Dagny goes to the construction site of the Rio Norte Line to supervise the work because Ben Nealy, the contractor she found to replace the retired McNamara, is incompetent. Ellis Wyatt arrives, and the respectful manner with which he treats Dagny shows his recognition of the merit of her work. She discovers that Wyatt has been to the job site often and has helped offset Nealy’s inefficiency. Rearden is also in Colorado on business of his own. He proposes to Dagny a bridge made of Rearden Metal to replace the old one that the railroad currently maintains. He shows her a design for a new truss that Rearden Metal makes possible, and Dagny agrees to build it.
Dr. Potter of the State Science Institute visits Rearden, informing him that the Institute does not want Rearden Metal to appear on the market at this time. Potter won’t state the reasons for this request. When Rearden refuses, Potter offers him unlimited money in exchange for the rights to the metal. Rearden tells him to leave, but Potter gives him a warning: The Institute may issue a public denunciation of the metal. Furthermore, Potter reminds Rearden that the Institute is a government agency and that bills currently pending in the legislature would, if passed, harm Rearden’s interests. The legislative votes will be close and may be swayed by Rearden’s cooperation.
Rearden throws Dr. Potter out, and the State Science Institute publicly smears Rearden Metal. Its denunciation contains no shred of factual evidence based on laboratory research, focusing instead on innuendoes and unsupported assertions. Dagny visits Dr. Robert Stadler, head of the Institute. Stadler recognizes the contemptible nature of the Institute’s statement, but he refuses to publicly state the truth regarding Rearden Metal. His reasons are clear: The public demands practical results in return for its funding, but the Institute’s metallurgical department has created nothing of value. If a private individual produces a new metal that is tremendously successful, the public will question the need for a State Science Institute. Stadler will not put the Institute’s funding at risk.
The stock of Taggart Transcontinental plummets because of the State Science Institute’s attack on Rearden Metal. Dagny tells Jim that she will start her own company to complete the construction of the Rio Norte Line. She says that after the merit of the Rearden Metal track has been proven, the line’s ownership will go to Taggart Transcontinental. Jim approves, and Dagny decides to call her railroad the John Galt Line. Rearden and the producers from Colorado invest in her company.
The legislature passes the Equalization of Opportunity Bill, which will strip Rearden of his ore mines and place their ownership in the hands of someone else. Wesley Mouch, Rearden’s Washington man, didn’t inform Rearden that the bill was being brought to the floor.
