They reminisce about their first meeting. Nicholas tells John he was a a monster, and Tilda agrees—particularly when she went home with him. She almost made up her mind never to speak to him again. John claims she spent the whole ride pleading with him. She denies this.
Nicholas thanks Jogn for loaning him the money. He also thanks him for rescuing Smike. John says they never suspected his involvement. John gleefully tells Nicholas about the wild good chase he gave the schoolmaster.
John and Tilda both despise Mr. Squeers. Tilda has kept in contact because Fanny was an old childhood friend. John agrees one shouldn’t quarrel with neighbors.
John had written to Nicholas to have him meet that night so there was no danger of him coming across Fanny. Fanny is having tea with her father.
Mrs. Browdie is telling Nicholas how she thought Fanny was fond of him. Just then, Fanny enters and denies this. Her father and brother are behind her. She accuses Tilda of being two-faced. She condescended to befriend rubbish and has been stabbed in the back. Tilda tells Fanny she never patronized her.
Fanny tells John she pities him. She then tells them that her family figured out their plot. She renounces her association with Tilda and John. Tilda tells Fanny she has never been as cruel to Fanny as Fanny has been to her. However, she bares Fanny no malice and hopes the same.
Mr. Squeers smacks his son, who has been stealing food from the table John says he wishes the schoolboys were there, for he would gladly feed them. Squeers accuses John of helping Smike to run away. John deosn’t deny it. He would do it again.
Squeers threatens Nicholas, saying that the father of the kidnapped boy may come after him. Nicholas says he doesn’t care.