- It's June 21, 1848 – the day of Rachel's eighteenth birthday party, and the day that Franklin has to give her uncle Herncastle's Indian diamond.
- The day starts as it does every year – the servants present Rachel with little gifts.
- Franklin and Betteredge agree that there's no point in worrying Lady Verinder with their suspicions about the diamond and Herncastle's possible desire for revenge.
- So they decide that Franklin should ride his horse to Frizinghall after lunch to pick up the diamond from the bank, and ride back with Godfrey Ablewhite and his two sisters in time for the party.
- Having decided all that, Franklin spends the rest of the morning with Rachel, finishing the painting on her boudoir door.
- Betteredge prepares the servants, who are supposed to wait the table at dinner while Franklin rides to town.
- When Franklin comes back with Godfrey and the two sisters, Betteredge notices that Godfrey seems out of sorts.
- Franklin privately reports to Betteredge that he hasn't seen anything of the Indians.
- A little while later, Betteredge steps into the drawing room and sees Rachel examining the diamond with delight, while Godfrey and his two sisters look over her shoulder.
- Franklin looks worried, and Lady Verinder is frowning as she looks over her brother, John Herncastle's will.
- She asks Betteredge to come and see her in her room.
- Everyone seems fascinated with the diamond.
- Betteredge leaves the cousins and the diamond and goes to see Lady Verinder in her room.
- She's worried about her dead brother's intentions – she doesn't believe that he was sincere when he wrote that he wanted to leave the diamond to Rachel to make amends for offending his sister.
- Lady Verinder is convinced that he did it out of spite – to take revenge on her.
- Later, Betteredge and Penelope are getting ready for dinner.
- Penelope is helping her old father with his tie, and she tells him what she overheard in the garden.
- She saw Rachel and Godfrey go out for a walk together and, when they came back, they seemed serious and awkward.
- Then she overheard Rachel telling Godfrey that they would remain cousins and friends.
- Penelope figures that Godfrey proposed, and Rachel turned him down.
- The guests start arriving just then, so Betteredge can't stay to argue with his daughter.