Babes in Toyland
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After an introduction by Mother Goose and her pet goose Sylvester, the audience is invited to Mother Goose Village, wherein numerous characters from nursery rhymes make their homes.

The village is currently celebrating the impending marriage between Mary Quite Contrary (Annette Funicello), and Tom Piper (Tommy Sands). However, high above the village, in a crooked house, lives the evil landlord of the village, named Barnaby. Barnaby is privy to the fact that upon being wed, Mary will inherit money, and as such, he intents to marry her to get to it. To do so, he recruits two men named Gonzorgo and Rodrigo, to kidnap Tom and throw him in the sea. As well, the sheep tended by Little Bo Peep (who lives with Mary, along with Little Boy Blue, Wee Willie Winkie, and two twin girls) must be stolen too, as they provide a source of income for the small family.

After Tom leaves Mary for the evening, the two men knock him out, and tie him in a sack. However, on their way to the sea, they come to a fork in the road, that tellsof a gypsy camp nearby. Gonzorgo gets the idea to sell Tom to the gypsies, and then lie to Barnaby that they've completed their deed, thereby collecting twice!

The next day, Barnaby intrudes on Mary's wedding preparations, but the moment is spoiled when two shipwrecked sailors (Gonzorgo and Rodrigo in disguise) come to Mary's place. They explain that Tom ran away to sea, ashamed that he could not provide for her and the children she takes care of. Gonzorgo claims that a note that they found from Tom, indicates that he says she should marry Barnaby instead.

Needless to say, Mary is saddened at this news, and Barnaby attempts to woo her to marry him However, she refuses, claiming she could never marry just for money alone. Taking a positive attitude, she claims that she's sure the sheep that Little Bo Peep tends will help them live well, when Bo Peep returns, claiming she's lost the sheep! The townspeople claim they'll help, but when word comes that the sheep's tracks lead to The Forest of No Return, all offers are rescinded.

Mary tries to assure the children that things will be fine, but later on that evening, she has second thoughts about Barnaby's offer, and goes to his home. The children don't want Mary to be miserable, and decide to go to the forest to find the sheep themselves!

After this, Gonzorgo and Rodrigo wake the village, telling that Mary has decided to marry Barnaby! Barnaby happily tells how he has hired a band of gypsies to perform, and the sleepy town is soon filled with their music. Near the end, a fortune teller comes out, and before everyone's eyes, she sheds her clothing (and makeup), and it's revealed to be Tom in disguise! Apparently, Barnaby hired the same gypsies that the two thieves had sold Tom to. Of course, Barnaby isn't happy to have been double-crossed.

Mary and Tom return to Mary's house, only to find a note from the children telling where they've gone!

In the Forest of No Return, the children wander into a small clearing, wherein they are menaced by a group of talking/singing trees. Luckily, Mary and Tom come to their rescue, with the trees then quieting down. The children try to convince their elders what they saw, but Mary and Tom assume they're playing a game. With it being too dark to go home, the group rests in the woods.

At daybreak, the trees stir them to waken, claiming they are going to take the group to the Toymaker, as they are on the outskirts of Toyland. Needless to say, this news excites the children, and they head to the Toymaker's workshop.

Inside, they find the Toymaker and his assistant Grumio, working on a way to increase toy production in time for Christmas. Grumio has created an automated machine, but when the Toymaker pushes it to super-speed, it falls apart, with the old man blaming Grumio for the machine's faults.

After Grumio leaves, Tom, Mary, and the children appear, offering to help the Toymaker. At first unsure, the Toymaker grows delighted at the work ethic of the group. Eventually, it's time for bed, and the children are put to sleep.

However, before Tom and Mary can do the same, Grumio rushes into the room, with a special gun, filled with red liquid. Grumio then shows the Toymaker and the others, that it can shrink items down. However, two puffs of the red liquid, will make the shrunken item disintegrate. The Toymaker thinks this is brilliant...until Tom points out that they'll need big things to be made small. Declaring his assistant's device to be ill-conceived, the Toymaker throws it out a nearby window...right into the hands of Barnaby, who has overheard everything about what the gun does!

Barnaby then shrinks down the Toymaker, before doing the same to Gonzorgo and Rodgrigo (as they have decided to defect from him). Finally, Barnaby shrinks Tom, and forces Mary to marry him, on condition that he'll make Tom disintegrate with an additional blast from the gun.

The Toymaker (being also the Mayor and Chief of Police of Toyland), is forced to marry the two. However, during the ceremony, Tom slips away, and going to the workshop, frees numerous toy soldiers from their boxes. Leading a charge into the next room, the soldiers then assault Barnaby. Barnaby almost has the upper hand, until the vial holding the red liquid in the gun breaks, and splatters on him, shrinking him down. Tom and Barnaby then face off, before Tom knocks the evil man into a box.

Shortly after this, Grumio appears, having made a green-colored antidote. With it, he restores the Toymaker, Gonzorgo, Rodrigo, and Tom, to proper size.

The people then return to the village, where Tom and Mary are wed, before driving off in a horse-driven sleigh, as their friends wave goodbye.

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