All of Act IV takes place in Hardcastle's house.
Hastings and Constance enter, bringing news that Charles Marlow (father of our young hero) is expected to visit the house that evening. Since he would surely recognize Hastings and thereby ruin the plan for elopement, the lovers know they must move with speed. Hastings has meanwhile sent the casket with jewels to Marlow for safekeeping. Before she exits, Constance says to herself that she will delude her aunt "with the old pretense of a violent passion for [Tony]" so as to keep her off their trail.
Marlow enters with a servant, confused why Hastings sent him the casket. He asks the servant to bring the casket to Mrs. Hardcastle (whom he still believes is the landlady) for safekeeping (uh oh!) and then speaks to himself about his nascent passion for the barmaid.
Hastings enters and Marlow tells him about the barmaid and his new infatuation. Hastings is shocked that Marlow would rob a girl of her virtue, whereas Marlow insists he will "pay" for the virtue. When Hastings inquires after the casket, he's angered to hear Marlow has sent it to the landlady (since that has returned it to the hands of his antagonist Mrs. Hardcastle). However, Hastings cannot reveal the reasons for his displeasure without alerting Marlow to the duplicity being played on him, and so Hastings must decide on his own that he and Constance will leave without the jewels.
Hardcastle enters to find Marlow, whom he welcomes again as son to his old friend. However, Hardcastle (who Marlow still thinks the landlord) wishes Marlow to control Marlow's servants, who are getting drunk and causing a ruckus. When Jeremy, one of the servants, enters drunkenly and makes a fool of himself, Marlow refuses to discipline him but instead mocks Hardcastle's request. Fed up, Hardcastle demands Marlow and his servants leave immediately. Marlow is disgusted with the idea of being put out in the middle of the night, but Hardcastle insists until Marlow asks for his bill. In the confusion over why Marlow is requesting a bill, Marlow suddenly realizes what is going on, but not before Hardcastle exits angrily.
As Marlow is grappling with his mistake, Kate (still disguised as barmaid) passes through, and he confronts her immediately about where they are. Realizing she needs to play the situation right so as not to counteract her well-designed ruse, she answers him that it is Hardcastle's house, and laughs at the prospect that he considered it an inn. What's more, she provides she is not a barmaid but a "poor relation" who relies on the Hardcastles for the charity of shelter. Marlow is shocked to have potentially treated her as a lower class woman, and apologizes for having mistaken her behavior for that of a barmaid. He admits to her that he cannot pursue her since "the difference of our birth…makes an honourable connexion impossible" and so he must not endeavor to ruin her. Kate is impressed with the virtue he shows here, and she suggests that they could be wed even if she lacks fortune. He is touched by her "pretty simplicity" but admits "I owe too much to the opinion of the world, too much to the authority of a father," and so he leaves her as an act of courage. When he leaves, she decides to herself that she will maintain the deceit long enough to show her father his true character.
Tony and Constance enter, with the former explaining that his mother believes the missing jewels were due simply to a servant's mistake but that he cannot steal them again. However, he has prepared some horses for their escape, and if he and Constance can fool his mother for a while longer, she and Hastings should be able to escape. As Mrs. Hardcastle enters, they pretend to be caught fondling each other, and she, so happy to see it, promises she will have them married the next day.
A servant brings a letter for Tony, the handwriting of which Constance immediately recognizes as belonging to Hastings, which could ruin them. Tony, who cannot read, tries to sort it out, but before he can give it to his mother to read, Constance grabs it and pretends to read it, making up a nonsense letter on the spot. Her attempts to blow it off don't deter Tony, who gives it to his mother to read. She reads from it that Hastings awaits them in anticipation of the elopement. Though polite, she insists she will not be bested at this game, and decides she will use the horses Tony prepared to bring Constance far away from Hastings and any attempt to run away. She then leaves.
Constance, now depressed, is joined by Hastings, who accuses Tony of betraying them. Before he can suitably defend himself, Marlow enters, angry at having been duped. In short order, everyone turns on Tony. A servant enters to inform Constance that Mrs. Hardcastle awaits her for a quick departure. In the meanwhile, the resentment between everyone grows harsher. With a quick and sad goodbye, Constance exits. Tony suddenly develops a plan, and tells everyone to meet him in two hours at the "bottom of the garden" where he'll prove to all he's more good-natured than they believe.
As one might expect in a well-made play, Act IV is where things look the worst for our main characters. By the end of the act, Marlow has turned his back definitively on Kate, and Constance has been removed from her beloved. And to top it all off, lovable Tony is hated by everyone.
It is in this high-stakes act that Goldsmith makes perhaps his most cutting observation on the hypocrisy inherent in the aristocratic worldview. When Kate changes her story, making herself a "poor relation" instead of a barmaid, she puts Marlow up against an ethical test. The fact that he no longer will stoop to seducing her comes off to some extent as an honorable proclamation, but it also implies that he would have had no trouble doing so otherwise. In fact, he speaks of her to Hastings at the top of the act as a commodity. He says he would never rob her of her honor, but would "pay" for it.
This sense of reprobate in Marlow is not something Goldsmith would outright condemn (a brief glance at his biography would suggest the hypocrisy of that), but what is worth condemnation is a system that traps Marlow into such extreme dualities. On one hand, he is a man who loves women – and this is what ultimately attracts Kate. On the other, he is someone much indebted to "the opinion of the world," and as such cannot imagine pursuing this woman any longer. Despite having genuine passion for her, she does not exist on one of his two extreme sides; she is not rich enough to be a respectable match, and yet is too respectable (as a relation to the Hardcastles) to treat as a paramour. In this dilemma is a spark of the tragedy that lies behind good comedy, but that tragedy lies not in the girl's situation (false though it may be) but rather in the forces that confound Marlow's happiness so.
Of course, Kate's change of tactic also continues the play's exploration of how the appearance of behavior is prized over substance itself. Marlow is mortified to learn that she is a “modest woman,” and apologizes for having mistaken her behavior. Of course, her behavior has not changed in the slightest, but now that she is ostensibly of a different social class, the perspective through which he views her is entirely different. It's an absurd fact, and one that makes for good comedy, in that Goldsmith can mock it rather than praising any virtue.
The treatment of Marlow in light of his behavior does indicate a certain conservative streak in Goldsmith, no matter how biting his satire might become. There is little doubt that we are ultimately meant to admire Marlow by the end of his “test,” and to believe that he passed it. It is easy for us today to criticize the arrangement, his desire to please the "opinion of the world" and of his father, and his disavowal of a marriage with a poor girl despite romantic attraction. And yet Kate, presented as a level-headed figure able to exist in moderation, admires him. It suggests that Goldsmith does not wish to criticize the confines of his society at large, but rather to merely point out the absurdities contained within it.
Lastly, this act shows Tony growing even more past the limits of his comic archetype. As a trickster, he was well established by the beginning, but his ironic embrace of stupidity as wisdom is now matched with a genuine desire to help others. However, one is certainly pressed to answer why he cares about this. It could be simply a desire to defeat his mother, but it might also be a desire to help others escape the confines of the world that has no place for him. The fact that Hastings and Constance want to escape might attract Tony because it negates the stifling rules of the city/country world. In a sense, perhaps Tony himself has a sentimental streak, so long as that sentiment does not praise aristocratic values as its end.