Back on the ship, Matt heads in to interrogate Mal. Mal asks if they've seen what happened on the cargo ship. They have. Mal suggests that they not even tow it back -- just destroy it there. Matt says they're not going to destroy it, because it's evidence. Mal snarks that Matt wouldn't want to break the rules. He bitches when the Alliance doesn't try to help people, and he bitches when it does. I wonder if Mal truly wants to be independent at all, or if he just wants to be able to complain about the service. He theorizes that this is Matt's first excursion out to the hinterplanets. Matt responds with a sniff. He observes that Mal has a very loyal crew, and backgrounds that he has a history of inspiring loyalty in his followers. I hope this doesn't turn into a thing where everybody says how inspirational Mal is, but he never actually does anything recognizably inspirational. He's not particularly charismatic as it stands. Matt calls Mal "Sergeant." Mal says he's not a sergeant anymore because the war is over. Matt observes (accurately) that for some folks, the war will never be over. Just like our Civil War. Drink! More exposition. We find out the reason the ship is named Serenity. One of the last fights between the Alliance and the Independents was called the Battle of Serenity Valley. The Independents suffered a crushing defeat. Mal was there. Supposedly, this loss turned the tide of the war against the Independents. Matt wonders why Mal would name his ship after that battle, considering that he was on the "wrong" side. Mal observes that he was on the "losing" side. He's still not sure he was on the wrong side.
Matt uses this position of Mal's to theorize that he was the one who attacked the cargo ship and killed all the passengers. He's still fighting that lonely war against the Alliance. Mal sarcastically asks why they'd then take the one survivor back to the infirmary. Matt says they'd ask him, but apparently his tongue has been split down the middle. Ow. That's ow. Matt says that he hasn't seen torture like that since the war. Interesting detail, that. Mal mutters something in Chinese. Matt tells Mal that he and his crew are "bound by law" for the murder of the passengers. Mal mutters, "I should have known," then warns Matt that he's not the problem. He explains, "If things go the way they are, there's going to be blood."