Bruce tells Alfred about Rachel and asks him to take her home. He goes to the party downstairs to a chorus of Happy Birthday. He meets Earle ,who tells him that the stock offering was a success; the buyers were mostly trusts and brokerages. Bruce finds Fox and thanks him for the antidote vials that he delivered. Bruce then tells him what has happened.
Fox interrupts that the water won't help disperse an inhalant. He stops and thinks. He says the stolen the microwave emitter could vaporize all the water in the mains, releasing the toxin. He reveals that he has been fired by Earle for asking too many questions about it. Bruce asks him to break into Wayne Enterprises and begin making more antidote.
Bruce is carted off unwillingly to another section of the party by Mrs. Delane. When she insists that he must meet a man called Ra's al Ghul, she suddenly has Bruce's attention. As the figure turns around, it is clearly not Ra's. Bruce whispers that he watched Ra's die. A familiar voice from behind asks 'but is Ra's al Ghul immortal? Are his methods supernatural?'
Bruce turns around to the sight of Henri Ducard. Bruce thinks slowly before figuring out that Ducard is the true Ra's and the man Bruce fought back at the League of Shadows HQ was a decoy. Ra's muses that they both have double identities. He then lectures Bruce on the weakness of compassion. Even though Bruce had saved his life, he will still destroy Gotham.
Ra's gives Bruce a chance to get the innocent guests out of the house, which he does by acting drunk and insulting them. After Bruce demands his guests leave him in peace, he and Ra's walk together. Ra's explains that Crane's fear toxin is derived from the blue flowers back in China and that he found a way of weaponising it.
Crane, however, is not a member of the League of Shadows and his idea of the plan was that they would hold the city to ransom. Ra's explains that Gotham must be destroyed because of how corrupt it is -- which he illustrates by explaining that the League of Shadows has infiltrated every level of its infrastructure.
The scene is intercut with a series of shots showing members of the League disguised as officials and police officers releasing people from Arkham -- including Victor Zsaz and Crane, who, still under the effects of his own fear toxin, only mumbles 'scarecrow.'
Back at the Manor, Ra's offers Bruce one last chance to join and help the League, which Bruce refuses, claiming that there are still good people in the city and that Gotham isn't beyond saving. Ra's nods to other League members, who set fire to the mansion. Ra's explains that Gotham has been attacked by the League before through economics, which caused the depression when Bruce was a child.
Ra's hoped that the city would destroy itself through the unequal distribution of wealth, however certain members of the rich families, such as Bruce's parents, donated money to help Gotham recover. But Ra's is back to the finish the job. With this Ra's attacks Bruce and pushes him in the way of a falling beam which pins an unconscious Bruce to the floor.
With Wayne Manor burning around him, Ra's says 'Justice is balance. You burned down my house and left me for dead. Consider us even.' Meanwhile the Narrows is in a state of panic as hundreds of rapists and murders are freed from the Asylum. Rachel wakes up in her bed with the two vials of antidote.
Alfred arrives back at Wayne Manor and uses a golf club to knock out a League member guarding the house. Praying that the man was not a member of the fire department, Alfred rushes into the burning house and rouses Bruce. Managing to free himself, Bruce is led to the cave by Alfred as the house collapses.
Alfred inspects Bruce for injuries as Bruce is torn about the destruction of his father's house. Alfred tells him that the Wayne legacy is more than bricks and mortar and quotes Thomas Wayne: 'Why do we fall, sir? So that we can learn to pick ourselves up.'
Police in full strength are moving from central Gotham across the bridge to the Narrows island. Rachel, being a D.A., is allowed to pass. She finds Gordon and gives him the antidote. Gordon explains that they are going to raise the bridges to the island and they need to get Rachel off before they do.
One last SWAT van is allowed over to the Narrows secretly carrying Ra's, a handful of his henchmen and the microwave emitter. A train, on the overhead Wayne line is stopped by the League where the Microwave emitter is being prepared to be hoisted up to it. While the drawbridges are raised, Ra's sets off the machine causing all of the water in the pipes below the streets to vaporize and blow the pipes open in the Narrows.