The Dwarf develops the picture he took and runs to tell Mr. Dark, who rushes to the storm drain where the two boys were hiding. He lifts the cover, but there is nothing there except old newspapers, gum, and old cigars.
Meanwhile, Charles sits upstairs in the library, having spent hours in researching the carnival. Not only that, Charles has also delved into poetic expressions of the angst and evil that he finds expressed in the carnival, summed up in the Shakespeare line from Macbeth: "Something Wicked This Way Comes." The boys knock at his door forty-five minutes late, having spent the day hiding in various places: garages, trees, and churches. They sit down next to the books that Charles had been reading and tell them the whole story of their experiences with the carnival, leaving nothing out. After they are finished, Charles looks at the boys and says, "I believe."
Charles shows the boys advertisements from 1846, 1860, 1888, and 1910 reading "J.C. Cooger and G.M. Present the Pandemonium Theater Co. Combined Side Shows and Unnatural Museums International!" The initials on the name are the same as the posters now up all over town. Charles, Jim, and Will stay up discussing the carnival, and Charles ruminates that "the carnival preys on "individuals with no one, they think, or no one actual, to answer their 'Help!'" Charles concludes, however, that there is still hope, as he could sense fear in Mr. Dark when they talked at the tobacconist. Mr. Dark would not have been afraid if he was invincible, so there must be a way to beat him.
Charles continues, saying that the way to hold together against forces like those of the carnival is through love and "common cause." He sums up: "Really knowing is good. Not knowing, or refusing to know, is bad, or amoral at least. You can't act if you don't know. Acting without knowing takes you right off the cliff."
Charles then imagines that the carnival represents the history of those who feed off of other people's unhappiness and fear, surviving indefinitely with the magical aid of the carousel. He decides that the carnival doesn't represent death, but rather our shared fear of death -- our fear of the images of death, whether actual pictures or the signs of aging. Essentially, the carnival plays on these fears, presenting the carousel as a way of escaping the anxieties of age, ignorance, death. Charles thus imagines that the carnival members were those who gave in to the promise of an easy solution, and who became indebted to the carnival as a result, serving indefinitely as "freaks."
They begin to discuss how the carnival can be stopped, but just as they begin, Charles hears the door to the library open and close. He tells the boys to hide as he stays behind and waits.
Charles is reading books on the devil and the supernatural and wonders if the carnival freaks are pure evil and the boys are pure good. The answer - at least according to him - seems to be no. This even applies to the Illustrated Man (to whom Charles refers as the "Illustrated Marvel"). But Charles senses something ominous - and possibly evil - just ahead. Something wicked this way comes, and it is sure to bring even greater horrors and mysteries.
The discussion about the "autumn people" gets to the heart of the good vs. evil theme that was first introduced near the beginning of the book. In Chapter 37, Charles reflected on the boys and circus freaks and decided that neither was really pure good or pure evil. In Chapter 38, this concept is elaborated upon. Most people are neither all autumn nor all summer. "Most of us are half-and-half. The august noon in us works to stave off the November chills. We survive by what little Fourth of July wits we've stashed away. But there are times when we're all autumn people".
Charles is trying to express through his monologues exactly how the carnival makes him feel. Did Mr. Dark really participate in the Black Plague or the murder of Julius Caesar? Maybe, maybe not. The point here is that this is how the carnival makes Charles feel. Charles feels that the carnival represents something dark that has been with humankind since its first days. It's an age-old force that strikes when the collective mood of a population is at low ebb, which strives to make things even worse, leaving chaos in its wake.
Charles's musings on the carnival have drawn its nature into more focus. We see now why he thought earlier that the "freaks" are not themselves evil. Rather, they are trapped in indentured servitude, seduced by the carnival's promises of youth (or older age). The carnival itself is "like people, only more so." It is a product of people's sins and desires.
Another idea that Charles reflects upon -- that Death does not really exist -- is important to the theme of acceptance, which will become the dominant theme of the book. Throughout the novel, Charles has been obsessed with what he feels to be his old age. Why? Because deep down, he sees his age as a sign of approaching death. However, the notion that death does not exist changes the whole equation. If death is indeed Nothing, then there is no need to fear death, and no need to obsess over old age. As Charles's musings turn from Death to the carousel, this shift becomes even more apparent. In the beginning, he was obsessed with wanting to be younger. Now, however, even though the boys have told him that there is a carousel that will make him younger, he does not want to ride it. He knows that it will not make him happy. He may appear younger, but he will not actually be any younger. His thoughts will remain the same, and he will have abandoned his friends and family. While he may still be upset at the physical limitations of his age, he is beginning to come to terms with himself.