Grandfather talks to Herbert about them growing up together and playing together as boys; Herbert only remembers fuzzy details, though.
Arthur asks a few questions about the past, and Grandfather says that a bunch of places in Ratbridge went out of business due to the pollution. The cheese business went bankrupt, which is where the trouble started.
Snatcher's father was trying to make a profitable cheese that concentrated the poison from the pollution in it. He got sued, so Snatcher was sent to school with the rest of the non-rich kids.
Snatcher didn't take to poverty well, though, and started to blackmail and bribe his way to top of the class.
When Grandfather and Herbert were on their way to becoming young inventors, they saw Snatcher for the first time in a while, and he got into a nasty tussle at the inn with someone who accused him of cheating at cards.
One of Snatcher's minions shot poisonous oil at the man, and they all fled. When the police arrived, though, Snatcher's minions had planted evidence on Grandfather implicating him in the crime.
Grandfather ran away and escaped down a drain, while Herbert was captured and imprisoned so that he couldn't be a witness against Snatcher.
The man from the inn survived the attack, but with permanent memory loss. And since Snatcher's men used the same oil on Herbert to capture him and knock him out, this explains why Herbert's memory is so bad, too.
As long as Herbert's in captivity and Grandfather's in hiding, no one can testify against Snatcher's attempted murder, which is the pits.
Right then Arthur has to hide the doll, since one of Snatcher's goons comes down with food for him.