Captain Crewe, a wealthy English widower, has been raising his only child, Sara, in India where he is stationed with the British Army. Because the Indian climate is considered too harsh for children, British families living there traditionally send their children to boarding school back home in England.

The captain enrolls his young daughter at Miss Minchin's boarding school for girls in London, and dotes on his daughter so much that he orders and pays the headmistress for special treatment and exceptional luxuries for Sara, such as a private room for her with a personal maid and a separate sitting room , along with Sara's own private carriage and a pony.

Miss Minchin openly fawns over Sara for her money, but secretly and jealously despises her for her wealth.