As “Atlas Shrugged” continues, the economy worsens, Dagny is forced to cut more trains, and more industrialists disappear. Dagny believes that the industrialists are not leaving of their own free will, but that a “destroyer” is at work. Francisco d’Aconia, who is both a childhood friend and former lover of Dagny’s, pays a visit. Dagny believes that Francisco is intentionally running the family business of d’Aconia Copper into the ground. Francisco and Hank become friends and Francisco asks Hank why he even bothers to stay in business under such oppressive government regulation. Francisco tries to convince Hank that his work is wasted, because it can only be used by parasites for their own exploitation.
Hank is put on trial for breaking one of the new communist laws, but he refuses to participate in the proceedings. (The law he broke was selling too much of his steel, which the government viewed as anti-competitive.) The courts decide to let him go, rather than appear heavy-handed. Following the trial, Hank’s wife finds out about his affair with Dagny and sets out to destroy him. Hank is blackmailed into giving all the rights to Rearden Metal to the State Science Institute, to be used for “Project X”, which is a new massively powerful bomb. There is yet another set of laws passed that are even more oppressive, and include a ruling that all patents must be signed over to the government. Dagny see the new laws as irrational and repressive, so she quits her job and retreats to a mountain lodge. While Dagny is away from her job, the Taggart Tunnel caves in on one of the trains. The accident is caused by the incompetence of the government workers. Dagny returns to her work, but Francisco tries to convince her to abandon the railroad as a lost cause.
When Dagny returns to her post at Taggart, she continues to try to salvage the railroad, cutting off some lines to make up for the others. On one of her trips across the country, she meets a hobo sneaking on her train. The hobo tells her he used to work with a man named John Galt, a worker who abandoned the factory he owned. Just before disappearing, John Galt declared that he would stop the motor of the world before he would participate in an unjust communist system. Dagny receives a letter from Daniels believes he will be the next target of the destroyer. So she heads out to reach Daniels and prevent him from quitting his work on the motor, but she arrives only to see him taking off in a plane with the “destroyer”, who is a strange man trying to persuade hard working members of society to abandon their jobs. In an attempt to stop Daniels from disappearing, Dagny follows them in a plane, but ends up crashing the plane into the mountains.