In this musical comedy a little girl helps her jobless father by getting his fiancé's wealthy uncle to provide jobs, thinking he is Uncle Sam.
Penny Hale (Shirley Temple) leaves a girls school and discovers her father moved from the penthouse to a small room, because he has no job. Jeff Hale (Charles Farrell) tells her he wants to finish his building. Penny does housework. Chauffeur Gus (Bert Lahr) shows maid Kitty (Joan Davis) and Penny the sax he found. Penny sings "This Is a Happy Little Ditty" with Kitty and Gus, and doorman Corporal Jones (Bill Robinson) tap dances with Penny. Hotel manager Waters (Franklin Pangborn) warns Jeff that Penny must behave, or they must leave. Jeff is summoned to the penthouse by Lola (Amanda Duff) so he can see Samuel G. Henshaw (Claude Gillingwater), who complains his architecture project cost him ten million and makes Jeff leave. Lola suggests Jeff marry her; but Jeff has no job and quarrels with her.
Penny with a toy machine gun plays gangsters with boys and saves Milton Ramsby (Benny Bartlett) from being the stool pigeon. Penny follows Milton to the penthouse but is ejected by Waters, whom Milton kicks in protest. Jeff finds Penny crying and tells her that Uncle Sam is in trouble. Newspapers blame Henshaw for a down turn. Penny hears Milton call Henshaw Uncle Sam, and she rescues him from reporters but declines his coin. Penny trims off Milton's hair curls. A bully takes a dollar, and Penny and Milton fight with him. Milton wears his clothes, causing his mother Julia Ramsby (Cora Witherspoon) to collapse. Henshaw finds out what Penny did and gives Milton a dollar for his black eye. Penny and Milton play blindman's bluff with Waters, getting him to fall into the pool. Henshaw tells Lola not to see Jeff, but she says she is going to marry him. She asks Henshaw to cooperate, and he agrees.
Jeff is hired to go to Borneo for two years. Lola wants to go, but the job won't permit it. Penny urges Lola to insist Jeff not go. Penny and servants prepare for a show. Gus locks Waters in with the laundry. Children pay nickels, and Penny tells a reporter it is a benefit for Uncle Sam Henshaw. He complains, and his men bring in Penny, who says it is so that Jeff won't have to go away. Jeff comes in, and Penny says Henshaw is Uncle Sam and gives him the bag of nickels. In the show Corporal Jones sings "Brass Buttons and Epaulets" and dances. Penny sings "I Love to Walk in the Rain." Waters gets out and brings the police to arrest Penny; but Henshaw says it is his show, and Waters is arrested. Henshaw tells the press he is tripling his payroll and putting Jeff in charge of his project. In the final scene Jeff and Lola kiss.
Since the Hoover administration, people had been told that prosperity was "just around the corner," but in 1938 many were still unemployed and suffering. This musical brings child-like optimism and escape entertainment to the confidence problem to suggest that the wealthy could help by hiring people.