Archer sends a telegram to Ellen asking her to come to visit Mrs Mingott.
News emerges that Beaufort is ruined, taking much of the money of New York's ruling clans down with him. It is the worse case of dishonor in memory. Mrs Beaufort too is disgraced, largely because of her seemingly cynical efforts to persuade others to bale her husband out. Mrs Archer feels that the Beauforts should retire quietly to the Regina's family's house in North Carolina to breed horses.
The Archers receive a telegram from Ellen saying that she will arrive the following day. The Welland-Mingott family members find excuses why they cannot meet her at the station, so Archer offers to fetch her. Later, May asks him how he can meet Ellen when he is going to Washington for the court case. He tells her he is not going as the case is postponed. But May has seen a note saying that Mr Letterblair is going. Archer rapidly changes his story: Letterblair is going, so he will not. May asks whether the case is not postponed after all. Archer blushes and says it is not, but his going is. May pretends that she does not know he is lying.
Archer collects Ellen from the railway station. He is surprised to realize that he barely remembers what she looks like. She asks if the carriage is May's. As if in retaliation for her reference to May, he tells her that M. Rivi�re has been to see him. He asks her whether it was Rivi�re who helped her get away from her husband. She says it was, but gives no clue as to the nature of their relationship. He tells her that she is an honest person who sees things as they are. She replies that she has had to, for she has looked at the Gorgon. In Greek mythology, the Gorgon was a monster so horrible that she was believed to blind those who looked at her. But contrary to legend, Ellen says, the Gorgon does not blind one, but dries up one's tears. The implication is that Ellen's experience has taught her to be realistic, not sentimental.
They kiss. Archer says that he does not want a secretive love affair. He has a vision of their being together. Ellen laughs harshly. She asks him if he wants her to live with him as his mistress. He says he wants them to get away to a place where such words do not exist. Gently, she asks, "Oh, my dear - where is that country? Have you ever been there?" She has known many who have tried to find it, and settled for various European cities, which turned out to be no different from the places they'd left. She says they have no future together, apart from a tawdry one of trying to be happy behind the backs of the people who trust them. There can be no escape from the judgments of others.
Archer, angry and hurt, gets out of the carriage before they get to Mrs Mingott's.
At home, May reports that the Mrs Mingott is improving and that the Beauforts intend to stay in New York. Archer is bored by their relationship and worries that she is turning into a copy of her mother. Feeling stifled, he opens the window. May asks him to shut it, as he will "catch his death," and her words prompt him to a morbid wish that she would die and set him free.
A week later, Mrs Mingott tells Archer that Ellen has agreed to come and live with her. She says that the family persuaded her to cut Ellen's allowance in order to make her go back to her husband. Olenski's secretary had put the Count's proposals to her, and she had agreed that they were favorable. But when she had seen Ellen again, she could not bear the thought of her being shut up in the cage of her marriage once more, and had asked her to come and nurse her instead. She has also restored Ellen's allowance.
Archer is delighted, believing that Ellen has agreed to this proposal because she cannot give him up. Mrs Manson Mingott warns Archer that the family does not agree with her plan, and she asks him to back her up. Archer agrees. He asks if he can see Ellen, but she has gone to visit Regina Beaufort, to support her in her unhappy situation.
New York society's treatment of the Beauforts shows its hypocrisy. It had always been known that Beaufort had indulged in shady dealings, but had been prepared to overlook this as long as the appearance of propriety was maintained. Indeed, people enjoyed Beaufort's private ballroom and went to his parties. But when his illicit dealings reached such heights as to become the subject of public gossip, society cut him and his wife off. It is felt that they should simply leave New York and live quietly somewhere else - as if not having the sinner under one's eyes made the sin vanish. Appearance is seen as more important than reality.
May continues to pretend that she does not know about Archer's feelings for Ellen, when she clearly does know something. She would rather keep up the act of a happy marriage and deny the reality. Watching her attempts to hide what she knows pains Archer, and he feels pity for her.
Archer, like May, is living in an illusory world. He imagines that he and Ellen can live somewhere apart from society's adverse judgments. Ellen is more realistic, and knows that there is no such place.