After the holidays, the social “season” is beginning. Mrs. Peniston, who, despite her reclusion, has an incredible memory for any aspect of social life, remembers this period as one in which everyone except Rosedale and Wellington and Louisa Bry felt poor, because of severe problems on Wall Street. At the same time, Rosedale, who has invested successfully, is becoming more socially prominent.
Mrs. Peniston’s interest in social life is not innocuous, and will later prove harmful to Lily, as Lily’s aunt will give a lot of weight to rumors against the young girl, however ill-founded they might be. The financial troubles on Wall Street also suggests that Gus is probably not earning the money he gives Lily in the way he wants to make her believe.
In the meantime, after Jack and Grace Stepney’s honeymoon, Mrs. Peniston decides to organize a dinner at her own house. The prospect of this dinner, meant to involve the entire family, delights Grace Stepney, who is almost never invited to such high-scale events. However, after Lily mentions to her aunt that she should probably invite some people prominent in high society, Grace is asked to come to dinner another time. As a result, Grace feels deeply resentful toward Lily for having ruined her chance at enjoying a fancy dinner.
Lily’s suggestion to exclude Grace from this meal proves to be one of the worst mistakes of her life, as Grace will remember this seemingly trivial episode and later use her resentment against Lily to condemn the young woman to financial ruin. Grace’s seemingly disproportionate reaction highlights how the desire to take part in upper-class life can distort people’s morals and values.
Because of this resentment, Grace Stepney resolves to tell Mrs. Peniston about the rumors according to which Gus Trenor is in love with Lily, and that they might be romantically involved. After Mrs. Peniston protests that Lily could not possibly be interested in a man like Gus, Grace then reveals that Gus is said to be paying Lily’s bills, including her gambling debts. At the mention of gambling, Mrs. Peniston becomes shocked and furious, unable to believe that her own niece gambles.
Instead of confronting Lily directly about what has happened, Grace uses devious methods to inflict harm on Lily. The injustice of this action is blatant, since Lily never actually meant Grace any harm, yet Grace feels no compassion toward the young woman. Lily thus becomes the victim of her own popularity, as her position of power inspires treacherous jealousy in others.
Grace further mentions that Lily has also accepted attentions from George Dorset, but Mrs. Peniston, unwilling to believe these accusations, defends her niece and refuses to pursue the conversation. Reluctant to make a scene, Mrs. Peniston refuses to talk about these rumors with Lily, but does conclude that a girl is responsible even for the unfounded rumors that are made about her.
The lack of compassionate, effective communication between members of the same family highlights the artificiality of relationships in high society, as people prefer to trust defamatory rumors about someone rather than engage in a sincere dialogue with the person in question.