Wedding bells ring as miner Mark Daniel marries visiting actress Keren Smith whilst Demelza and Ross have their own celebration as their daughter Julia is born, Ross not allowing Demelza's father's unwelcome visit to the christening party to ruin matters. Young Dr Dwight Enys comes to the area and is befriended by Ross. He is progressive and philanthropic, which annoys the curmudgeonly incumbent Dr Choake. With widespread poverty and mine closures all around Ross proposes that the pit owners form a collective with their own smelting company, to beat the Warleggans' monopoly, and presses ahead with the scheme. Francis opts out and is subsequently ruined as his mine is forced to close. To repay Verity for her kindness Demelza reunites her with Andrew Blamey in town, where they witness a food riot by starving locals.

Whilst Ross's cooperative has some success there are hard times throughout Cornwall and typhoid sweeps through Bodmin jail and kills Jim Carter just as Ross and Dwight break in to rescue him. Dwight is also called upon to visit the injured Keren, who throws herself shamelessly at the young doctor, as Demelza notices. Untouched by privation the Warleggans throw a ball where Francis, struggling to accept his reduced circumstances, neglects Elizabeth, allowing George to step in as her escort. Ross turns up drunk and confronts Halse, the magistrate who jailed Jim and then plays cards recklessly though he does expose his opponent as a card sharp, known to the Warleggans, who are now all the more determined to break him. Further scandal is caused by the arrival of Captain Blamey, who asks Verity to run away with him.

Francis wrongly blames Ross for helping Verity elope with Andrew Blamey. Meanwhile, Mark suspects Dwight and Keren of having an affair, starting chain of events which will have tragic consequences and threaten the safety of eveyone in Nampara.