Jim is the adopted and abused son of Sir George Lancaster and his snobbish and cruel wife, Lady Agatha Lancaster, the widow of Sir General Bloodwing Beardsley. Jim works as a menial at Merton Chase, their elegant home. Lady Agatha dominates her weak husband and plots to marry her two foppish sons, Lumley and Guy (from her previous marriage) to wealthy girls, since the Lancasters have lost their fortune. Guy, however, is in love with a woman named Phyllis Patterson, whom Agatha rejects because of her lack of money. Jim keeps his spirits high, with the philosophy that one should Spread a Little Happiness. Jill is an American heiress who lives next door at a stately home, The Towers, with her wealthy father Henry Kemp and her cousin Minerva (who, like Jim, is the poor relation of her family).
When Guy is credited with saving Henry from drowning (a task which Jim actually accomplished, unbeknownst to anyone but him and Guy), all at Merton Chase are invited to a costume ball at The Towers, but Jim is not allowed to attend. Jill, meanwhile, has disguised herself as a servant girl, Sarah Jones, in order to hide from a police officer who has accused her of physical assault on him. Minerva pretends to be Jill, and every man at Merton Chase is captivated by her beauty.
Jim, with the help of Jill, crashes the ball disguised as a famous South American explorer, the Earl of Ditcham. Lumley reveals that Jim is an imposter. Also, Jill's priceless necklace is found in Jim's pocket, leading everyone at the ball to believe that he stole it. Jill helps Jim escape, and they capture Smith the butler, the real thief, and leave him tied up for the authorities to arrest. After the ball, a hat is found that belongs to the valiant person who captured the thief (instead of the glass slipper). A search for the owner shows that it fits only Jim. He wins the £1,000 reward and learns that the maid "Sarah" is actually Jill, and she and Jim agree to get married. Lumley and Guy, meanwhile, announce their engagements to Minerva and Phyllis, respectively. All ends happily.