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Dickens divides the book into five chapters, which he labels "staves", that is, song stanzas or verses, in keeping with the title of the book. He uses a similar device in his next two Christmas books, titling the four divisions of The Chimes "quarters" after the quarter-hour tolling of clock chimes and naming the parts of The Cricket on the Hearth "chirps".
The tale begins on a "cold, bleak, biting" Christmas Eve exactly seven years after the death of Scrooge's business partner Jacob Marley. Scrooge, an old miser, is established within the first stave as "a squeezing, wrenching, grasping, scraping, clutching, covetous, old sinner!" He hates Christmas, calling it "humbug"; he refuses his nephew Fred's Christmas dinner invitation, and rudely turns away two gentlemen who seek a donation from him to provide a Christmas dinner for the poor. His only "Christmas gift" is allowing his overworked, underpaid clerk Bob Cratchit Christmas Day off with pay – which he does only to keep with social custom, Scrooge considering it "a poor excuse for picking a man's pocket every 25th of December!"
At home that night, Scrooge is visited by Marley's ghost, who is forever cursed to wander the earth dragging a network of heavy chains, forged during a lifetime of greed and selfishness. Dickens describes the apparition thus: "Marley's face ... had a dismal light about it, like a bad lobster in a dark cellar." Marley has a bandage under his chin, tied at the top of his head; "...how much greater was his horror, when the phantom taking off the bandage round its head, as if it were too warm to wear indoors, its lower jaw dropped down upon its breast!"
Marley tells Scrooge that he will be visited by three spirits that night, and that he must listen to them or be cursed to carry chains of his own. As Marley departs, Scrooge witnesses other restless spirits who now wish they could help their fellow man, but are powerless to do so. Scrooge is then visited by the three spirits Marley spoke of – each visit detailed in a separate stave – who accompany him on visits to various Christmas scenes.
The first of the spirits, the Ghost of Christmas Past, takes Scrooge to Christmas scenes of Scrooge's boyhood and youth, which stir the old miser's gentle and tender side by reminding him of a time when he was kinder and more innocent. These scenes portray Scrooge's lonely childhood, his relationship with his beloved sister Fan, and a Christmas party hosted by his first employer, Mr. Fezziwig, who treated Scrooge like a son. They also portray Scrooge's neglected fiancée, Belle, who ends their relationship after she realizes that Scrooge will never love her as much as he loves money, and a visit later in time to the then-married Belle's large and happy family on Christmas Eve.
The second spirit, the Ghost of Christmas Present, takes Scrooge to several different scenes – a joy-filled market of people buying the makings of Christmas dinner, celebrations of Christmas in a miner's cottage and in a lighthouse. Scrooge and the spirit also visit Fred's Christmas party, where Fred speaks of his uncle with pity. A major part of this stave is taken up with Bob Cratchit's family feast, and introduces his youngest son, Tiny Tim, who is full of simple happiness despite being seriously ill. The spirit informs Scrooge that Tiny Tim will soon die unless the course of events changes. Before disappearing, the spirit shows Scrooge two hideous, emaciated children named Ignorance and Want; he tells Scrooge to beware the former above all, and replies to Scrooge's concern for their welfare by repeating Scrooge's own words: "Are there no prisons? Are there no workhouses?"
The third spirit, the Ghost of Christmas Yet to Come, shows Scrooge Christmas Day one year later. Tiny Tim has died because Cratchit could not afford to provide the boy with proper care on his meager salary. The spirit then shows Scrooge scenes involving the death of a "wretched man". The man's funeral will only be attended by local businessmen if lunch is provided. His charwoman, his laundress, and the local undertaker steal his bedroom fixtures while his corpse still lays in the bed, and sell them to a fence. The spirit then shows Scrooge the man's neglected grave: the tombstone bears Scrooge's name. Sobbing, Scrooge pledges that he will change his ways in hopes that he may "sponge the writing from this stone".
Scrooge awakens on Christmas morning with joy and love in his heart. He spends the day with Fred's family, and anonymously sends a prize turkey to the Cratchit home for Christmas dinner. The following day, he gives Cratchit a raise, and becomes like "a second father" to Tiny Tim. A changed man, Scrooge now treats everyone with kindness, generosity, and compassion; he now embodies the spirit of Christmas. The story closes with the narrator repeating Tiny Tim's famous words: "God bless us, everyone!"
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