Billy Mallory was inspecting the stranger through Mr. Harding's glass. Suddenly he gave an exclamation of dismay.

“By George!” he cried. “It is serious after all. That ship's afire. Look, Mr. Harding,” and he passed the glass over to his host.

And sure enough, as the owner of the Lotus found the brigantine again in the center of his lens he saw a thin column of black smoke rising amidships; but what he did not see was Mr. Ward upon the opposite side of the Halfmoon's cabin superintending the burning by the black cook of a bundle of oily rags in an iron boiler.

“By Jove!” exclaimed Mr. Harding. “This is terrible. The poor devils are panic-stricken. Look at 'em making for the boats!” and with that he dashed back to the bridge to confer with his captain.

“Yes,” said that officer, “I noticed the smoke about the same time you did—funny it wasn't apparent before. I've already signaled full speed ahead, and I've instructed Mr. Foster to have the boats in readiness to lower away if we find that they're short of boats on the brigantine.

“What I can't understand,” he added after a moment's silence, “is why they didn't show any signs of excitement about that fire until we came within easy sight of them—it looks funny.”

“Well, we'll know in a few minutes more,” returned Mr. Harding. “The chances are that the fire is just a recent addition to their predicament, whatever it may be, and that they have only just discovered it themselves.”

“Then it can't have gained enough headway,” insisted the captain, “to cause them any such immediate terror as would be indicated by the haste with which the whole ship's crew is tumbling into those boats; but as you say, sir, we'll have their story out of them in a few minutes now, so it's idle speculating beforehand.”

The officers and men of the Halfmoon, in so far as those on board the Lotus could guess, had all entered the boats at last, and were pulling frantically away from their own ship toward the rapidly nearing yacht; but what they did not guess and could not know was that Mr. Divine paced nervously to and fro in his cabin, while Second Officer Theriere tended the smoking rags that Ward and Blanco had resigned to him that they might take their places in the boats.

Theriere had been greatly disgusted with the turn events had taken for he had determined upon a line of action that he felt sure would prove highly remunerative to himself. It had been nothing less than a bold resolve to call Blanco, Byrne, “Bony,” and “Red” to his side the moment Simms and Ward revealed the true purpose of their ruse to those on board the Lotus, and with his henchmen take sides with the men of the yacht against his former companions.