As a nervous but hopeful Deeds prepares for his luncheon date with "Mary", Cornelius Cobb storms in and reveals her true identity: "'Mary Dawson' my eye - every time you opened your kisser you gave her another story. That dame took you for a sleigh ride that New York will laugh about for years!" Refusing to believe Cobb, Deeds phones "Mary", who is forced to tell him the truth. Longfellow hangs up before she can explain.

As the stricken Deeds prepares to leave for Mandrake Falls, a homeless man bursts in on him, distraught that Deeds is supposedly squandering millions when so many are broke and starving. Listening to the sobbing man, Deeds forms a plan for his fortune: he will give it away to the needy, forming a farming district with acres of land for deserving families.

The lawyer Cedar sees his chance for power and wealth slipping out of his grasp. He declares Longfellow Deeds incompetent and possibly insane and has him arrested. "We'll stop this yokel dead in his tracks!"