Chapter 1

The body of the text contains the governess's manuscript describing her experiences at Bly.  She is rather anxious when she arrives, but she finds the house is lovely and her room is one of the best in the house.  She gets along well with Mrs. Grose immediately, and they become friends.  The little girl, Flora, is absolutely beautiful, which also reassures the governess.  Flora shows her all around the house and they become friends. 

Chapter 2

Two days later, the governess drives  with Flora to meet Flora's brother, Miles.

The governess is disturbed by a letter that the uncle, also known as the master, has forwarded to her from Miles's school.  It seems that Miles has been kicked out of school, although the headmaster does not explain why.  The governess worries that he might be a bad child.  Mrs. Grose assures her that he is no worse than is appropriate for a little boy with some spirit.  Nonetheless, she is a little anxious.

The governess questions Mrs. Grose about her predecessor.  Mrs. Grose says that she was young and pretty.  When the governess jokes that the master likes them young and pretty, Mrs. Grose responds "Oh he did," but then quickly says "I mean that's his way-the master's (18).  The governess wonders whether Mrs. Grose was speaking of someone else.  She also learns that her predecessor left to go home for a holiday and died while she was away.

Chapters 1-2, Analysis

Throughout this section, the governess sees things that could be a little troubling, but she dismisses them.  She notices how placid Flora is at all times, but she takes that to be a good quality.  She also notes that she thinks she hears the cry of a child or a light footstep outside her door.  "But these fancies were not marked enough not to be thrown off, and it is only in the light, or the gloom, I should rather say, of other and subsequent matters that they now come back to me" (13).  Then, once Miles is kicked out of school, she is really concerned, as she is when she considers the mysterious way her predecessor died.

All of this mystery leads the reader to wonder.  Is there really something awful that happened in the past?  Is the book really foreshadowing something worse?  Or, is the governess just highly strung and likely to imagine mysterious, dark happenings?  The reader could conclude that the governess is too easily dismissing warning signs, or that she makes a big deal over nothing.  These conflicting readings will continue throughout the book, as James has intentionally set up a sense of wonder over whether there is evil afoot or it is all in the governess's mind.