The internationally renowned painter Professor Ernst Nyborg lands in Korsbæk. He is a former art teacher and romantic interest of Maude Varnæs. Also arriving to witness Nyborg's exhibit is Gitte Graae, Jørgen Varnæs' home-wrecking and increasingly expensive lady friend.

The Varnæsses' maid, Agnes Jensen, quits her job to get married to railway employee and local communist, Lauritz "Red" Jensen, but to her dismay, Red quickly invites a German refugee, the poet Herbert Schmidt, to live with them in the spirit of solidarity.

Mads' building project is well under way, but Mrs. Møhge supported by Skjold Hansen continues to fight him. Skjold Hansen's daughter Iben arrives in town, having cancelled an upcoming wedding in Germany, and begins flirting with Kristen Skjern. Elisabeth Friis causes a furor, when openly supporting an abortion doctor, bringing her at odds with her and her sister's social circle.

Agnes delivers a boy, while Vicki, widow of Arnesen, returns to Korsbæk as a traveling vaudeville actress and reconciles with her father, the Colonel. Via Oluf Larsen she meets Herbert Schmidt, who now lives with the Larsens. Hans Christian Varnæs learns that his mistress Ms. Jacobsen is pregnant from their affair. She wants an abortion, which he pays for in betrayal of his own morals.

Mads is back in business and expands on all fronts and moves his family to a large villa outside of Korsbæk. The Varnæs couple returns from a trip to Paris, envigourated and with Maude bringing back something extra. The Varnæs home is to house a party with people whom they've met in Paris much to Laura's regret.

Jørgen Varnæs feels Mads' hand when Jørgen has taken an early Christmas vacation (on December 7) and has traveled to Switzerland. Upon his return a month later, Mads de facto reduces Jørgen's salary by half. Jørgen seeks help from his brother who is unable to provide any relief. Hans-Christian bites the bullet and seeks out Mads to speak for Jørgen.

As Oluf Larsen is arranging pictures of assorted fascists in his outhouse, he's surprised by Herbert Schmidt, returned from Spain. He's reunited with Vicki, who'd become a teacher at the private school (replacing teacher Andersen). World War II breaks out causing rationing of certain goods in Denmark (sugar and gasoline). Agnes is to wait at Daniel's confirmation party, leaving Lauritz to look after the children - with the most serious consequences.

Sofus Jensen, Korsbæk's beat policeman, seeks out Lauritz along with a police lieutenant early in the morning of June 22, 1941, the day Hitler declares war against the Soviet Union. The good nurtured officer feigns a story that Lauritz has already left the premises so as to give Lauritz a chance to escape. Lauritz seeks help from the Larsen family, and through Kathrine, Lauritz gets a lift to Copenhagen via a reluctant Mads.

Skjold Hansen has announced his retirement from the Korsbæk Bank Board. Bank President Jessen suggests that Jørgen Varnæs return to the board as Skjold Hansen's replacement, but he wishes to meet with him first. Hans Christian Varnæs organizes a dinner for them. There, Jessen confronts Jørgen with his suspicion that his wife, who is the sister of the seller, was defrauded of her share of the proceeds from the farm sale that Jørgen conducted as a front for Mads Skjern. Jessen demands an investigation, before he will nominate Jørgen for the vacant bank directorship.