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jewel theft to him. It was after eleven o’clock when Helen and Nancy said good night to Emily and walked to their cottage. Both girls fell asleep almost as soon as their heads touched the pillows. But around three in the morning, Nancy was partially awakened by a noise.
    “What was that?” she thought, looking around the cottage with sleepy eyes. She listened. But all was silent now. Finally Nancy went back to sleep.
    She awoke at seven. Helen was still asleep. Nancy put on a casual sweater and skirt and loafers. She tiptoed from the cabin and headed for the inn. No one else seemed to be outside.
    For the next half hour Nancy looked near the front door for footprints, lilac buds, or anything else to give her a clue to the jewel thief. She found nothing.
    She strolled around back and met Hank, the gardener, who greeted her pleasantly and said he had decided not to give up his job. “My injured leg’s better. But I have other worries now,” he said. “Some outdoor equipment was taken last night from the tool shed.”
    “Really?” said Nancy. “What?”
    Hank led her to the small wooden structure used by the outdoor workers. “We’re missing several shovels, rakes, some wire, and small parts,” said Hank. “But worst of all, an expensive jig saw that Mr. Farnham just bought is gone.”
    “More thefts,” thought Nancy. Aloud she asked, “Is the shed locked at night?”
    Hank said it was, and that he was responsible for securing the shed after work. “Probably none of the other men thought to ask Miss Willoughby for the spare key to lock up when I wasn’t here.”
    Nancy examined the soft dirt outside the shed. There were a number of footprints, all blurred and leading in different directions. As Jim, Gil, and Luke—the three other gardeners—reported for work, Nancy questioned each of them in turn. They confessed that they had forgotten to lock the shed, and said they had no idea who might have taken the tools. Before Nancy left the men, she suggested that Hank search the grounds once more before reporting the theft.
    As Nancy started up the front porch steps of the inn a few minutes later, she was hailed by John McBride. “Look what I found!” he cried triumphantly.
    He held out Emily’s white velvet jewel case!

CHAPTER VII
    A Diver in Peril
    “JOHN, you found the diamonds!” Nancy exclaimed.
    The young man opened the case and displayed its contents. The twenty diamonds, of various sizes, glinted in the morning sunlight.
    “Astounding, isn’t it?” John grinned, adding that he had found the case under one of the lobby windows. “I must have missed it last night.”
    “Will you show me the spot, please? I must have missed it too.”
    John led Nancy to a clump of China-blue lilac bushes, and pointed out the place where he had found the case.
    “The thief must have dropped this, but I can’t figure out why she didn’t come back for it,” John remarked.
    “She may not have known until later that she had dropped it. By that time she probably was afraid of being caught,” Nancy replied.
    Just then Emily came outside. She was beside herself with joy upon seeing the jewels.
    “John, you’re a darling!” she cried. “Let’s go to the patio and tell the others.”
    “Isn’t this wonderful?” Mrs. Willoughby exclaimed. “And none of the diamonds is missing!” she added, counting.
    “Are you sure?” Maud gave John and Nancy suspicious looks.
    Nancy was about to make a sharp retort but refrained. The social director seemed determined to be unpleasant, and the young sleuth decided to ignore her insinuating remark. John just looked amused.
    “Aunt Hazel,” said Emily, “I think these jewels should be put in a safe place at once. Since I’m going to sell them, I think our jeweler friend in Benton, Mr. Fabian, is the person to keep them. And he can also make a new appraisal of the diamonds.”
    Emily’s aunt nodded. “I’m so happy for you, dear.”
    Emily continued, “I might sell a few