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Teenager Henry Aldrich is the leader of a Centerville Boy Scout troop, which includes his best friend, Dizzy Stevens, and operates the troop out of his house. One day, Henry marches his patrol to the park, where the Scout Masters will be inspecting the troops. When they encounter industrialist Ramsey Kent and his son Peter stranded on the road, Henry orders his troop to help pull Ramsey's car, but Peter, a troublemaker, unties the knot on the rope and the troop lands in a muddy puddle. Henry's efforts impress Ramsey, however, who is a college friend of Henry's father Sam. Sam, who is president of the chamber of commerce, hopes to lure Ramsey into bringing his business to Centerville, and is pleasantly surprised that his son has not caused trouble for once. Impressed by the quiet small town life, Ramsey decides to remain in Centerville for a while because he wants a stable environment for his motherless son, who is considered a problem child. Henry takes Peter under his wing and inducts him into the Boy Scouts, but Peter continually causes mischief. Henry protects Peter, however, and brings him to the regional Camporal, an extended camping trip during which Scout troops compete for honors. Peter scoffs at the Boy Scouts, calling them "pantywaists," and his antics continually place Henry's troop behind those of his competitors, Irwin Barrett's Centerville troop and the troop from Sunnygrove. Henry's Scouts finally have enough of Peter's tricks, and tenderfoot John challenges Peter to a fistfight. John soundly trounces Peter, who learns new respect for his friends, and memorizes the Boy Scout code of honor. The final challenge for the Scouts is a night-time hike during which they must find their way back to camp by compass. Only Irwin's, Sunnygrove's and Henry's troops are eligible. Before they leave, Irwin sneaks into the Sunnygrove tent and sabotages their compass, but does nothing to Henry's troop because he is sure they will fail anyway. To Irwin's dismay, Henry's troop wins the challenge, but when the Sunnygrove troop returns and tells the scoutmasters that they got lost, Henry believes that Peter tampered with the compass. Peter denies the charge, and is so hurt by Henry's accusation that he runs away after writing a farewell note. Henry confesses to Scout Master Towers that he broke the compass and will accept any punishment. When he gets back to the tent, he finds Peter's note and rouses Dizzy to search for the boy. Peter slips off a cliff during the night, and Henry and Dizzy finally find him in the morning, clinging to a small ledge. Henry lowers himself by rope to help the boy, but Dizzy is unable to pull them both up, and the rope frays dangerously. The rest of the Scout troops finally see the smoke signals that Dizzy sends up, and arrive in time to rescue Henry and Peter. Irwin, guilt-ridden, has already confessed to having sabotaged the compass, and Henry is promoted to junior assistant Scout Master. Henry's honorable behavior inspires the love of Towers' daughter Elise, and impresses his parents and Ramsey, who decides to stay in Centerville.