Nicholas sleeps in a room full of other students. Sleep gives some peace, but this is destroyed when the dawn approaches.
Nicholas looks about the room. Squeers calls up to the boys to come down or to suffer a thrashing. He calls for Smike, but Nicholas does not see the boy in the room. When Nicholas says that Smike isn’t there, Squeers comes up, cane in hand. When he doesn’t see Smike, he looks frightened. He accuses them of hiding Smike, but Nicholas says he hasn’t seen him since the night before. When Nicholas suggests that maybe he committed suicide, Squeers is disturbed.
Squeers asks the other boys where Smike is. One suggests that he ran away, and Squeers beats him for suggesting that anybody would want to run away. Seeing Nicholas’ look of disgust, Squeers asks if he thinks Smike has ran away. Though he denies knowing it for certain, Nicholas thinks it is likely. He is glad Smike didn’t tell him to relieve Nicholas of the obligation of informing Squeers.
Mrs. Squeers comes up and blames Nicholas for putting the idea in Smike’s head. She orders him to take the boys to the school room, or she’ll find a way to ruin his good looks. Nicholas is amused. She says she wouldn’t have him in her house if the decision was hers, and he says he wouldn’t have her there if the decision was his. She promises the boys that Smike will be brought back and be flayed alive—as they will be if they talk about him.
The Squeers discuss where Smike has gone. They figure he is on the public road, which is the only road he can beg on. He took no food or money, so he has to beg his way. They will each take a chaise and search in a different direction. They are sure to find him.
Nicholas is filled with anxiety. Smike faces starvation and death from exposure, and yet his fate is not much kinder if he is brought back. Mr. Squeers comes back empty-handed. He is angry at the cost spent in the effort to find Smike. He plans to take it out of somebody if not Smike. Mrs. Squeers returns the next day with Smike. He is locked in the cellar.
The Squeers take the effort to capture runaways for two reasons. One, it is less expensive to capture the runaways themselves than to rely on other sources. Mainly, though, they want their students to know that running away is futile.
The other students try to avoid notice. Squeers summons them. He has bought a new cane. Smike is brought in. The other students seem to pity him. Smike begs for mercy, claiming that he was driven to do it. This infuriates the Squeers more, because they interpret as a complaint against their treatment of him.
As Mr. Squeers begins to beat Smike, Nicholas intercedes. He says this has to stop, and he is going to put a stop to it. He says that he is responsible for Smike running away. Mr. Squeers grabs Smike and tells Nichoals to stand down. Nicholas refuses, saying he will fight Squeers. The schoolmaster hits him in the face with the cane. Nicholas goes after him and starts beating him.
The Squeers’ son and daughter attack Nicholas, and Mrs. Squeers tries to pull her husband away. Nicholas ignores them all and beats Squeers senseless.
Smike has fled after Nicholas stops beating the schoolmaster. Nicholas packs his things and leaves. He is on the road when he sees John Browdie pull up in a carriage. Nicholas apologizes for the other day, and John good-naturedly accepts it.
Nicholas tells John about his fight with Squeers. Browdie is delighted. Hearing that Nichoals plans to walk to London, he loans him money. On his journey, Nicholas meets up with Smike. Smike begs Nicholas to let him come along. Nicholas says he can’t do much for him, being almost as bad off as Smike. Smike offers to work for him. He only wants to be with the friend who has shown him kindness. He wants nothing else. Nicholas agrees.