The young people of Blair Water travel to Summerside to take the entrance exam for high school and compete for the Queen Victoria scholarship. Isabel sneaks back to Scotland leaving a venomous letter in her wake.
Ilse Burnley has moved into the Murray house. Jimmy comes home. It is discovered that Isabel sold her share of New Moon to Ian Bowles. Laura decides to sue Ian for divorce. Jack Haszard plans to help Laura.
Rhoda Stuart steals Emily's mail, incoming money orders and with the help of her mother Velma, attempts to impersonate Emily when a New York travel magazine publisher visits Blair Water. Ian Bowles, who is in hiding at New Moon, is wanted for fraud.