Ruth Fielding, a recently-orphaned girl, arrives in Cheslow, New York to live with her uncle, Jabez Potter, at the Red Mill with his housekeeper, Aunt Alvirah Boggs. Ruth is greatly disappointed in the cold reception she receives. Uncle Jabez seems to care very little about her, and all that he has to say is that she must earn her keep. Uncle Jabez grows even more difficult after his cash box disappears during a flood.

Ruth becomes friends with Helen and Tom Cameron, who are the children of a wealthy merchant. Ruth also visits a lame girl, Mercy Curtis, at her home. Mercy is a very disagreeable girl who resents her disability and takes it out on everyone else. Ruth kindly endures Mercy's taunts, and even promises Mercy that she can someday come stay with her at the Red Mill.

In time, Ruth's cheery disposition softens Mercy's attitude, and she does visit the Red Mill. Soon, a doctor examines Mercy, and it is determined that she may have hope of recovery after an operation. Uncle Jabez's cash box is found, thanks to Ruth, and Uncle Jabez gradually softens towards Ruth.