Santa, Claude, and Mrs. Reilly are sitting around chatting.
Mrs. Reilly is worried that Ignatius's new interest in peace means that he's a Communist.
Santa says Ignatius is insane and should be put away, and she tries to get Mrs. Reilly to seriously consider contacting the Charity Hospital to take Ignatius.
They go to the movies. Mrs. Reilly is worried that Claude will become amorous, and is painfully reminded of the movie that made Mr. Reilly and her conceive Ignatius.
Meanwhile, Ignatius is writing at home about how wonderful his scheme for peace through homosexuality is.
He also is scheming to go see the new Doris Day film—probably That Touch of Mink from 1962.
At Levy Pants, Mrs. Levy has returned Miss Trixie to her post, much to everyone's sadness (including Miss Trixie's).
Mr. Levy gets a letter from Abelman's Dry Goods threatening to sue him for the abusive letter that Ignatius wrote under Mr. Levy's name.
There is much panic, and then they notice that all the files have disappeared (because Ignatius threw them out).
Jones calls to see if he can get in touch with Ignatius, but of course Ignatius isn't there.
Mr. Levy thinks Ignatius may have written the letter, but Mrs. Levy abuses him for trying to pin it on the young idealist (that would be Ignatius in case, you know, you don't immediately equate him with idealism).
Mrs. Levy demands that she be put in charge of a charitable foundation called the Leon Levy Foundation in honor of Mr. Levy's father, who he hates.
Mrs. Levy tells Mr. Levy to go out and find Ignatius before they are sued for all their money.
Down the social ladder to George, who is trailing Ignatius.
Ignatius is trying to figure out how he can get enough money to go to the Doris Day movie. His cart gets stuck in a streetcar groove.
George offers to help him move the cart before the streetcar hits them, and though Ignatius is not very friendly about it, they do get the cart moved.
Then George gives Ignatius money, and Ignatius becomes friendlier.
So George asks him to keep some packages ("school supplies") for him in his cart.
Ignatius insists on opening the packages. He sees a picture of Lana Lee nude, her face covered by Boethius's Consolation of Philosophy, so Ignatius does not recognize her.
The conjunction of nudity and Boethius causes Ignatius to fall in something like love.
Because Jones put the address on the packages, Ignatius figures he can track the woman down and rescue her from degradation.
He also mentions that he knows Officer Mancuso, freaking George out.
Ignatius blackmails George into watching the cart while Ignatius goes off to see the Doris Day movie.
He splutters and screams at the screen happily.
Ignatius goes back to get his cart, and proceeds to the address where his love is to be found. He is horrified to discover it is the Night of Joy, and assumes that the woman in the photo is being tormented.
Lana Lee tells Ignatius to move on, and Darlene attacks him for being rude to his mother; neither of them knows who Boethius is.
Jones convinces Ignatius to come to Darlene's opening, because he figures he'll sabotage it.
Ignatius goes home, where his mother is talking to Santa on the phone about whether Claude will marry her and how Ignatius should be sent to the Charity hospital.
Mrs. Reilly gets off the phone and Mr. Levy calls. Ignatius tells him in a fake voice that Ignatius Reilly has been sent to the insane asylum.