"Peter" and "Kate" take refuge in London with Lady Lowestoft, a former admirer of their adventurous father, and quickly rise to social prominence.

Prudence refuses his proposal, asking him to wait until her father's doubtful claim is proved, to which Sir Anthony agrees, although resolving to carry her off and marry her whatever the outcome.

Having obtained a document that could get the Old Gentleman executed as a Jacobite himself, Markham attempts to blackmail him but is persuaded instead to exchange the incriminating letter for another that exposes Letitia's wealthy father as a traitor.

To counter that, the Old Gentleman dispatches Robin/Kate, disguised as a highwayman, to kill Markham and steal back the exchanged document, thereby inspiring the romantic Letitia to fall in love with her unknown rescuer.

Following "Peter's" disappearance, suspicion is cast over both the Merriots, and so "Kate" flees to France while Lady Lowestoft complains of the deception played upon her by her protégés.