Spencer Junior and Baldock—two retainers of the recently deceased Earl of Gloucester—enter, discussing whom they should serve now. Spencer rejects Mortimer on the grounds that he is feuding with Edward II, and proposes seeking out the Earl of Cornwall (i.e. Gaveston) instead. In fact, Spencer expects to be Gaveston's “companion” rather than his “follower,” since Gaveston “loves [him] well, / And would once have preferred [him] to the King.”
Although they are relatively minor characters themselves, Spencer Junior and Baldock underscore the play's exploration of social status and hierarchy. Like Gaveston, Spencer Junior and Baldock are "commoners" who use personal relationships to advance in the world. In Spencer's case, these relationships are implied to be sexual; although it is unclear whether he ever becomes Edward's lover, Spencer's description of his relationship with Gaveston suggests a romantic connection.
Baldock reminds Spencer Junior that Gaveston is exiled and can therefore do little to help him, but Spencer says he has heard a rumor that Gaveston has been called back to court. What's more, Spencer saw Lady Margaret smiling as she read a letter that he suspects had news of her fiancé. Baldock hopes Spencer is correct and that the marriage between Margaret and Gaveston will in fact go forward: as Margaret's former tutor, he hopes to profit off of it himself. With this in mind, Spencer advises Baldock to “cast the scholar off” and adopt the ways of a nobleman: “You must be proud, bold, pleasant, resolute, / And now and then, stab, as the occasion serves.” Baldock protests that he has only dressed and behaved like a “common pedant” in order to please his former master, and he and Spencer Junior joke about scholarly life.
Spencer Junior's advice to Baldock on how to remake himself as a nobleman touches on many of the central tensions in the play. His remark about "stabbing," for instance, is a sexual innuendo that captures the way characters like Gaveston and (perhaps) Spencer use sex in order to climb the social ladder. What's more, by equating this "stabbing" with nobility, Spencer suggests that nothing fundamental separates the kind of power he and Gaveston hold from the kind of power the inherited nobility holds. This, of course, poses a threat to characters like Mortimer Junior, who views his rank as an innate quality that distinguishes him from the common people. In fact, even the more literal sense of "stab" contains a similar challenge to the social hierarchy, since it hints that being a noble is partly (or even largely) a matter of force: the implication is that the nobility maintains its status through the use of violence.
Lady Margaret's arrival interrupts Baldock and Spencer Junior's banter, and the two men listen as she reads aloud from letters from Gaveston and Edward: Gaveston's declares his intention to remain true to her at any cost, and the King's calls her back to court to be married. At this point, she notices that someone else is present and calls out for Baldock, who comes forward with Spencer. Margaret orders Baldock to prepare her coach for her departure, and he leaves. She urges Spencer Junior to stay, however, because she wants to share the good news of Gaveston's return with someone else , which she hints will prove beneficial to Spencer.
Margaret's parting words to Spencer vindicate much of what he has said throughout this scene: Gaveston's advancement, she implies, will also mean Spencer's. Margaret's words also establish her as a foil to Isabella. Like the Queen, Margaret is in love with a man (Gaveston) who is romantically involved with someone else. Unlike Isabella, however, she does not seem to resent her fiancé/husband's relationships with men, whether because she is not aware of them, or because she feels it is not her place to complain, or for some other reason. Whatever her reasoning, however, Margaret apparently accepts Spencer's connection to Gaveston.