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It consists of a tube in the rock wall of the Nome King's throne room. The tube runs up to the side of a mountain and turns several curves, but since it is magic Kaliko can see through it as easily as if it had been straight. With a mumbled charm he can twist the end around to see anywhere he wants.
Kaliko used the Magic Spyglass to identify the Shaggy Man and his companions, who were on their way to the Nome Kingdom to rescue his brother. He also used it to see Quox coming up the Hollow Tube. (Tik-Tok of Oz)