She draws the ire of the headmistress, Winifred Minchin, for going to supper without shoes on and for mingling with Becky, a scullery maid at the school.
Sara Crewe's father's wealth means provides her with privileges that her schoolmates are both jealous of and curious about.
Crewe tells stories to her schoolmates and talks about contacting spirits, which Minchin disapproves of.
Sara Crewe gains friends in classmates Ermengarde and Lottie, who moreover apologize to Becky for their previous behavior toward her.
Minchin, having made some money on the stock market based on rumors that Captain Crewe reached Timbuktu, is more amenable toward Sara than previously.
However, a lawyer interrupts the birthday party to inform the school that Captain Crewe never reached Timbuktu and died.
After they fall asleep, Pasko—a friend of Crewe's from St. Louis—sneaks into their attic and brings food and amenities to comfort them.