of money.
Apparently, politicians thought the project would be great, since it would help diplomatic relations with Mexico. Dagny couldn't care less about diplomacy; she's more concerned with how much money they'll lose building the thing.
Ironically, the project wouldn't have been finished at all if Dagny hadn't taken over.
Dagny gave Jim an ultimatum when she was 32: he could either make her VP, or she'd quit. So James promoted her, even though women weren't normally VPs of anything, and Dagny got the San Sebastián line finished.
Back to the present! James confronts Dagny and we learn that Dagny deliberately left one crappy train running in Mexico. She knows the government there is about to nationalize (take over) the San Sebastián line, so she didn't want to leave them anything worth having, or stealing.
James is appalled – he thinks that's mean. Poor Mexico needs help. But James is also freaked out by the idea of losing money. (Apparently, he wants to have his cake and eat it too.)
We learn that Dagny knows the playboy Francisco and used to be friends with him. Interesting.
Dagny leaves her office after her latest spat with James.
On the way out of the building, Dagny stops to say hi to the massive statue of Nathaniel Taggart, her ancestor and the founder of Taggart Transcontinental.
The statue is in the main concourse, the train station terminal on the first floor of the Taggart building (sort of like a fictionalized Grand Central).
Turns out that Nat Taggart did all sorts of hardcore stuff, like possibly murdering a state legislator who was hassling him and offering up his wife as security on a loan. (She agreed to it, by the way.)
Dagny thinks that Nat Taggart was fierce and wants to be just like him.
After paying homage to Nat, Dagny stops by a newsstand to chat with her buddy, an old man who runs the newsstand and collects cigarettes as a hobby.
Old Newsstand Man is filled with doom and dread. He gripes about how the world is going to hell in a handbasket, and he and Dagny agree that they don't like the creepy "Who is John Galt?" question.
Scene break! Eddie is talking to a mystery man in the Taggart Transcontinental cafeteria. (We'll call him Mystery Worker, since the dude apparently works for the railroad.)
We can't hear anything that Mystery Worker says to Eddie, which is...mysterious. We only hear Eddie's side of the conversation.
Eddie is a little Chatty Cathy and tells the Mystery Worker all about the problems with the Rio Norte Line, and how their contractor (a certain McNamara) is their last hope.
Eddie then mentions Dagny, and the Mystery Worker apparently asks a question about her, which turns him into Mystery Stalker. He wants to know what Dagny does on her time off. Creepy!
Eddie, clearly not having watched enough Lifetime movies, spills the beans and tells Mystery Worker that Dagny is a bit antisocial. She works her butt off all day then goes home and listens to Richard Halley records – the only thing she loves aside from the railroad.