Josefa, a young Mexican who works the bar, and Ah Sing, a vivacious young Chinese prostitute, voice a more sober view of life. Joe romances Ah Sing with a corny old song. She sizes him up and decides he is the perfect man to help her realize her future ambitions. Panicking in the face of her expectations, Joe runs out into the night.
Scene 3: Late Night at the Empire. The miners are addicted to gambling, making fortunes, and hopelessly ruining themselves, night after night. Ramón and Josefa work the tables. He deals, she is there to attract the crowd: “Without a girl, there can be no hotel, without a beautiful one, there can be no business.”
Joe is a particularly drunk, aggressive customer and his crude advances towards Josefa trigger an ugly incident. Josefa and Ramón remember an afternoon far outside the city when their love was dangerous, fresh, and unobserved.
Scene 4: Coronation Dinner. Joe and Clarence are feeling bullish, singing a song to help restore their virile pride: “Give me a man that’s all a man, who stands up straight and strong. A blessed thing in anybody is bone, backbone!”
Dame Shirley, alone in her cabin while her husband is away caring for a badly injured miner, receives a visit from Ned who reveals that he was a fugitive slave.
Ah Sing appears in a new dress in a new apartment. When she was a little girl, she was sold for a mere $10. Now she has bought her freedom for $700. Joe and she confess their love for each other. She hopes to marry him.
Ned has prepared a lavish dinner for her, his “Queen” of Rich Bar. He serves her and sings a quiet, intimate statement of his beliefs.
Joe, Clarence and a band of violent miners suddenly interrupt the dinner. They are recruiting men to go out and “chastise” some local Indians in response to the murder of one of their miner buddies. They describe a massacre they’ve already participated in: “a half dozen bucks, some squaws, some children. There was no resistance.” They burnt the houses and the bodies.