The novel opens at the opera. Newland Archer enters his opera box and looks out across the theatre to see his lover, May Welland, touch the lilies he had given her. While dreaming of their future together, his thoughts are interrupted by gasps from the gentlemen sitting with him. They are whispering about a stylishly dressed woman who has just sat down in the box with May. Sillerton Jackson gasps, "I did not think they would have tried it on". In other words, he cannot believe that the Mingotts would allow the woman to come and sit in their box at the Opera. Newland becomes annoyed as he realises that everyone is paying attention to the box where his fiancée is sitting. He does not want the woman with whom he is engaged to be associated with a woman of questionable reputation. The strange woman is Ellen Olenska, a cousin of May. She has a bad reputation because she left her husband and ran off with his secretary. In New York Society, such behaviour was not accepted. Newland suddenly wishes to sit next to his girlfriend, as if to protect her from the gossip. He also has a sudden urge to announce their engagement because he wants to distract attention from the foreign woman and place attention on a happy event. He walks over to their box and is introduced to Ellen. Ellen explains that she remembers being kissed by him when they were little children and that returning to New York reminds her of her childhood. She imagines everyone appearing before her in their childhood underpants. Newland does not like her referring to New York society as being "a dear old place." He considers his society to be a grand institution and Ellen seems to be slighting this society.
After the Opera, everyone goes to the Beaufort's house for the annual ball. He keeps a huge room in his house dedicated solely to this annual ball. It is here that May announces to friends that she is engaged. Newland and May dance and, as is appropriate, sit alone in the conservatory where they sneak a kiss while no one is looking. Newland asks if Ellen has come to the ball; he hopes that she has not come because of her ill reputation. May replies that Ellen did not feel her dress was pretty enough to attend the ball, so she went home. Newland is glad that May understands propriety so well that she know when not to discuss the "real" reason why Ellen decided not to come: i.e. her bad reputation. As is customary for newly engaged people, Newland calls on Mrs. Welland and May and together they go to Mrs. Manson Mingott's home to ask her blessing for the marriage. Her home "lacks propriety" because her drawing room is on the same floor as the bedroom. To Newland's and May's relief, Ellen is not home. She has gone out shopping during the main "shopping hour" which lacks propriety as well. Mingott of course gives her blessing and encourages Newland and May to marry soon, "before the bubble's off the wine." As May, Newland and Mrs. Welland are leaving, Ellen returns with Beaufort. Newland apologises to Ellen for not having told her of the engagement at the Opera. Ellen understands that it is not proper to reveal such things in crowds. Ellen asks Archer to come and visit some time, but Newland thinks to himself how inappropriate such a visit would be.
Sillerton Jackson comes to dine with the Archers. Janey and Mrs. Archer want to hear the recent gossip on Ellen Olesnka. They began conversation discussing Mrs. Lemuel Struthers, who apparently was just a model for Mr. Struthers before they married. Then Ellen was discussed. Jackson said that she had not attended the ball and Mrs. Archer was glad of it. Janey ridicules Ellen's dress, and Mrs. Archer says that Ellen was bound to grow up strangely since she was permitted to wear black satin at her coming out ball. Newland defends Ellen and says that she should be able to act however she pleases since it is not her fault that she happened to have married a brute. Later, while the ladies retreat to work on a tapestry for May, the men smoke in the Gothic library. Newland remarks that "Women ought to be free." For the first time, Newland has doubts about his marriage. He feels that May's "innocence" is a contrivance of society, too fabricated to be real. He feels uncomfortable taking such an innocent woman as his wife, trading her blank page for his "page with a past." He worries that all the men around him of "perfect form" like Lawrence Lefferts lead horrible marriages of deceit and is worried that such a fate could become his own. After all, he has not confided any of his "real self" to May; perhaps they will always live their lives in secret from each other.
Then, the Lovell Mingotts decide to throw a reception for Ellen Olenska. But all the people of good society reject the invitation. So, Mrs. Welland tells this to Newland and Newland tells his mother. Mrs. Archer then goes to tell her friend Louisa van der Luyden, who is one of the most reputable women in New York society. Mrs. Archer and Newland discuss the problem of Ellen's reception with Mrs. Van der Luyden,
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