Then, opening a low door in the side of the cavern, she beckoned them to follow. In the middle of a still larger vault stood an arm chair fashioned from beryl and jasper, with knobs of amethyst and topaz, in which sat Ned's friend, the Gnome.

He was dressed in a robe of velvet, green and soft as forest moss, and a ring of gold lay on his grizzled hair. His little eyes shone keen and fiery, and his hands, withered and brown, were now covered with glittering jewels.

About the cave a hundred little men, smaller than he, were busy in a hundred ways. Some stirred kettles of smoking broth; others sliced fresh vegetables for crisp salads. Some spread a table, with golden plates and crystal goblets; three turned huge pieces of meat on a spit before a fire at the end of the cavern, while a dozen more watched the simmering pots.

The jackdaw hopped gravely past all this toward the chair of the Gnome King, who stretched out his sceptre, a tall bulrush of gold, and touched the jackdaw, who at once turned into a dwarf.

Making a low bow to the Gnome King, he turned to Ned and said:

"I was forced to take the form of a jackdaw for twenty years because I once said that gold was not as yellow as buttercups nor so bright as sunshine. This made the Gnomes angry, because their belief is that gold is the most beautiful thing in the world. My punishment is now over and I need never return to the earth again. But I would do a favor to the poor peasant children who were so good to me."

"What favor would you ask for the poor peasant children?" asked the Gnome King.

"I would send them a Magic Basket filled with food," answered the dwarf.

No sooner had he spoken, than the Gnome ordered his subjects to fill a Magic Basket with all kinds of good things to eat. There was a golden bowl of smoking stew, a crystal goblet of wine, a golden dish of mashed potatoes and another of rice pudding.

And when the Magic Basket was covered with a damask napkin, it was handed to a dwarf messenger to take to the poor woodcutter's children, while all the little dwarfs stood around him and sang: