Mary takes up work at a dressmaker's (her father having objected to her working in a factory) and becomes subject to the affections of hard-working Jem Wilson and Harry Carson, son of a wealthy mill owner. She fondly hopes, by marrying Carson, to secure a comfortable life for herself and her father, but immediately after refusing Jem's offer of marriage she realises that she truly loves him. She therefore decides to evade Carson, planning to show her feelings to Jem in the course of time. Jem believes her decision to be final, though this does not change his feelings for her.
Meanwhile, Esther, a "street-walker," returns to warn John Barton that he must save Mary from becoming like her. He simply pushes her away, however, and she's sent to jail for a month on the charge of vagrancy. Upon her release she talks to Jem with the same purpose. He promises that he will protect Mary and confronts Carson, eventually entering into a fight with him, which is witnessed by a policeman passing by.