The title character is named Pollyanna Whittier, a young orphan who goes to live in Beldingsville, Vermont, with her wealthy but stern Aunt Polly. Pollyanna's philosophy of life centers on what she calls "The Glad Game", an optimistic attitude she learned from her father. The game consists of finding something to be glad about in every situation. It originated in an incident one Christmas when Pollyanna, who was hoping for a doll in the missionary barrel, found only a pair of crutches inside. Making the game up on the spot, Pollyanna's father taught her to look at the good side of things—in this case, to be glad about the crutches because "we didn't need to use them!"

With this philosophy, and her own sunny personality and sincere, sympathetic soul, Pollyanna brings so much gladness to her aunt's dispirited New England town that she transforms it into a pleasant place to live. 'The Glad Game' shields her from her aunt's stern attitude: when Aunt Polly puts her in a stuffy attic room without carpets or pictures, she exults at the beautiful view from the high window; when she tries to "punish" her niece for being late to dinner by sentencing her to a meal of bread and milk in the kitchen with the servant, Nancy, Pollyanna thanks her rapturously because she likes bread and milk, and she likes Nancy.

Soon, Pollyanna teaches some of Beldingsville's most troubled inhabitants to 'play the game' as well, from a querulous invalid named Mrs. Snow to a miserly bachelor, Mr. Pendleton, who lives all alone in a cluttered mansion. Aunt Polly, too— finding herself helpless before Pollyanna's buoyant refusal to be downcast—gradually begins to thaw, although she resists the glad game longer than anyone else.

Eventually, however, even Pollyanna's robust optimism is put to the test when she is struck down by a motorcar while crossing a street and loses the use of her legs. At first she doesn't realize the seriousness of her situation, but her spirits plummet when she accidentally overhears an eminent specialist say that she'll never walk again. After that, she lies in bed, unable to find anything to be glad about. Then the townspeople begin calling at Aunt Polly's house, eager to let Pollyanna know how much her encouragement has improved their lives; and Pollyanna decides she can still be glad that she has legs. The novel ends with Aunt Polly marrying her former lover Dr. Chilton and Pollyanna being sent to a hospital where she learns to walk again and is able to appreciate the use of her legs far more as a result of being temporarily disabled.

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