The Emperor of a European country demands new clothes to wear every day, in fact sometimes several times a day. He imposes a heavy tax on the poor citizens to pay for his vanity. An itinerant man and boy come to the capital city and see the injustice, and make friends, but they soon have to flee. They return disguised as Arab tailors, and offer to make the Emperor a new suit of clothes. But only the wise will be able to see it; fools, or those unfit for their public office, will not see anything. The Emperor orders the suit made, and much money is needed to purchase the raw materials. Eventually the suit is ready, and the Emperor and his officials pretend that they can see a wonderful outfit; will anyone prick the bubble of the illusion?

Silly Augustine, wife of silly August, who performs in the circus, and mother of Guggo, Gugga and Guggilein, dreams of one day being able to perform as a clown in the circus. Instead, she has to run the exhausting household. Her suggestion to share the job, the housework and the children is met with incomprehension and scorn from her husband. When silly August suffers from a toothache and misses his performance, Augustine seizes her chance, steps in and promptly masters the task with flying colors. From then on, father and mother share the housework and circus duties, as silly August immediately realizes that he has underestimated his wife.