Margaret's at home with Teddy, checking over his homework (he's learning cursive) and inquiring a bit more about this gypsy he says he saw. It just doesn't make a lot of sense. Why would a gypsy want to start a fire? "Because Daddy's not home," Teddy explains. Margaret isn't sure what that means: the gypsy started the fire and Daddy wasn't there to stop it, or the gypsy started the fire because Daddy wasn't there? Teddy changes the subject and asks if Owen can come live with them. Margaret's shocked at such a notion and says that's not what they're talking about. She says everybody just has to be much more careful so that things like the fire don't happen again.
Across town, Lucky Luciano has just finished sexing one of the whores at the Maison Derriere and is busy giving her instructions on peddling the heroin he wants her to peddle to her Johns. Suddenly, Gillian barges in, snatches the packet of heroin from the girl's hands, and lectures Luciano that they have standards here -- the girls don't peddle dope. Luciano gets on her case about the place not making much money; he chalks it up to how Gillian dresses the girls like schoolmarms. Gillian says they're classy, like how things ought to be. "It's the 20th Century," Luciano retorts. "You gotta have them show some skin." The girl comes back out of the bathroom with her clothes on, and Gillian informs her to gather her things, because she's fired. Luciano protests and says he's part owner of the place, but Gillian says it's her house. "I thought the house was Jimmy's" Lucky says. Gillian stops, wounded, and then gathers herself. "It is," she says, like it gives her even more standing to make decisions.
Nucky arrives in Washington D.C. and heads straight for Harry Daugherty's office, where he has to push past a crowd of grumbling bootleggers each looking for some reassurance that their kickbacks will be honored. Inside, Nucky finds Harry and Jess talking business with Remus, which pleases Nucky not at all. Harry tells him to wait his turn, but Nucky's all "Hell no!" about it, and I guess that's all it takes, because Harry asks Jess and Remus to clear the room. What a pushover to have as your Attorney General. Alone, Nucky says Means wasn't there today and also asks what the hell is going on with this investigation. Harry tells him it's a witch hunt, to which Nucky retorts that Jess Smith looks for all the world like he's about to be burned at the stake. More importantly, Nucky demands to know who's set to be the sacrificial lamb Harry throws to the wolves (I'm preeeetty sure that metaphor holds together). Harry says he doesn't know what Nucky's talking about, which pretty much convinces Nucky that it's him. "Indict Remus instead," Nucky says. Harry says that's never going to happen, and Nucky infers that it's because Jess, who took payments from Remus personally, would go down too. Nucky's furious that Harry would protect his lackey over a man who gave him thousands of dollars. Harry's already playing the Teflon game, reminding Nucky that he never accepted a dime. Nucky continues to rage about how he delivered New Jersey so that Harry's puppet could "pretend to be President." Nucky promises Harry that if he goes down, Harry's coming down with him, "lock, stock, and whiskey barrel" (gosh this episode is overwritten). Harry isn't moved by Nucky's accusations, and he wonders how the word of a washed-up bootlegger is going to stack up against the Attorney General of These Unites States. Nucky says we'll have to find out.