"The Rat Trap" begins by describing the daily life and toils of a vagabond traveling through the Swedish countryside. This man, who goes unnamed until the very last line of the story, relies on the scant kindness of strangers for shelter and food. When he is able to scrounge the materials, he makes rat traps, which he sells in the markets of the towns he travels through. He wears the rat traps on a string around his neck, like pendants, until he manages to sell them.
The thought occurs to him one day while traveling that the whole world is quite like the rat traps he fashions with makeshift materials. He concludes that the world is full of temptations and spells of hope, and that these things are just like the cheese and meat that farmers place in rat traps to lure rats to their demise. So too in life, he thinks, hope or the promise of something too good to be true often results in a worsening of the hoper's circumstances.
One winter evening, the vagabond is plodding down the road when he encounters a small cottage. He knocks, hoping to be sheltered for the night, and his knock is answered by a good-natured crofter, a widower who lives alone and is happy to take in a vagabond for the evening. It seems that the crofter is as happy to host the man as the man is to be hosted and out of the cold. They play cards, smoke their pipes, and chat late into the evening. The crofter used to work at the iron mill, but now he relies on his milk cow to make a living. The crofter praises his beloved cow for the living she provides him, and to prove it, he shows the vagabond the three ten-kronor notes she earned him the week before, which he keeps on a nail by the door in a small purse.
The crofter and the vagabond wake early the next morning, and the vagabond continues on his way while the crofter goes to milk his cow. The vagabond then turns back toward the house while the crofter is still away, breaks one of his front windows, and snatches the purse from the nail on the wall, stealing the crofter's week of funds. The vagabond then walks deep into the woods to avoid detection, for he knows that the crofter will return to his home, find the broken window, see the money has been stolen, and possibly alert the town.
After walking for a while in the woods, the vagabond realizes that he is lost. The sun has set, and it appears to be a bitterly cold winter night ahead. The vagabond suddenly realizes that he has been ensnared in precisely the type of metaphorical rat trap that he, himself, ascribed to life. He was tempted by the purse full of kronor, he stole it, took an obscure path in order to avoid detection, and now, as a result of these decisions, he is lost in the woods facing a dangerously cold night without shelter.
The vagabond finds refuge in an iron mill called Ramsjö Ironworks. The smith doesn't mind him standing by the forge to keep warm. Eventually, the owner of the mill shows up and greets the vagabond as if they were old friends. The Ironmaster greets the vagabond as Nils Olaf, a man with whom he apparently served in the military. Not knowing what to say, the vagabond goes along with it. The Ironmaster invites the vagabond to his home for Christmas, so he can rest and eat good food. After some convincing, the vagabond nervously agrees to go to the Ironmaster's home.
The next morning, after the vagabond has washed, been clothed, and been given a haircut, it is suddenly clear to the Ironmaster that this man is not the man he thought he was. At first the Ironmaster is angry—he feels deceived. But the vagabond quickly jumps to his own defense. He tells the Ironmaster his theory that the whole world is a rat trap waiting to ensnare the downtrodden. The Ironmaster is entertained by this theory, but still doesn't want this stranger staying in his house. However, the Ironmaster's daughter, Edla Willmansson, convinces her father to let the man stay for Christmas. The father, unable to deny his only child, consents.
The vagabond has the most restful day of his life there in the Willmansson household. He sleeps all day, waking only for meals. The next day, as the Willmanssons attend church services, the vagabond leaves to continue his travels. At church, the old crofter tells everyone how he was robbed by a drifter with rat traps strung around his neck. The Ironmaster is furious and embarrassed that he hosted a thief, but when they return home, his valet tells him that the man left a small present for Edla. In the package is a rat trap with the kronor he stole from the crofter inside, and a letter. The vagabond thanks the Willmanssons for their hospitality and claims that their kindness helped him avoid the rat trap of the world. He asks that they give the money back to the crofter and signs off as Captain von Ståhle, the man for whom the Ironmaster mistook him.
