Max has thrown her out. Cliff finally agrees- Perfectly Marvelous . The Emcee and two frauleins indicate that everybody in Berlin lives with somebody- Two Ladies. Fraulein Schneider is being courted by Herr Schultz, a widower who lives in her house. But Sally is pregnant.
Cliff is upset-then happy.
Ernst arrives to offer him a job smuggling a briefcase into Germany. Needing the money, Cliff accepts. Everyone in Berlin earns money in strange, illegal ways-the Emcee announces in The Money Song . Fraulein Kost, a prostitute, discovers that her landlady, Fraulein Schneider, is having an affair with Herr Schultz. Sally arranges an engagement party at the fruit shop.