Every Saturday night, Gatsby throws incredibly luxurious parties at his mansion. Nick eventually receives an invitation. At the party, he feels out of place, and notes that the party is filled with people who haven't been invited and who appear "agonizingly" aware of the "easy money" surrounding them. The main topic of conversation is rumors about Gatsby. Nick hears from various people that Gatsby is a German spy, an Oxford graduate, and someone even claims Gatsby once killed a man.
People used Gatsby for his extravagant parties: most of his "new money" guests didn't even know him. Gatsby continues to be a man who barely seems to exist beyond the rumors about him. Nick's feelings of discomfort at the party shows that he senses the emptiness behind the party.
Nick runs into Jordan Baker at the party. While spending time with her, he observes all the amazing luxuries of the party: a live orchestra, a cornucopia of food and imported fruits, and endless reserves of alcohol.
Nick and Jordan decide to find their mysterious host, and wander into Gatsby's library. There they meet a short, somewhat drunk man who wears owl-like glasses (and whom Nick refers to as Owl-Eyes). Owl Eyes is amazed by Gatsby's books, which he can't believe are actually real (and not just fakes), even if they've never been read or opened. The vastness and "realism" of Gatsby's book collection astounds him.
The shallowness of the Roaring Twenties: the vast library of "realism" that Owl Eyes admires is full of books no one reads. The books contain "realism" but are just for show.
Later, as Nick and Jordan sit outside watching the party, Nick strikes up a conversation with the man sitting next to him. The man thinks Nick looks familiar. They realize they may have crossed paths during World War I. The man introduces himself: he's Jay Gatsby. Gatsby has a dazzling smile, and refers to everyone as "old sport."
Gatsby's enchanting smile is like a mask, just as the "fun" of the Roaring Twenties hides an emptiness beneath. Nick and Gatsby connect because they share a common past: the war.
Gatsby also interests Nick because he remains apart from the party, as if his pleasure derives from observing the spectacle, not participating in it.
Gatsby's distance suggests he has goals other than just fun and money.
At almost two in the morning, a butler approaches Jordan and asks her to come meet with Gatsby. She returns a while later from this meeting and tells Nick that she has just heard a story that is "the most amazing thing."
Until now Gatsby has been a smile and a bunch of rumors. Suddenly he has a story, a past, though Nick doesn't know what it is.
After saying goodbye to Gatsby (who has to run off to receive a phone call from Philadelphia), Nick leaves the party. As he walks home, he sees a crowd gathered around an automobile accident. A drunken man has driven his new car into a ditch, with Owl Eyes in the passenger seat. The car is now missing a tire, but the driver nevertheless tries to reverse out of the ditch.
The crash is symbolic in two ways. It represents the reckless disregard of the Roaring Twenties and the inevitable plunge Fitzgerald sensed would end the boom. It also foreshadows a car accident later in the novel.
Nick then describes his everyday life that summer to the reader: he wants it clear he does more than just go to parties. He works each day in the city, has a brief relationship with a woman from New Jersey, and then begins to date Jordan Baker. Yet though he's attracted to Jordan, he doesn't like her because she's dishonest and even cheats at golf. Nick then says that he is one of the only honest people he's ever known.
Nick isn't comfortable with the carefree Roaring Twenties mentality of easy money and loose morals shared by other characters in the novel, including Jordan. He prefers substance, and generally seems honest. Yet having a relationship with someone he dislikes makes him not entirely honest.