After a peasant joins the royal army, never to return from war, his wife raises their daughters Schneeweißchen and Rosenrot as if he may return ant day and keeps telling stories how wonderful he is, having chased all dwarfs. The realm being impoverished and threatened with famine, prince Jacob convinces his father to let him sell the treasury to buy sowing-seed, but is surprised by an evil dwarf who transforms him into a bear. A gang of wandering dwarfs is tired of lacking cave or treasure, so their chief tricks one into winning some for them. He ends up at the sisters' humble homestead, but keeps getting caught with his beard -where his magic power resides- or countered by the protective spell of the rose garden. The king is meanwhile tricked by a fraudster into confiding his last gold for speculation on the stock market to the crook. The courtiers are horrified to be ordered to form a bear hunt party.