Gulliver’s master attends a Grand Assembly of Houyhnhnms, where the horses debate whether or not to extinguish the Yahoos from the face of the Earth. Gulliver’s master suggests that instead of killing them, they should, as the Europeans do with their horses, merely castrate them. Eventually, unable to breed, the Yahoos will die out, and in the meantime the Houyhnhnms can breed asses to take their place.

Gulliver then describes further aspects of the Houyhnhnms’ society. They are a reasonable and healthy race. They understand the nature of the eclipse (the sum of their astronomy). They use only months to reckon time. They have no literature but do compose poetry which is moral and accurate. Their only word for evil is Yahoo. They have a sound knowledge of medicinal herbs, build simple houses, and usually live about seventy or seventy-five years, dying of old age. They feel no sorrow about death, accepting it as a routine element of life. They have no writing system and no word to express anything evil.

Gulliver grows more and more used to the Houyhnhnm way of life. He has a small room of his own with two chairs. He makes clothing of animal skins and shoes of Yahoo skins. He often dines on bread and honey. The conversation he listens to with the Houyhnhnms' permission is decent, moderate, polite, and virtuous. He begins to think of his friends and family back home as Yahoos. However, he is called by his master and told that others have taken offense at his being kept in the house as a Houyhnhnm. The master has no choice but to ask him to leave. He is very upset to hear that he is to be banished. He builds a canoe with the help of a fellow-servant and departs sadly.

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