Beauty's friend and companion, Captain, soon leaves Jerry's, and Beauty explains how it happened: Captain and Jerry were coming home over London Bridge when another empty carriage came toward them, pulled by two huge horses. The man driving the horses was whipping them hard, and they were speeding across the bridge, out of control. They collided with Jerry's cab, tearing off both wheels and tipping it over: "Captain was dragged down, the shafts splintered, and one of them ran into his side" (44.2).
It turns out this was a case of drunk driving, and the man who hit them was fined, but Captain is badly hurt. Jerry tells Governor Gray that Captain will never recover, and rants, "I only wish all the drunkards could be put in a lunatic asylum, instead of being allowed to run foul of sober people" (44.4). Looks like drunk driving isn't exactly a modern problem…
Governor tells Jerry that he couldn't give up drinking, and Jerry says it was tough, but he gave up drinking himself at one point. With the help of his wife, Jerry's been sober for ten years. Good man.
Jerry can't bear to sell Captain for work as a cart horse, so he decides to shoot him instead, thinking that "[…] the kindest thing he could do for the fine old fellow would be to put a sure bullet through his heart, and then he would never suffer more, for he did not know where to find a kind master for the rest of his days" (44.11).
Harry takes Beauty out for new shoes the day after this, and when Beauty comes back, Captain is gone. "I and the family all felt it very much" (44.12), Beauty says.
Jerry finds a new horse, a well-bred young horse who had run away and ended up with scars that made him undesirable for a fancy family. The new horse is apparently high-spirited with a very tender mouth, and the man selling the horse guesses that a bearing rein caused the sensitive young horse to freak out.
Jerry buys this new horse, called Hotspur, who's only five. Hotspur is nervous and high-strung at first, but after some time with Jerry he starts to settle down. At first, "Hotspur thought it a great come-down to be a cab horse" (44.18), but realizes that Jerry's a good master and soon decides this new life isn't so bad.