Peter, a woodsman and his mother live in the Black Forest where he exists by selling charcoal. Stung by the ridicule of the wealthier inhabitants of the village and desiring to marry the beautiful Lisbeth, he sees his only chance for prosperity by locating a good forest spirit, the small Glasmännlein who grants him two wishes at first, then a third wish later. Peter wishes for wealth that he purchases a glassworks but due to his inexperience the glassworks fails and he gambles his money away.
Unable to marry Lisbeth due to his being pursued by creditors, Peter locates a dark forest spirit, Holländer-Michel, to make more wishes for wealth. Holländer-Michel agrees to grant him wealth, but only in exchange for his heart that Holländer-Michel replaces with one made of stone. Holländer-Michel shows that the wealtheir inhabitants of the village already have done so and shows Peter their hearts that he displays on the wall. Peter agrees and becomes a ruthlessly successful businessman but at the cost of Lisbeth and his happiness.