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Act III starts a little while later, as a group of men arrive for the auction of the estate and its slaves. They notice that there is one name scratched out on the list of slaves, which Pete says is Paul, whom they believe to be dead. People believe, however, that it was Wahnotee who killed him. Sunnyside explains: “So mad are the folks around, that if they catch that redskin they’ll lynch him, sure” (48). Scudder enters and tells Sunnyside to show the group around, as his “stomach goes agin [against]” (48) doing it himself. Mrs. Peyton enters and the men privately express pity for her fate before they leave.
Mrs. Peyton says she will never leave Terrebonne “till the law compels [her]” (49), and Scudder tells George that Dora is in love with him and he should marry her to save the estate. He reveals that he knows George is in love with Zoe, and since he loves her too, seeing their love has “been a hollowing [him] out” (50). Mrs. Peyton begs George to marry Dora and he agrees. He begins to propose to her, but soon confesses to her that he is in love with Zoe instead. Zoe appears and the two try to break the news gently to her; Zoe disparagingly tells Dora that although he loves her, she isn't a threat: “[Y]ou know you can’t be jealous of a poor creature like me” (51). Dora is upset, crying: “You’ve made me cry, then, and I hate you both!” (52).
M’Closky then enters with Zoe’s free papers, telling the group that Zoe is not actually free due to a technicality concerning the judge’s debts. They all lament Zoe’s fate and the fact the Liverpool did not arrive in time. Zoe admits that Dora and Sunnyside cannot save them, as they’ve just told Dora of their love, explaining: “I had rather be a slave with a free soul than remain free with a slavish, deceitful heart” (53). The family weeps for Zoe, while Pete tells the group of slaves about their upcoming auction. Pete tells the slave men to “look [their] best for de judge’s sake” (56), as then the other slave owners will realize they are happy and were treated well, and will say when they’re sold to someone else: “Lor’ bless dis yer family I’m gwine out of and send me as good a home” (56). Zoe enters to lament her fate before the auction, saying: “[Y]ou [the judge] made [my] life too happy, and now these tears will flow; let me hide them till I teach my heart” (56).
The auction begins and Dora tells Sunnyside that he must bid for the estate, even though it will “cost [him] all [he’s] worth” (57). Sunnyside agrees and buys the estate at auction. The slaves then get auctioned off; Grace and her children are bought by Ratts, the captain of the Magnolia Steamer, while George buys Pete himself. Zoe is then put up for auction, and despite a bidding war with bids by Sunnyside, George, and Dora—and George rushing on M’Closky with a knife—M’Closky buys Zoe for the price of $25,000.
Act III is the most fraught act of The Octoroon before its tragic ending, as it is revealed that Zoe is still a slave, and she is sold off at auction to M’Closky. The rigidity of the South’s laws at the time is on full display here, as Zoe is forced into slavery and sold off to M’Closky at the behest of the law (even as the characters acknowledge that it’s wrong), and Zoe and George confront that the law prevents them from being together. Mrs. Peyton, who loves both Zoe and George, still encourages George to wed Dora even after learning of his and Zoe’s love.
The act also showcases Boucicault’s seemingly both pro- and anti-slavery stances in the play. The Terrebonne slaves are shown here to be treated well, even saying before the auction they want to look their best “for de judge’s sake” (56) and to show how well they’ve been treated. At the same time, Zoe’s retreat back into slavery and purchase by M’Closky shows the evils of slavery as an institution, as it can imprison even “good” people like Zoe to a life of enslavement under a villainous master if he bids the highest price. The act also exhibits the racial prejudice against Native Americans, as the characters immediately assume that Wahnotee must have killed Paul, despite the two’s friendship.
George comes off more valiant and good-hearted during this act, as he is unable to lie to Dora in order to use her money to fund the house:—“I have not learned to lie” (51)—and buys Pete at the slave auction despite him being too old to work. Although Dora starts off the act in her more stuck-up way and is initially angry over Zoe and George’s love, the act also reveals her good heart, as she forces her father Sunnyside to purchase Terrebonne—even threatening to buy it herself—and later bids on Zoe in an attempt to stop her from going to the evil M’Closky.
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