[1] The scene takes place in a toy-shop at Nuremberg Cornelius the owner, has an only son, Donathan, whom he loves despite the boy’s stupidity, while being unjust to his orphan nephew, Miller, whom he keeps like a servant, after having misappropriated the latter's inheritance.
When they have left Miller reappears in the garb of Mephistopheles and clapping his hands, his fiancée Bertha, a poor seamstress soon enters.
Sadly she tells her lover that she is unable to go to the ball, having given all her money, which she had meant to spend on a dress, to a poor beggar-women in the street.
Miller, touched by his love's tender heart, determines to lay aside his mask, in order to stay at home with Bertha, when suddenly an idea strikes him.
Father and son are delighted by her performances, but when she opens her mouth and reveals a very wilful and wayward character, Cornelius is less charmed.
Awed by his deed, he sees Miller returning, who confesses that he had found out the secret about the doll, and having accidentally broken it, had substituted a young girl.
Cornelius, half dead with fright, sees himself already accused of murder; his only salvation seems to lie in his nephew's silence and instant flight.