The people at Blithedale are devoted to working for the betterment of mankind, but they make time for relaxation and enjoy putting on theatrical performances from time to time. The night after the incident with Westervelt, Zenobia proposes that they put off acting for the evening so she can tell a story. Zenobia has a gift for making stories up on the spot, so the group excitedly encourages her idea. The young girls ask for a ghost story, but Zenobia says what she has in mind isn’t quite a ghost story but close to it. She tells Priscilla to stand in front of her so Zenobia can draw inspiration from Priscilla’s eyes. Coverdale doubts that he can quite do the story justice on paper, but he’ll try. The story is called “The Silvery Veil.”
It is notable that Zenobia places Priscilla directly in front of her. Zenobia clearly means to direct this story at Priscilla, but it’s unclear why or if Priscilla will be able to understand it.
Everyone has heard of the Veiled Lady, who once drew huge crowds but abruptly disappeared months earlier. Zenobia tells of the last known incident involving the Lady: a group of young men are discussing the Veiled Lady over some bottles of champagne and theorizing about her identity, bandying about the idea that she’s a wealthy heiress. One young man names a woman who must be the Lady because she always disappears during Veiled Lady performances, but one of the men, Theodore, objects and says he saw that woman at a Veiled Lady exhibition once. Nobody can adequately argue against this, so they change the topic to whether the woman within the veil is beautiful or horrifyingly ugly. They also speculate about the handsome magician, who purportedly exchanged his soul for a “familiar” for seven years, this being the final one.
Much like Coverdale, the men in this story want to learn all the secrets about the Veiled Lady. It’s not enough for them to appreciate her alleged supernatural abilities or that her performances are entertaining, they must know who she is and what she looks like. A “familiar” is a supernatural creature or entity that attaches itself to a magician or witch and helps them do their magic. However, they’re also considered evil, which means the Veiled Lady might have evil propensities and the magician who summoned her definitely does.
Theodore runs out of patience with speculating and says he’ll make a bet that he can find out the Veiled Lady’s real identity that night. After some discussion, the men agree to terms and Theodore sneaks into the apartment that the Veiled Lady withdraws into after her performances. Inside, Theodore hides and listens to the exhibition. The performance ends and soon the Veiled Lady enters the room. Zenobia says at this point Theodore was likely becoming frightened with the thought of what he was about to do. The Lady seems to float through the room, evidently looking for something. Suddenly she approaches Theodore’s hiding spot and calls him by name, saying he can come out. She asks what he wants with her and he says he must know her identity. She says she can’t tell him, so he’ll have to lift her veil.
Theodore uses dishonest means to try to ascertain the Veiled Lady’s identity. Instead of openly approaching her, Theodore chooses to sneak in and essentially ambush her. He also doesn’t ask for consent to lift her veil, but he tells her that he must do it and gives her no choice. Theodore is essentially willing to violate the Veiled Lady to satisfy his own idle curiosity, revealing his belief that, as a man, he has a right to her body.
Theodore steps forward to lift the Veiled Lady’s veil, but she steps back and tells him there are conditions he must hear first. She says she’s a prisoner beneath the veil, but before he lifts it, she wants him to kiss her through it. If he does, they’ll be bound together and have a beautiful future—this is all she can say behind the veil. If he doesn’t like this, then there is another way. Theodore wants to know what that is, which seems to make the Lady sad. She asks if he only wants to satisfy idle curiosity. If that is so, he may lift the veil without kissing her but then she must become his “evil fate” and he’ll never be happy again. Theodore is skeptical and doesn’t want to kiss her and thus bind himself to her without knowing what she looks like first.
The first option the Veiled Lady gives Theodore resembles marriage. Only once they’ve sealed themselves together with a consensual kiss will he be able to remove her veil and truly know her. This will bring him lasting happiness. Still, she can’t stop him from forcibly removing her veil, which resembles rape. If he does this, however, he will be haunted by the act (she’ll be his “evil fate”) and by the knowledge that he’ll never get to know her the way he would if he had done the right thing by gaining her consent through a kiss. That kiss must be done while she’s still under the veil, or still in a state of innocence.
Theodore tells the Veiled Lady he’ll take her veil off first and decide whether to kiss her afterwards. He takes her veil off and catches a momentary glimpse of a beautiful face before the Lady disappears, leaving Theodore to waste his life searching for another glimpse of her face. At the same moment the Veiled Lady disappeared, a pale young girl appears amongst a group of visionaries, all of whom grow to love her. The girl attaches herself to one woman in the group above all others. A male figure appears to this woman and says the maiden is her enemy who will ruin her life, but the woman can stop her by putting the veil over her and calling the magician. The woman does it and the magician grabs and enslaves the Lady. At this moment, Zenobia throws some gauze over Priscilla, leaving her shaken and scared.
The latter half of Zenobia’s story—when a girl pops up among a group of visionaries and becomes attached to one woman in particular—echoes Priscilla’s entrance into Blithedale. This is the first clue that there is some connection between the Veiled Lady and Priscilla. Priscilla’s strong reaction seems to indicate that Zenobia has struck a chord. This would mean the story was Zenobia’s way of telling Priscilla that she knows the truth about her past—worse, it seems like a warning to Priscilla of what’s to come.