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The Magic Cloak glints and sparkles with every hue of the rainbow. It is soft and light as swan's-down, but its strength makes it nearly indestructible. The Cloak grants each wearer one wish. It can be passed on to another wearer for another wish, but if it is stolen, it will not grant a wish for the thief.
One evening in Burzee, when the Fairies had grown weary of dancing in the moonlight, Queen Lulea asked her subjects to think of another way to amuse themselves that night. Espa suggested weaving a Magic Cloak which would grants its wearer any wish immediately. Queen Lulea agreed, but limited its power to only one wish per wearer.
That night, the Queen created a Fairy Loom, which consists of a large and a small ring of gold on a tall jasper pole. The Fairies danced around it, each carrying a silver shuttle with a different hue of glossy filament finer than silk. The Queen herself wove the single magical thread that would give the Cloak its power.
When its was finished, at the suggestion of the Man in the Moon, Ereol was assigned to give it to the first unhappy person she met. In Noland Ereol encountered a girl known as Fluff, who was inconsolably unhappy, due to the recent death of her father and the stern treatment of her brother Bud by their Aunt Rivette, their new guardian. Ereol gave Fluff the Cloak, over the objection of Aunt Rivette, and later that day Fluff thoughtlessly wished to be happy again, and the wish was granted.
When Bud became King of Noland, the Cloak was passed around and it granted wishes for many of the residents of the palace. Queen Zixi, of the neighboring Land of Ix, heard of the Cloak from Quavo the minstrel. She tried to obtain it by deception and invasion, and finally succeeded in stealing it, leaving a duplicate (woven by imps) in its place. Because it had been stolen, it failed to work for her, so she dropped it in the forest near Nole.
A shepherd named Edi found it in the forest, and traded it to Dame Dingle for some rheumatism medicine. Dame Dingle, in turn, cut the Cloak into pieces to use in patchwork crazy-quilts. She gave a piece to each of her friends: Nancy Nink, Betsy Barx, Sally Sog, Molly Mitt, and Lucy Lum. Lucy gave half of her patch to the miller's wife who turned it into a necktie for her son, who was a sailor.
When the Roly-Rogues conquered Nole, King Bud and Princess Fluff went to Queen Zixi for help. As they talked, the whole story of the Magic Cloak was revealed, and they set out to collect the Cloak and all the pieces. After an involved search, they were able to collect all the missing parts but one, the necktie of the miller's son, who had gone to sea.
The miller's son eventually returned, but without his necktie, having lost it in a gale at sea. He brought a false necktie, hoping to collect the reward and marry his sweetheart, Imogene Gubb. His deception was discovered, but before he could be sent to prison, Queen Lulea appeared to reclaim the Cloak. She allowed King Bud to have one last wish, then disappeared forever from Noland with the magic cloak, rescinding some of the wishes but leaving others as granted. (Queen Zixi of Ix)
- Margaret - happiness
- Aunt Rivette - the ability to fly / wings
- Jikki - a half-dozen servants (later rescinded)
- Tollydob - to be ten feet tall (later reduced to six feet)
- Tellydeb - the ability to reach great distances (later rescinded)
- Tallydab - the power of speech for his dog, Ruffles (later rescinded)
- Tillydib - the royal purse to always be full
- Tullydub - the defeat of the army of Ix
- King Bud - to be the best king Noland ever had