Jefferson and Hamilton debate the merits of Hamilton's financial plan. Afterwards, Washington pulls Hamilton aside and tells him to find some compromise to win over Congress.

HAMILTON: They think me Macbeth, and ambition is my folly
I'm a polymath, a pain in the ass, a massive pain
Madison is Banquo, Jefferson's Macduff
And Birnam Wood is Congress on its way to Dunsinane

When his family travels upstate for the summer, Alexander begins an affair with Maria Reynolds, a woman who claims to be abandoned by her husband. But her husband finds out about the affair and blackmails Hamilton.

Burr expresses his envy of Alexander's influence in the newly-formed government and decides to run for political office in order to be in the metaphorical "room where it happens".

WASHINGTON: One last time
The people will hear from me
One last time
And if we get this right
We're gonna teach 'em how to say goodbye

ELIZA: The world has no right to my heart
The world has no place in our bed
They don't get to know what I said
I'm burning the memories
Burning the letters that might have redeemed you

Philip, now grown, challenges New York lawyer George Eacker to a duel for insulting his father. Following Alexander's advice, Philip aims for the sky at the beginning of the duel, hoping the gesture will cause Eacker to stand down, but Eacker shoots him anyway.

Burr is furious at Hamilton's endorsement of Jefferson and challenges Hamilton to a duel for keeping him out of "the room where it happens".

ELIZA: Can I show you what I'm proudest of? I established the first private orphanage in New York City. I help to raise hundreds of children. I get to see them growing up. In their eyes I see you, Alexander.