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Whilst Charlotte becomes bored with life with Samuel, James learns that Elizabeth is sailing to South Africa with a mysterious and dangerous cargo. She is in fact gun-running. James needs money for the repair of his steamer and sails after his sister, illegally using a bogus distress flag to get her to stop. He persuades her that she is in an awkward position and buys the guns from her as a job lot. However, when he tries to sell them to Major Nesbitt in South Africa, he makes a heavy loss, which amuses Captain Baines.
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