A tiny circus performer, Lou, decides to look for work in Walnut Grove after his wife dies while giving birth to his baby girl. A prejudice Mrs. Oleson uses her power to make sure that the dwarf doesn't find work. She even threatens Mr. Anderson that she would close her account at the bank if he hired Lou. To keep the infant alive, the dwarf must steal food. Mrs. Oleson decides to press charges when she finds out who stole the food. When Nancy falls in a well, Lou risks his life to save the girl. That's when Mrs. Oleson decides that being small has its advantages and decides to drop all charges.

Mr. Edwards keeps Matthew at his place, but Nancy Oleson tells on him. A judge comes and rules that Matthew be placed in an institution. Then Mr. Edwards makes a statement that everyone is crazy sometime. He convinces the judge to allow the boy to stay with Mr. Edwards.