Smeden drømmer - og Andre ser syner!

Børnene synger julesalmer med mor og smeden har hørt at borgmesterens skib er gået ned i den engelske kanal. Gadedrengen snyder igen, men bliver igen fanget af Bissekræmmeren. Han fortæller historier fra tiden med Borgmesteren på havet. Mads og Mette driller Karoline oppe på loftet, så nisserne driller dem.

The children sing Christmas carols with their mother, and the blacksmith has heard that the mayor's ship has sunk in the English Channel. The street boy cheats again, but is caught once more by the peddler. He tells stories from his time with the mayor at sea. Mads and Mette tease Karoline in the attic, so the elves tease them.