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On an upper branch of the Congo River live an "ancient and aristocratic" family of hippopotami (or as Baum consistently refers to them, "hippopotamuses"). The queen of this tribe has a son named Keo (which means, in hippo language, "fat and lazy"); but the human residents of the area call him "Ippi," meaning the jolly one, because his disposition is so merry. They know the young hippo's characteristic laugh — "Guk-uk-uk-uk!"
The black residents of the place long to eat hippo meat, harvest their tusks, and ride the beasts — but the hippos are so dangerous that the people rarely attain these goals. Gouie is one of the more "thoughtful" of these people; he is the nephew of the chief and the grandson of the sorcerer. (The sorcerer is famed as "the boneless wonder" for his amazing flexibility.) Gouie builds a hippo trap, digging a deep pit and covering its opening with branches; and who does he catch but Keo. Gouie is unhappy at this, because Keo does not yet have his tusks. Man and hippo reach an agreement: Gouie will spare Keo if Keo agrees to return to captivity in a year and a day.
The happy hippo has no problem with this; but his mother, uncles, and the other members of his tribe are deeply distressed. Keo has sworn by the tusks of his grandfather, and so must keep this sacred vow. A week before the term is up, the Queen and Uncle Nep take Keo to meet the mysterious Glinkomok. This strange magic being serves as the hippos' oracle. After hearing the story, Glinkomok agrees that Keo must keep his vow — but the oracle magically endows Keo with amazing abilites and endurance.
When Keo meets Gouie, the beast is so enormous and fat that the human decides to slaughter and eat him. But Gouie's knife will not penetrate Keo's hide. So he uses the hippo for a beast of burden instead. Keo gives rides to the villagers — but uses his amazing speed to transport them to Glinkomok's cave, from which they never return. Soon, Gouie is the last man left in his village; he is surrounded by the hippo tribe, who threaten to trample him or tear him with their tusks.
Keo offers Gouie the familiar bargain: return to servitude in a year and a day. A year and a day later, though, Gouie does not appear. He took the wealth of his village and set himself up as a great chief, in a place far away. He was proud and swaggering by day, but tossed and turned through his sleepless nights. "For he had sworn by the bones of his grandfather; and his grandfather had no bones."
"The Laughing Hippopotamus" is one of the eight stories in the collection illustrated by Ike Morgan.
The story treats its black African characters with a condescending humor that was common in Baum's day but distasteful and unacceptable in ours. (The hippos, on the other hand, are portrayed very affirmatively.)
A predator catches his prey, but allows a timed reprieve; the same plot device can be found in Baum's story "The Troubles of Pop Wombat." Animals is trouble consult their mysterious oracle; the same plot device appears in "The Stuffed Alligator." Comical hippos can also be found in Baum's The Woggle-Bug Book and Ruth Plumly Thompson's Captain Salt in Oz.
Along with the queen hippo, other animal royalty figures in Baum's works: the Queen of the Field Mice in The Wonderful Wizard of Oz, the King of the Fairy Beavers in John Dough and the Cherub, the king of the beetles in "The Wonderful Pump," and the title character in "The King of the Polar Bears," among others.