Jiro, having discovered the identity of the renegade Saburo, flees Hanaza in fear for his life. He is determined to find his mother and Kinshi. As he runs through the streets he meets his father, who reveals that although he was supposedly recuperating from illness in the country, he is in fact a member of Saburo's band. After much maneuvering, Jiro finds his mother and Kinshi. In the midst of all the turmoil, Kinshi has been caught by the police, who, believing him to be a thief, cut off his hand. Kinshi will never work the puppets again.
Jiro returns to Hanaza with his mother and Kinshi to face the master puppeteer and accept his fate. Jiro promises not to betray the secret of Saburo's identity, and Saburo is merciful, allowing Jiro's mother to live with them at Hanaza and accepting Kinshi into his band. Jiro's debts are forgiven, and he will continue his work as a rising young puppeteer.