Jack returns to Gallowshield and lodges with Sarah, who tells him that Matt drowned in a boating accident. Jack learns from the boat's owner, Doughty, that Matt killed himself having stolen union funds to support his mistress, Thelma Clark. She is now dating Sarah's brother, Harry. Harry has photographs of Doughty's smuggling activities with which to blackmail him. Jack steals them and sells them to Doughty. They have Harry beaten up and run him out of town. Jack burns Matt's love letters to Thelma to convince Sarah that he was not unfaithful.