Chapter Summaries and Commentaries

Part One: Chapter 3—The Top and the Bottom

Over drinks in a New York bar, four men conduct a meeting that will greatly impact the U.S.
economy. Orren Boyle wants Jim Taggart to use his influence with various Washington
politicians to pass legislation that will strip Rearden of his ore mines. Taggart agrees to do it.
Taggart and Boyle are counting on Paul Larkin, who is present at the meeting, to receive the
mines from Rearden and to provide Boyle with first claim on the ore. Taggart, meanwhile,
wants Boyle to speak to friends on the National Alliance of Railroads regarding the competition
that Dan Conway’s Phoenix-Durango Railroad gives Taggart Transcontinental in Colorado.
Taggart wants the Alliance to force the Phoenix-Durango out on the grounds that it provides
“cutthroat competition” to Taggart Transcontinental in a region where the latter company has
historical priority. Boyle states that Taggart’s idea is sound, and he’ll speak to his friends
about it. The fourth member of the party is Wesley Mouch, Rearden’s Washington man. In
return for not reporting the proposed legislation to Rearden, Mouch will receive a bureaucratic
post in Washington, courtesy of Taggart’s influence.

Taggart comes to his sister’s office. Boyle has told him that on a recent trip to the San
Sebastian Mines in Mexico, he observed the limited and archaic train service that Taggart
Transcontinental provides. Boyle questions the level of service provided. Dagny reminds Jim of
several facts. The San Sebastian Mines, built by Francisco d’Anconia, have produced no
copper. Francisco never even presented facts to support the claim that any copper exists
there; Jim and his friends invested money based only on Francisco’s business reputation. And,
in the past ten years, Francisco has degenerated from a remarkable businessman into a
worthless playboy. Dagny tells Jim that she’s shipped every piece of railroad property that can
be moved north of the border, so that when the Mexican government nationalizes the San
Sebastian Line, the railroad’s loss will be minimal.

Dagny’s assistant, Eddie Willers, often eats his meals with a railroad worker in the employees’
cafeteria of the Taggart Terminal. He doesn’t know the worker’s name or job, but because of
his rough, grease-stained clothes, Eddie assumes that the job is menial. However, the worker
has a deep interest in the railroad, and Eddie feels comfortable speaking to him. He tells the
worker that the Rio Norte Line will save Taggart Transcontinental and that Dagny has found a
reliable contractor to rebuild the line—McNamara of Cleveland.

This chapter shows readers the way things work in a mixed economy that’s moving toward
socialism. Private property exists nominally, but the state has steadily increasing control over
its use and distribution. In such a system, productive businessmen like Hank Rearden and Dan
Conway have no rights; they are at the mercy of any inferior competitor with political friends.
Only capitalism provides the economic freedom that great producers like Rearden and Conway
require. Under a capitalist society, their productive activities would be unrestricted by
government bureaucrats and envious competitors.

The men who meet at the beginning of this chapter insist that the preservation of the steel
industry “as a whole” is vital to the public welfare. Therefore, Boyle’s virtually bankrupt
company must not be allowed to fail. It must be propped up by stripping Rearden of his ore
mines and turning them over to Paul Larkin, who will please the Washington planners by
giving Boyle first priority for the ore. Rearden’s productive company will be sacrificed to
Boyle’s unproductive one, in keeping with the moral premise underlying socialism, which
states that the strong must serve the weak.
 Chapter Summaries and Commentaries
Part One: Chapter 3—The Top and the Bottom

As the government acquires power over an economy, the level of corruption necessarily rises.
This rise in corruption occurs because, as the state gains power to dispense economic favors,
it attracts power-seekers like Wesley Mouch and enables incompetent businessmen like Jim
Taggart and Orren Boyle to exist parasitically off of competent men like Rearden. In a free
market, where customers can choose unrestrictedly among competitors, customers select
companies like Rearden’s and Dan Conway’s because they get the job done. In a free market,
businesspeople like Boyle and Taggart go out of business. But in a state-dominated system,
unprincipled businesspeople curry favor with power-seeking politicians, brokering corrupt
deals that allow them to stay in business by means of legislation.

In contrast to these unprincipled and incompetent businessmen, Dagny fumes over the
corruption and mindless incompetence of a statist economic system. As an engineer, she
respects the facts. She makes business decisions based on facts, not political favors. She
knows that Francisco d’Anconia showed no evidence to support his claim that the San
Sebastian Mines contain any copper. Her brother Jim was eager to build a branch line to the
mines at a cost of millions to the struggling railroad so that he could please his political
“friends” in Washington. The government regards the branch line as a self-sacrificing, “public-
spirited” action to aid the destitute Mexicans. As a result of Jim’s decision, Taggart
Transcontinental will lose millions of dollars—money desperately needed to rebuild the
collapsing Rio Norte Line and save the industrial enterprises of Colorado. Dagny tries to reason
with her brother and with the men of Taggart Transcontinental’s board, but the government’s
power over the railroad has become too great. She fights a losing battle.

This chapter also hints at Francisco d’Anconia’s past, implying that as a young man, he turned
his extraordinary talents to industrial production and was fabulously successful. Jim’s remarks
indicate that Dagny’s relationship with Francisco in the past may have been much closer than
it is currently. This chapter raises questions about Francisco’s true nature, his motives, and his
past relationship with Dagny. We don’t yet have answers to any of these questions.

Progressive policies Progressive policies, in this book, are socialist acts of

legislation such as the expropriation of Rearden’s ore mines by the government and
their distribution to “needy” men like Paul Larkin. The term progressive, in matters of
economic policy, is a euphemism here for the government’s theft of private property
and the country’s gradual decline into dictatorship. “Progressive” is usually
associated with “favoring, working for, or characterized by progress or improvement,
as through political or social reform, (or) of or having to do with a person,
movement, etc. thought of as being modern or advanced, as in ideas, methods, etc.”