The Red Pony is divided into four stories. Each story centers on a boy named Jody; the four together show him in a critical time of his childhood. In the first story, Jody is ten years old. The stories are close together in chronological time; indeed, Steinbeck is careful to remind readers that Jody is a "little boy" at the start of each story.
This story describes Carl Tiflin's family and ranch, which will be the setting of all four stories. Jody is Carl's son. Another central character is Billy Buck, the ranch's single employed hand. While Carl is a stern, unemotional man, Billy is warmer, and spends a lot of time teaching Jody how to take care of horses. The ranch includes several horses, along with cows and pigs.
In this first story, Carl gives Jody a red pony, which Jody names Gabilan. Every morning Jody brushes the horse and after school works on training it. Just as he is about to teach Gabilan to let him ride him, the horse catches a bad cold in the rain. Billy had promised Jody that the horse would not get sick. Eventually, Billy has to resort to drastic measures to try to save Gabilan, cutting open a sack of puss then carving a breathing hold in the horse's throat. Unfortunately, the horse escapes one night, and Jody finds vultures preying on the corpse the next morning. Jody kills one of the vultures and is reprimanded by his father, but Billy defends him.
Jody is bored. He looks with longing at the great mountains, wishing he could explore them. Suddenly, an old Mexican man named Gitano appears, claiming he was born on the ranch. Gitano requests to stay on the farm until he dies. Carl Tiflin refuses, although he does allow him to stay the night. That night, Jody secretly visits Gitano. He is polishing an old sword. Jody asks if he has ever been to the great mountains, and Gitano says he has but remembers little. The next morning Gitano is gone. A neighbor reports seeing him riding into the mountains with something in hand—the rapier, Jody assumes. Jody is filled with longing at the thought.
Billy Buck and Carl Tiflin decide Jody should raise a colt from birth. Jody is sent with Nellie, a mare, to have her bred. The breeding is expensive; Jody works extra hard at his chores to repay his father, but eventually he grows tired of waiting. Also, he is wary that Billy will let something go wrong, as happened with Gabilan. This hurts Billy's feelings. Finally, it comes time for the colt to be born, but the birthing is complicated. Nellie becomes very ill. Billy discovers that something is wrong with the birth, and he has to kill Nellie and cut the colt out of her stomach with his pocketknife.
The Tiflins' receive a letter from Jody's maternal grandfather, saying that he is coming to visit. Jody's father is upset, and argues with his wife, complaining that the grandfather simply repeats his stories about crossing the Great Plains as the head of a wagon train. Jody goes down the road to meet his grandfather. That night, his grandfather begins his usual stories, but everyone is polite. The next morning, the grandfather is late coming down to breakfast, and Carl begins to openly complain about him. Suddenly the grandfather walks in, having heard everything. For once in his life, Carl has to eat his words. After breakfast, Jody sits with his grandfather on the porch. Eventually, the grandfather begins talking about how he really feels, about how he wonders if it was really worth it to cross the plains. He says that what was important was not crossing the plains, but the act of leading people across it. Jody says that someday he will be a leader of the people, but his grandfather replies that the days of exploration are over.
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