Chapter 3: The Mining Town

Sent to inspect the coal mines of Youswell, Edward and Alphonse are guided by a boy named Kyle to an inn run by his father Halling, the foreman and village head. The brothers balk at the two hundred thousand cenz asking price for a single night, a sum owed to the town's poverty, but earn a discount by doing free alchemy for the residents. Sentiment sours once Edward is exposed as a State Alchemist and he is thrown out as a military dog, though Alphonse stays behind as a civilian. Questioning the townsfolk, Al learns their bitterness stems from Lieutenant Yoki, who owns the land, caps the miners' pay, and keeps raising taxes to line his pockets while bribing superiors.

Halling adds that his contempt for State Alchemists comes from their betrayal of the creed that alchemy should serve the people in exchange for state backing. As Al relays all this to Edward outside, Yoki himself arrives with soldiers to demand overdue taxes, and when Kyle mouths off, the lieutenant orders the child disciplined, only for Edward to block the blow with his automail arm. Introducing himself as a State Alchemist, Edward is fawningly escorted to Yoki's mansion, where the officer offers bribes to advance his own standing in Central. That night, Edward overhears Yoki ordering the inn burned down, and by morning it lies in ashes.

When the townspeople refuse to leave a home they love, Edward acts. He secretly transmutes heaps of mining waste into gold bars, buys the deed to the town and mines from Yoki, and advises recording it as a gift to dodge government scrutiny. He then trades the deed to Halling for a night's lodging, proving a State Alchemist can still stand with the people. Yoki storms back, furious that the gold has reverted to dust and pebbles, and demands the deed returned as fraudulent, but since it was logged as a gift he is powerless. As the miners round on him, Edward vows to report the corruption to Central Command. The chapter also establishes the pocket watch as a State Alchemist's official identification.