The burgermeister gives Swanilda a stalk of wheat to test her love. Traditionally, if the wheat rattles when shaken, her love will be true. Swanilda and Franz dance with the wheat, but, when she shakes the stalk, she and her friends hear nothing. Although Franz says he hears it, she refuses to believe him. The marriage appears to be off.
Dusk begins to settle and the celebrants depart.
But some of the town bullies push him around and the key falls to the ground. Swanilda and her girl friends appear, find the key, and, under Swanilda's urging, sneak into the house of the toymaker. As the curtain closes, Franz starts to climb up. Nervously, Swanilda and her companions enter the dimly lighted room. They soon discover that the object of Franz's admiration is no more than a mechanical doll.