Gemma is sure she's being watched, and can't stop thinking about it through dinner and free period (because being watched = super creepy).
The great hall, where the girls relax, is decorated with carvings of mythical figures.
In one corner of the room, she spots Felicity and Pippa with other girls in a little fort made of scarves. They are gossiping (shocking).
So that she doesn't stand out (by standing in the middle of the room), Gemma takes a seat and reads her mother's diary. The entry she turns to is about Gemma being upset with her for not letting her go to London, and as she reads, Gemma tears up with grief.
Just then Ann appears and sits to knit. She tries to make small talk with Gemma about books, but Gemma (being quite quick and smart) sums up Ann's favorite slush novels of the poor, kind girl gaining fame and fortune and then calls them "poppycock."
Poor Ann is terribly upset because her hope is dashed by Gemma's harsh and honest summary.
Once Gemma realizes how hurtful she's been, she tries to ease Ann's discomfort by agreeing that maybe one day she can change her fate.
Pippa, the pretty one, comes over and invites Ann to share some chocolate in the scarf-tent with the other cool girls, which Gemma gets is meant to totally diss her.
Ann doesn't respond to Pippa's invitation until Gemma bucks up and tells her to go, smiling.
Trying to ignore the girls in the tent, Gemma flips through the diary and comes across a newspaper clipping about girls going missing or crazy at boarding schools—she thinks it is stupid and scandalous writing.
Suddenly Felicity screams and accuses Ann of stealing her new sapphire ring; Ann backs away, stuttering that she didn't take it.
A teacher, Miss Moore, walks over to the tent and Felicity tells her that she noticed her ring missing after Ann was in the tent.
Gemma wonders if the teacher will be easily sold on this bad performance because the two accusers are rich, but Miss Moore is smarter than they think and she proposes they look for the ring first.
No one finds it, of course, so she asks to see Ann's knitting basket, which is where the girls put it.
The trouble, as Gemma sees it, is that Ann has no hope—she is poor, has no family, and if she should get into trouble now, will have no future even as a governess. This game could ruin her life.
Off Miss Moore takes Ann to see Mrs. Nightwing, but Gemma's bad temper overtakes her good sense and she butts in, making up a great lie that Ann found the ring on the floor after prayers and wanted to return it to Felicity.
You probably already guessed that Felicity challenges her, but Gemma wins since she can't prove that they didn't see the ring on the floor.
Then the talk turns into a class war, where Felicity mentions her wealthy family (a famous admiral and a clothing designer in Paris) and challenges Gemma to see if she has enough money to buy an expensive dress in Paris as well.
Felicity leaves Ann out of the conversation about their upcoming "season," which is the time that young girls are shown off for dating and marriage proposals by going out to all the dances and parties.
Ann won't be going to any of these since she is not destined to marry, but instead to be a servant and nanny.
When the girls leave to go to bed, Ann doesn't say thank you to Gemma for saving her, which irritates Gemma.
When she questions Ann about it, Ann just blows it off, saying it's no use since no one can beat them at their game.
Just then, Felicity slips beside Gemma and says she must repay her for finding the ring and invites her to join her club, but Gemma wisely doubts this is a real invitation and tells the blonde to take a hike.
Then Gemma reconsiders and asks what she would have to do to join. Felicity says she will find Gemma and let her know soon enough.