Back at the Coach and Horses inn, the Halls head down to the cellar to water down their beer. Yum.
Mr. Hall has to go back upstairs to get some sarsaparilla to cover the taste of the watered-down beer (and also because Wells knows that everyone has trouble spelling "sarsaparilla" and he likes to torture us). On his way, he notices some strange things: the front door is unlocked and the stranger isn't in his room.
The lady of the house, Mrs. Hall, comes to check on the situation in the stranger's room.
She peeks in and, after a few sneezes, the blankets and pillows start flying around the room, and the furniture starts banging around.
Mrs. Hall immediately assumes that the stranger has put ghosts into her furniture. (There's a joke here about "spirits," which can mean both ghosts and alcohol. Since alcohol goes into bottles, maybe ghosts could also, and maybe that's what the stranger has in all of his bottles. At least, that seems to be what Mrs. Hall thinks.)
Some of the villagers – including Sandy Wadgers, the blacksmith, and Mr. Huxter, the general shop owner – get involved in the mystery of the stranger's disappearance and the haunted furniture. With so many people, not much gets done: "The Anglo-Saxon genius for parliamentary government asserted itself; there was a great deal of talk and no decisive action" (6.18). Zing! Take that, parliamentary government.
Finally, the stranger comes out of his room and demands to be left alone. Huh?