As Johnny tries to make himself look presentable for his meeting with Mr. Lyte, he daydreams about the new life of luxury he imagines before him. He plans to reward Mr. Lapham and Cilla for their kindness and leave the rest of their family empty-handed. At first, Mr. Lyte dismisses Johnny’s claim of kinship as “a very old story—a very old trick” (78), and the conversation between the merchant and the boy quickly devolves into an exchange of insults. However, the mention of the silver cup works a change. Mr. Lyte tells Johnny to bring the cup to his house that night.

When Johnny stops by the Laphams’ house to retrieve his cup, Mrs. Lapham orders him to stop insulting Mr. Tweedie and to give up any thought of marrying Cilla. Johnny retorts that he doesn’t like Cilla and tells Mrs. Lapham that he’ll soon be moving out anyway. To pass the time before his second meeting with Mr. Lyte, Johnny tells Rab all about his conversation with the merchant. Rab warns Johnny that Mr. Lyte is a greedy, unscrupulous man who tries to play both sides and profit off the Whigs and Tories alike. The Whigs oppose British rule while the Tories favor it, and Rab is a staunch Whig.