Stephen leaves Bounderby's house depressed. He runs into Rachael and the old woman who comes to town to look at Bounderby.
The old woman wanted to get a look at Bounderby's new wife, but Louisa had not left the house all day. She settles for Stephen's second-hand description.
Stephen tells Rachael that he will no longer be working at the factory. Because he will now have a bad reputation with all the factory owners, he needs to leave town in order to find new work.
The three go to Stephen's for a cup of tea.
The old woman introduces herself as Mrs. Pegler.
She tells them about her wonderful (and now dead) husband, and then tells them that she had a son a long time ago, but has "lost him."
Mrs. Bounderby is announced, and Mrs. Pegler freaks out at the name and wants to be hidden.
Louisa and Tom come in, and Louisa for the first time gets a sense that the workers in Coketown are all individual people, not just a mass of production.
She feels bad for Stephen (she knows about the alcoholic wife, also) and offers him some traveling money. He rejects most of it, but takes a little to make her feel better.
Rachael reveals that the reason he won't join the union is that he made her a promise to "avoid trouble" and would never go back on his word.
Tom takes Stephen aside. He tells him that there might be a job at the bank – and to get it. Stephen should mill about in front of the bank a few nights in a row before he leaves. Stephen is weirded out by this, and by Tom's "breath like a flame of fire" (um, Satan much?), but he agrees.
Tom and Louisa leave. Mrs. Pegler leaves. Then Stephen and Rachael say a quick good-bye to each other, all full of love and strangled emotion.
Stephen goes to hang out in front of the bank, feeling self-conscious. Nothing happens. The next day, he goes to work, clears out his loom, and does the thing at the bank again.
The next morning he leaves town to find work elsewhere.