[Wallbachs and Ottomar call on Valerie. Giraldi asks François about the interview between Valerie, Sidonie and Else. Count Golm is announced, and speaks with Giraldi in the outer room about the advance of the loan, and the impossible conditions which Lübbener, the banker, has made him, and mentions his visit to Philip. Giraldi confuses Philip with Reinhold, to the disgust of Golm, who informs Giraldi that Philip is a promoter of the Sundin-Berlin railroad; that he is to build the road, and is, besides, a graceful, companionable, immensely rich man. Giraldi offers Golm half a million as advance loan for a four per cent. mortgage, under promise of secrecy, telling him it is the hand of a friend, not of a usurer, that is extended to him. The Count then goes into the other room to meet the ladies. Carla is eager to make the acquaintance of Giraldi, but Ottomar conceives a dislike for the Count, and is alarmed at the power of Giraldi; but Giraldi wins his confidence by flatteries and assurances of friendship. During the conversation Valerie compares the studied manner of Carla with the naturalness and ease of Else, and is convinced that Carla is not suited to Ottomar. The company departs, and a scene follows between Giraldi and Valerie. The General speaks frankly with Reinhold about Ferdinande and wishes that her father would relent as he has, but Uncle Ernst is still obdurate. Justus and Reinhold converse about Uncle Ernst, and Justus asks Reinhold to sit as model for one of his reliefs. The conversation turns upon love, which Justus declares is a strange drop in the artist's blood; Reinhold begs Justus not to express his opinions of love in Cilli's hearing. Cilli's father speculates in the railroad stocks on the sly. Cilli is to be modeled by Justus, and tells Reinhold how her friends look, although she cannot see them. She asks Reinhold if he loves Else, and when he confesses he does, Cilli tells him that she was afraid at first that he was in love with Ferdinande. Reinhold tells Cilli that he thinks Else unattainable; Cilli replies that love is always a miracle, and that Reinhold must be himself if he would win Else. Reinhold goes away greatly encouraged, and finds in his room a letter from the President telling him that his appointment as Pilot Commander has been ratified, and that he shall appear at the ministry at his earliest convenience.