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Isabel goes to her uncle to discuss the matter of Lord Warburton’s offer of marriage. She tells him she doesn’t plan to accept the offer. He tells her Lord Warburton has already written to him telling him of his plans to propose. Isabel says she doesn’t want to get married at this point in her life.
During their discussion, Isabel and Mr. Touchett discuss the position of Americans in England. He tells her he has paid for his place in England and that as long as one pays, there’s room anywhere. He suggests, "Perhaps you might also have to pay too much." Isabel simply replies, "Perhaps I might."
Isabel thinks of how she has been trying to escape the possessiveness of Caspar Goodwood, her American suitor. She feels as if he influences her in such a way that it deprives her of a sense of freedom. He is a very powerful force in her mind and this force always translates in her sense of things to a diminished sense of liberty. She is especially interested in keeping her independence since she has just given such a focus to it by turning down Lord Warburton’s "big bribe." She realizes she was very eager to take up Mrs. Touchett’s offer to come with her to Europe because she wanted to escape Caspar Goodwood. She thinks of him as a sort of "grim fate."
The narrator gives a short history of Gaspar Goodwood’s life in the interests of giving a "clearer view." He is the son of a cotton mill owner in Boston, Massachusetts. He went to Harvard and distinguished himself in sports. Then he applied himself to mechanical engineering and invented a device that improved the running of the cotton mill. "There were intricate, bristling things he rejoiced in." Many people think he should do more than manage the mill, but he needed some big event to pull him into politics. Isabel had always liked the fact that he was such a "mover of men." However, there was always something stiff about him. She isn’t in love with him and therefore criticizes his small defects. She wonders about herself since Lord Warburton fulfills all the criterion in a lover or husband which Caspar Goodwood lacks and she still doesn’t want him.
She decides not to answer Caspar Goodwood’s letter. Instead she writes to Lord Warburton telling him she cannot marry him and asking him not to bring the matter up again. In the meantime, Henrietta Stackpole talks to Ralph about her worries about Isabel. She thinks Isabel is changing too much from having been in Europe and she wants Isabel to marry Caspar Goodwood as a measure to keep her in line with her old values. She asks Ralph to invite Caspar Goodwood to Gardencourt. Ralph does so, but Caspar responds saying he cannot come. When she hears of this, Henrietta decides to take Isabel with her to London for sight seeing. When Isabel tells Ralph of this plan, he laughs, saying in a roundabout way that it is improper for two young women to go around alone in London. He will go with them.
Here Isabel Archer sends Lord Warburton a letter rejecting his offer of marriage and Henrietta Stackpole begins a scheme to get her married to Caspar Goodwood regardless of her wishes. The issue at stake for Isabel seems to be about freedom. When she considered her life with Lord Warburton, she thought of it as a sort of gilded cage. When she thinks of Caspar Goodwood, she thinks of a loss of freedom. This theme of freedom is part of James’ attempt to write the American heroine. She is interested in Europe, but she goes to it for the freedom she thinks it might afford her. However, as soon as she arrives, she encounters many forms of restraint, the most telling of which is social conventions. First, Mrs. Touchett informs her of the impropriety of staying up with two young men. Now, Ralph Touchett informs her that it is improper for her and Henrietta to go to London to see the sights unescorted by a man. He does so lightly as if in jest, but he does say he will go with her. For her part, as much as Henrietta Stackpole is supposed to stand in for the independent woman, she is more invested in the present social order than she would at first seem to be, especially its insistence that young women like Isabel Archer marry young men like Caspar Goodwood.