'Follow me,' he said, 'and you shall see how we work. I am going to show you the manufacturing of the lucky pennies and horse-shoes.'

'What are lucky pennies?' whispered Leonore to Hildegarde. 'I think I have heard of them, but I'm not sure.'

'Never mind,' Hildegarde replied in the same tone. 'The gnomes won't be vexed with us for not knowing things if we are polite and admire their cleverness, and I am sure they are very clever.'

Then they followed their guide in silence, which soon, however, came to be broken by the sound of tapping, light sharp tapping, and in another moment or two, there was added to this a whizzing sound, and now and then short clear whistles. But the little girls asked no questions and made no remarks, till suddenly, the passage along which they were walking coming to an end, they found themselves in a very large rock-chamber—the sides of which towered up so high that their tops could not be seen, though everywhere the same clear rose-coloured light penetrated.

The air was fresh and pleasant, though not cold. The gnomes evidently possessed the secret of warming their habitation as well as lighting it! And now were explained the several sounds the children had heard as they approached the 'manufactory' as their guide had called it.

MANUFACTURING LUCKY PENNIES.

For the great room—one would have called it a cave perhaps, except that no cave ever was so lofty—was filled with a crowd of busy workers. Gnomes of course, some smaller, some a little bigger than the one who was guiding the children, but all as like each other as a lot of Chinese seem to us—and all apparently of the same age. A few were standing, but most were sitting, and in front of each was a small rock-table, on which lay tools of glistening silver. There were tiny hammers which explained the tapping, and little wheels revolving so rapidly that when in motion they could not be seen. And every now and then a gnome lifted a kind of tube or pipe to his mouth, through which he blew with a whistling sound, on to the piece of metal he was working at. None of them spoke; they all seemed absorbed in what they were doing.

The guide-gnome signed to the children to come close up to one little earth-man and watch what he was doing.