A Looters club meeting is going down in Washington.
Who is there: Evil scientist Dr. Ferris; Bad Banker Eugene Lawson; everyone's favorite politician Wesley Mouch; our bad seed James Taggart and his BFF Orren Boyle; a guy named Fred Kinnan; and a Mr. Thompson, none other than the Head of State of the USA.
They are all playing an exciting round of the blame game, griping at one another for various problems and complaining about how bad things are and how they need to do something.
Wesley is snippy; Mr. Thompson is chilling on the sidelines, letting everyone else duke it out; Orren is complaining; James and Eugene are spouting rhetoric and whining. Fred and Dr. Ferris seem to be the only ones willing to call everyone out and admit that they all just want power.
After complaining and talking in circles for a while, we learn that they are meeting about a specific directive that they want to pass.
Thompson tells Wesley to go ahead with the directive; no one will oppose it in Washington. He then leaves the meeting.
Wesley starts reading off Directive 10-289 to everyone, though they are familiar with it.
Directive 10-289 Rundown: The goal of this directive is to achieve "total stability."
Main points: No one is allowed to leave their current jobs, and the Unification Board will handle all employment issues. No business owner is allowed to quit and disappear. All patents and copyrights will be handed over to the government. No new inventions can go on the market. Everyone has to spend the same amount of money they did in the previous year, or the Basic Year. Everyone's salaries are now frozen.
Everyone starts talking quickly, trying to justify the Directive by saying that they'll achieve total stability and security with it.
They then run through the points that will cause potential problems.
Wesley says they have enough Emergency Power to cover passing this Directive, which is otherwise pretty unconstitutional.
We learn that Fred Kinnan runs the labor unions, and he demands to have his people stacked on the Unification Board.
They all say that some people will just have to be "sacrificed." No welfare for people like the researchers who will be out of jobs when they close down the laboratories (no new inventions, remember).
They are concerned that Hank won't cooperate and hand over his patents – the government can't legally force him to do it. But James promises that he has dirt on Hank and can make him do it.
The meeting concludes. We think this Directive thing merits a big doom: Doom!
Scene cut. Dagny wakes up early in her office after like three hours of sleep, yet she's still excited to start her day. Is this a Folger's Coffee commercial?
She is running through all the problems she has to tackle today when Francisco calls and asks if she's read the paper yet. She says no. He says get one.
Dagny reads about the Directive passing and is furious.
She marches into James's office and resigns on the spot, saying she won't work for a bunch of corrupt, immoral, power-mad morons.
Dagny bids Eddie a fond farewell and says she's going to her family's cabin near Woodstock to think things over and decide what to do.
Dagny calls Hank to tell him where she's going and he says he'll come get her. Hank has two weeks to hand over his Rearden Metal patent and he's not sure what will happen to him when he refuses. He wants Dagny safely out of harm's way.
Scene cut. Things are bad at Rearden Steel. Lots of good employees quit and run for it after the Directive passes. No one wants to be chained to his job like a slave.
The Wet Nurse is worried for Hank.
Everyone waits anxiously. Nobody is sure how much worse things will get now that the government has gone all crazy dictatorship on people.
Lillian randomly goes out of town, which is shifty.
Finally the deadline arrives and Ferris comes to collect Hank's patents.
Hank refuses and Ferris pulls out his secret weapon. He knows all about Hank's relationship with Dagny and will expose it, ruining Dagny's reputation, if Hank doesn't sign his patents over.
Hank is horrified and comes to a Major Epiphany, or realization.
The Epiphany: Hank realizes that he's made a huge mistake and has been complicit in the looters' awful moral system. He treated his relationship with Dagny as a shameful affair, which opened the door for people like Ferris to blackmail him. He should have been honest about his relationship from the start to avoid this sort of thing, and now he's screwed. Hank realizes that the looters prey on good people and use their morals against them.
Hank can't let Dagny's name be smeared. He now realizes that he's in love with Dagny and has done wrong by her. He has an epic flashback to the first time he saw Dagny. It was love at first sight, even though he didn't realize it then.
In his mind, Hank tells the Dagny he met a few years ago that he loves her. Then he signs the "Gift Certificate" handing over his Rearden Metal. Hanks thinks that he'll pay the price for his folly, but he won't let Dagny pay it for him.