Dr. Orwell uses her hypnotism to send Klaus back to work. Klaus mishandles one of the mill machines, cutting a worker's foot off.
Sir warns that if the children misbehave again, they will be sent into custody of "St. Ives". The children discover that Dr. Orwell has hypnotized all of the mill workers. Klaus is hypnotized again to tie Charles to a log and send it through a log cutter as Dr. Orwell, Olaf, and Fernald watch. Fernald inadvertently mentions the word "fires" that frees the mill workers, and they start to rush the building. Violet figures that the word to break Klaus' trace is "inordinate", and stops Klaus in time from harming Charles. The workers break in and Dr. Orwell stumbles backwards into a furnace, killing her, while Olaf and Fernald escape.
As the police and Mr. Poe arrive, Charles thanks the children, and gives them a document that says their parents had stopped the Paltryville fire and were seen as heroes. Mr. Poe leave the children at the Austere Academy boarding school, where they meet the Quagmire orphans whose mansion had also burnt down.
