Hoping not to neglect her older friend, Milly spends a few nights chatting with Susan about their London adventures. While Milly has been hanging out with Kate, Susan has been hanging with Maud Lowder. And guess what? It has come out in conversation that Maud Lowder and her niece Kate are acquainted with Merton Densher, the dude Milly met in New York (and her original reason for coming to London). Milly makes an effort to control the enthusiasm she feels at hearing this.
Susan, however, is curious why Milly has never brought up the fact that she knows someone from London. It's almost as if she's made an effort not to talk about Merton with Kate. Milly, though, insists that she has nothing to conceal.
It's also surprising that Kate has never mentioned Merton, since she would have known that he was in New York and that Milly had just come from there.
It turns out that Maud has asked for Milly not to bring up Merton Densher around Kate. Susan suspects there's something going on with all of this, but doesn't speculate too much out loud.
Milly wants to know, though, if there's anything going on between Kate and Merton.
Until this point, Milly has thought that she and Kate have become fast, intimate friends. But now it seems like there's a lot that Kate has been keeping from her.
One day, Kate takes Milly to visit her sister Marian. Milly is surprised at how different the women's circumstances are, with Kate living the posh life and Marian living in squalor.
While Kate goes off into another room with the children, Marian mentions that there's a guy named Mr. Merton who is in love with Kate. Marian tells Milly this because she thinks it's necessary if Milly plans on learning who Kate really is.
It sounds like Marian wants Milly to be a spy of sorts and to report back on Kate's activities with Merton.
Susan wants to know what's so awful about Mr. Merton. Milly says she assumes it's because he's not rich or from a high class like Lord Mark.
Milly mentions that she has decided to hide from Marian the fact that she has met Merton in New York. She's worried that Marian would use this information to create doubt about Merton's commitment to Kate.
Susan asks, though, whether Milly's relationship with Merton should cause doubt about the man's commitment to Kate. Or in other words, has something gone on between them?
Milly deflects this and just says it'll look suspicious that she (Milly) has avoided telling Kate about knowing Merton, when she's only following Maud's orders.
Susan says that either way, everyone will know the truth when Merton Densher returns to London. Milly suggests that she can find a way to tip him off about what's happening before he gets back. That way, she can arrange it so that she leaves London before he gets back.
Susan says she doubts whether Milly is strong enough for much more travelling. They keep alluding to the idea that things aren't quite right with Milly's health. Milly mentions the idea of travelling somewhere else in Europe. But she admits that sooner or later the truth will come out. She's just sad that Marian will use the info to make Merton look guilty to Kate.
At this point, Susan bluntly asks if Merton hit on Milly while he was in New York. She seems more than ready to call the guy a scoundrel. Milly says no.
Susan believes that if Milly had made a pass at Merton, the guy would've forgotten his commitment to Kate. Milly, though, doesn't think this is true.
Milly also mentions that she doesn't believe that Kate actually loves Merton back. At this point, the ladies feel like they've gossiped and speculated enough and turn in for the evening.