Washington Irving begins this short story by describing its setting. Some miles from Boston, Massachusetts, there is a deep body of water. It ends in a wooded swampland, which has different trees on each side of the water. On one side, level with the water, there is a "beautiful dark grove." On the other side, the land rises at an angle from the swampy water into a "high ridge on which grow a few scattered oaks of great age and immense size."
The "scattered oaks" can be found on an elevated bank on one of the sides of the swamp, not far from the swamp itself.
Captain Kidd's treasure is buried under one of these huge trees. The treasure is under the devil's protection, and cannot be taken by anyone without his permission. The devil tells Tom Walker about the treasure to tempt Tom's greed and convince him to come into his (the devil's) evil service.