Firstly, Ragged Dick escorted Frank Whitney around town, showing him the sights of New York City. In addition to a tour of all of the buildings, Ragged Dick periodically saves people from being swindled, including Frank. As a result, Frank recognizes his good nature, and in addition to the suit that he gave Ragged Dick at the outset of their journey, he motivates him to become "'spectable" and gives him five dollars. From this course of action, Ragged Dick moves from being simply extravagant with his money to opening a bank account to host his savings.
Next, Ragged Dick treats a Henry Fosdick to dinner. Henry although he was twelve, "knew as much as many boys of fourteen." Dick enlists him as a tutor and trades room and board for tutoring. Through his generosity, Dick earns a solid friend and an education.
Through this process, Dick remembers to return some extra change to a gentleman, Mr. Greyson, who had enlisted Dick to shine his shoes. By proving that he is honest and learning to read, Dick secures an invitation to church and continues his learning in Sunday School.
Finally, Dick jumps into the water to save a drowning child. To reward his selflessness, the child's father, James Rockwell, gives him "the best [suit] he had ever worn" and a clerkship, which pays more than he was currently making and "three times as much as he had expected to obtain at first."
Simultaneously, Alger constantly introduces characters who have been to the Island for stealing. Alger characterizes these other boys as being unnecessarily cruel, and Dick constantly expresses his frustration with these characters. Mickey Maguire would not "[tackle] boys whose strength was equal or superior to his own" and preferred to "get hold of small boys." Through this injustice, Dick promises Henry to "give [Maguire] a thrashing," if he ever bothered Henry. Additionally, when Jim Travis was arrested for stealing Dick's bank book, Dick only felt upset for him, even though he was distraught just the previous night because he thought all of his savings were gone.
Because Alger constantly rewards Dick for being generous and punishes other characters for being cruel, Dick grows up to be unselfish and have a strong set of morals.
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