"The Storyteller" begins with an aunt who is trying and failing to control her nephew and two nieces in a railway carriage. She attempts to keep them quiet by telling them a story about a good little girl, loved by all who knew her, who "was finally saved from a mad bull by a number of rescuers who admired her moral character."
The children are bored by the story and become even more fractious, whereupon a man traveling in the same carriage remarks on the aunt's lack of success as a storyteller. When she takes umbrage at this, he proceeds to tell the children a story about a good little girl who won a great many medals for good conduct. The story ends with the girl hiding from a wolf, who discovers and eats her when her medals clink together.
The man's story is a satire on the type of story the aunt told. Although this is not related at length, it is the type of moral fable that abounded in Victorian and Edwardian nurseries, in which vice is punished and virtue rewarded (Eric, or Little by Little and Sandford and Merton are prime examples of the genre). Initially, it seems as though the man's story will be as dull as the aunt's, until he uses the phrase "horribly good" to describe the heroine of the story. The sort of arbitrary details found in fairytales and moral fables are also satirized in the absurd extemporized details of the story, such as the fact that there were no sheep in the prince's park "because the Prince's mother had once had a dream that her son would either be killed by a sheep or else by a clock falling on him. For that reason the Prince never kept a sheep in his park or a clock in his palace."