Chapter 3: The Mining Town

Summary
Arriving in the frontier town of Youswell in order to inspect the coal mines there, Ed and Al meet a young boy named Khayal who refers them to an inn owned by his father Halling, the mine foreman and village chief. While there, the Elrics are astounded to learn that, due to the village's low income, it will cost them two hundred thousand cenz to stay the night, but are able to discount the price by performing free alchemy for the grateful townspeople. But when it comes out that Edward is a State Alchemist, the people's sentiment turns against him and he is kicked out for being a "dog of the military, though Alphonse is able to stay behind due to his civilian status. Questioning Khayal and the others, Al discovers that the people of Youswell's distaste for the military comes from the fact that the land upon which the town and the mines are built belongs to Lt. Yoki, a military officer who puts caps on the miners' wages while continually raise taxes to fill his own coffers, bribing his superiors to keep from being punished. Additionally, Halling notes that his distaste for State Alchemists is in their rejection of the alchemist code to work for the people in exchange for government funding and authority. Bringing Ed some food outside, Al relates all of this to his brother just as Lt. Yoki himself arrives at the inn with a pair of soldiers, demanding back taxes. When Khayal insults the lieutenant, he orders one of his soldiers to discipline the child, but Edward intercedes, protecting the boy with his automail arm.

Edward introduces himself to Yoki as a State Alchemist and the corrupt lieutenant sycophantically escorts Fullmetal to his own mansion for the night. While there, Yoki bribes Edward in order to grease the wheels of his own promotion and raise his stock in Central City, but as he goes to bed, Edward over hears the lieutenant order his men to burn down Halling's inn. He investigates in the morning to find that the inn has been destroyed, but when he suggests that the townspeople move somewhere else, Halling explains that their own personal attachments to their home will not allow them to leave, Ed decides to help. Secretly transmuting large amounts of mining waste into gold bars, Edward approaches Yoki and asks the lieutenant to sell him the deed to the town and the mines, advising him to document the purchase as a gift so as to keep their exchange of funds off the government's radar. Fullmetal returns to the wreckage of Halling's inn with the deed and exchanges it to the foreman for a night's stay, proving that - despite being a State Alchemist - he is still in service of the people. Yoki arrives shortly afterward, furious that the gold bars have turned to dust and pebbles as Edward had transmuted it all back before leaving the mansion, and demands the deed back, as it was bought fraudulently. But as Edward reminds him that the deed was given to him as a gift, Yoki is powerless. As the coal miners vent their frustrations on Yoki and his men, Edward declares that he will be reporting the lieutenant's corrupt actions to Central Command.

Chapter Notes

 * This chapter introduces the pocketwatch as the official identification of State Alchemists.
 * In this chapter, Yoki says that the watch is gold, however it is later said to be silver.
 * In this chapter, it is made somewhat apparent that alchemists are easily capable of transmuting base materials into gold, but are forbidden to by the central government. It is later found out that it is against the law for anyone to create gold, to stop people from getting as much money as they wanted and creating economic turmoil.