Simon and Augie find work in a department store while they take courses at the city college. Simon hires a woman named Molly Simms to help with the household chores, and on New Year's Day, when Molly fails to arrive and Simon comes home with odd scratches on his face, Augie learns that they are involved in a romantic liaison. Molly claims that she loves him, but in response Simon fires the girl and has her replaced by an old Polish woman.
As a sporting-goods salesman in the suburb of Evanston, Augie begins making more money than Simon. He moves into an Evanston student loft, and Mrs. Renling, Augie's boss's wife, takes him under her wing; she dresses him, pays for horse-riding lessons, and enrolls him in evening classes at Northwestern. She tells him, "I'll make you perfect." However, when Augie begins dating a waitress named Willa Steiner, Mrs. Renling opposes the match, warning him that all Willa wants is to get married. In order to create distance between the two lovers, Mrs. Renling asks Augie to take her to Benton Harbor, a resort for the wealthy up in Michigan. Augie agrees to keep her company, quietly enduring her incessant commentary on the guests.
One day, Augie spies two pretty girls at a table, and quickly falls in love with the younger of the sisters: Esther Fenchel. Mrs. Renling, noticing the attention Augie gives to them, wrongly concludes that he is love with the elder girl, Thea. Augie allows her to think this while he secretly pursues Esther. In the end, however, Esther refuses him, and Augie is horrified to learn that the girls believe he is Mrs. Renling's gigolo. Nevertheless, Thea declares her love for him, but the next day the girls leave the resort. Augie finds a note from Thea: "It's true I love you. You'll see me again." As the summer holiday comes to an end, Simon arrives for a day trip with Cissy Flexner, and tells Augie that he intends to marry her. Augie observes how powerfully in love with her his brother is, and silently disapproves of the way Simon is made to "struggle" with the girl. Cissy, in Augie's view, asserts far too much power over his brother.
Back in Evanston, the Renlings offer to formally adopt Augie. If he accepts their offer, he will become "Augie Renling" and inherit all of their money; he realizes, however, that they assume he is "self-seeking" (153), like the rest. He goes to Einhorn for advice, but the man, assuming that Augie will accept the offer, extends his immediate congratulations, commenting on how lucky he has always been. In the end, Augie rejects the Renlings' offer.
Augie then returns to the city and miserably settles into a job selling paint. Soon, he runs into Joe Gorman again. Joe tells him that he has been running illegal immigrants over the Canadian border, and asks Augie whether he would like to join him. Augie, attracted by the idea of getting out of the city, agrees to help drive to Massena Springs, but nothing more. They roar off in Joe's fancy black Buick, but when a state trooper investigates the car when they stop for food and gas, Joe tells Augie that the vehicle is stolen. The two young men separate in an attempt to escape the police, and Augie later catches sight of Joe sitting between two men in the back of a police car.
Without enough money to buy a bus ticket home, Augie wires Simon, but never hears back from his brother. Augie takes the matter into his own hands, and begins jumping along freight trains headed west. After a circuitous route, Augie finally makes it home to Chicago. At home, Augie discovers that everything has changed. A Polish family now occupies the house. He goes next door to the Kreindls' home, where he finds Mama, who tells him that Grandma Lausch died while he was away, and that Simon sold the flat, along with all of the furniture. Mournful about Grandma Lausch, Augie heads over to Einhorn's house, and runs into Five Properties and Mr. Coblin outside. Five Properties announces that he is getting married, and invites Augie to the wedding.
When he arrives at the Einhorns', Augie learns that Five Properties is marrying Cissy Flexner, and that Simon, in his desperation to win back his love, lost all of his money in a betting pool. After wreaking havoc in the Flexners' house and spending a night in jail, he went into hiding. Einhorn advises Augie to be hard on his brother, since he has the upper hand now, but Augie can only feel heartbroken.
Einhorn sets Augie up with a job working for a Frenchman who runs a high-end dog-grooming business. Augie also visits Evanston, and learns that Willa has married. Later, he runs into Padilla, a Mexican classmate of his from the city college: a genius who has won a scholarship to study math and physics at the university. Padilla supports himself by stealing books, and rationalizes his job by stating that he doesn't intend to do it forever. Augie joins him in stealing books, and quickly discovers a reading fever of his own: "I realized how a general love or craving, before it is explicit or before it sees its object, manifests itself as boredom or some other kind of suffering."
Augie moves into a student house near the University of Chicago, where Simon finally visits him. He apologizes for not having wired him the money, and Augie observes that his brother has grown fat and unhealthy. Simon tells him that he is planning to woo and marry a rich young woman named Charlotte Magnus. He shows Augie a picture: she is heavy, but pretty in the face.
Soon, Augie runs into Clem Tambow, a registered student of psychology who is in love with a girl in Augie's student house named Mimi Villars. Mimi had initially come to Chicago to study, but was expelled for open sexual activity. She now waitresses at a student hash-house, and - unfortunately for Clem - is in love with her Frazer, a graduate assistant in Political Science who cuts an impressive intellectual figure. Mimi, it seems, is the kind of girl who prizes men for their genius. When Augie's friend Sylvester appears, he discovers that Sylvester's ex-wife is actually Mimi's sister, Annie. Now deeply involved in communist party activities, Sylvester aims to recruit Frazer.
Simon eventually hits his mark, and marries Charlotte Magnus in a secret ceremony. The large and indelicate family members look upon Simon as their prince, and he confides in Augie that the honeymoon was terrible. There is a new suicidal streak in his eyes, and he anxiously strains to make the coal yard he has been given as a wedding dowry turn a profit, learning from the powerful Uncle Charlie himself. Happy Kellerman, the manager of Simon's yard, and Augie work alongside Simon, and slowly, but surely, Simon learns how the business works; he becomes politically adept, and finds friendships within the police force and municipal government. Charlotte also proves to be an excellent businesswoman and councilor, and Simon eventually gives her his utmost respect.
When the Renlings tell Augie that they wish to adopt him, they offer him the possibility of a special future, one which would find him a wealthy man with a new family. This highlights another Machiavellian influence in his life, as well as emphasizes Augie's attractiveness; he is young, energetic, promising, bright, and good-natured. He is, in other words, readily "adoptable"; others see that there is something good to be made of him. The trouble, of course, lies in his tendency towards "opposition", as noted by Einhorn. When the Renlings offer him the opportunity to become their son, Augie opposes it because he does not want to seem "self-interested". In other words, he defines who he is by rejecting others' assumptions - but later contradicts himself by offering the Whitmanesque insight that he assumes about others what he assumes about himself. On the one hand, Augie rejects others' assumptions, but on the other hand he assumes that his own assumptions are shared by others. This draws attention to Augie's inability to commit even to something as small as a point of view.
Augie also rejects the Renlings' offer by citing his own sense of origin and family, especially asserting his love for Mama and Georgie. This contrasts with Simon's willingness to be "adopted" by the Magnus family - in his view, a highly practical decision. Linking one's fate to others does not necessarily have to signify a repudiation of one's family or origin: Simon continues to provide for his mother and advise Augie.
For a little while, at least, Augie enjoys Mrs. Renling's attention, and when he accompanies her to Benton Harbor, he poses as her son, even welcoming this assumption when it is made by others. Augie's passivity with regard to his identity in Benton Harbor borders on dishonesty. Esther and Thea Fenchel realize he is not a relation but, ironically, assume the worst.
In Benton Harbor, Augie falls for Esther Fenchel, the purer of the two sisters. In his attempt to win her, he plays at being an "Arthur". Mrs. Renling mistakes the object of Augie's desire, and believes that he loves Thea, the more passionate of the two. This moment echoes a scene written by the poet Dante, who admires his beloved Beatrice from afar, only to have others mistakenly assume that the object of his love is the woman sitting next to her, and not Beatrice herself. Augie's attempts at romantic chivalry, however, fail, and Esther rejects him. Thea, on the other hand, a kind of Machiavellian figure herself, takes an active interest: she sees the "adoptable" quality in Augie, and her parting note points to her future reappearance in the narrative.
Meanwhile, Simon falls madly in love with Cissy, and loses his self-respect, as well as the respect of others. When Cissy marries for money, Simon reexamines his circumstances, recalling Grandma Lausch's assertion that respect is better than love. Augie muses: "I had accepted of Grandma Lausch's warning only the part about the danger and that, through Mama, we were susceptible to love; not the stigmatizing part that made us out the carriers of the germ of ruination." Simon, experiencing the havoc of love, fights off the possibility of ruination by gathering together his wits and quickly aiming at a new mark. He pursues Charlotte Magnus and marries into a wealthy family that has, thus far, lacked a "prince". He becomes that prince, and ultimately discovers that Charlotte, being a very intelligent and astute businesswoman, is a person he can respect. Having been burned by love, Simon chooses respect, just as Grandma Lausch had always advised.
The physical immensity of the Magnuses, including Charlotte, echoes the immensity of the Coblin family and Five Properties. Simon responds to Cissy's rejection by behaving in a similar fashion, pursuing a wealthy woman whom he does not love. He trounces his former lover's success, and arrives at his full-fledged Machiavellian potential by assessing the material world, his position within it, and the possible consequences of his actions, and arriving at the best possible decision given what he has to work with. Simon succeeds in making the marriage happen, and sets himself along the path towards becoming a rich man.
Augie, by contrast, suffers the consequences of having rejected the Renlings' offer, and finds himself accepting another dead-end route to fast money by agreeing to accompany Joe out East. He naively assumes that there won't be any trouble along the way, and that he is only coming along for the drive, but he soon ends up on the run from the law. The impulse to go east strikes the reader as escapist: Augie states that he wants to get out of the city. As someone "Chicago-born", he desires new landscapes and possibilities. Though the drive proves disastrous, the rambling route back to Chicago by way of hopping trains is at least quixotically adventurous; in this manner, Augie manages to see something of the country.
Augie's mistake in judgment, however, does not bode well for his future. The decision to go with Joe Gorman flies in the face of Einhorn's previous warning about Joe's character. Augie understands that these first actions are crucial, but grabs at straws nonetheless. He rejects offers based on groundless idealism in favor of questionable actions, and makes far too many baseless assumptions. While he forms the Whitmanesque belief that the thing one assumes about one's self can be assumed about others, he fails to fully develop this insight. He has an almost romantic faith in the possibility of social mobility and rising above one's past, but he fails to determine how one can actively construct a path to reach these goals. Augie's idealized view of the Commissioner, Einhorn, and his son Arthur serves as only the vaguest kind of map for progress. Clem Tambow tells him: "You've got more possibilities than you know what to do with. The trouble with you is that you're looking for a manager."
In this section of the novel, Augie passes through a quick succession of professions: personal assistant, salesman, dog-groomer, and book-thief. Though he avoids Joe Gorman's darker route, he is inspired by Padilla's justification for stealing books: Padilla doesn't feel that "stealing" is his fate, thereby expressing a kind of psychological control over his destiny. Augie recognizes the value of Padilla's statement, and makes it his own; at the same time, however, this belief strikes the reader as untenable over the long-term. At the end of the novel, as Augie finds work dealing in black-market activities in Europe, he may continue to find comfort in this same rationalization, but the irony is that he may have unwittingly made a criminal profession his fate.
The irony of the book-stealing job is that Augie threatens the job by reading all of the books first, thereby causing a delay in the turnover rate. Augie clearly craves knowledge: he reads to learn about the world, though in the end he appears to have trouble creating a bridge between what he reads and reality. Augie orbits the world of the university, though he never registers to become an actual student; indeed, the reader wonders whether Augie will ever cross the threshold and become a true scholar. He expresses a clear admiration for intelligence and exhibits some of his own, but the question of "knowledge", for him, is less about books than it is about life experiences.
The narrative introduces Mimi Villars by way of Clem Tambow's admiration, but the reader infers that Augie is also smitten with Mimi. After meeting her lover Frazer, however, Augie realizes that neither he nor Clem have any real chance with her. Augie probably aspires to become the kind of man Mimi desires - an intellectual - but as it is, Frazer appears to exist in a stratum that Augie cannot reach.