The fog was dense and thick at Purple Cloud Cave, where an old yellow dragon dwelled. This yellow dragon was no longer young, and he had done many evil deeds in his day. Drowsily and sleepy-eyed, he slept in the cave from morning till night, with no desire even to move a muscle.

There was also a little yellow dragon in the cave. The little dragon had no parents of his own, and had been the old yellow dragon's slave ever since childhood. The old yellow dragon was afraid that the little dragon might escape, so he would not allow him to go even one step out of the cave. Even when he slept, he would keep one claw on the little yellow dragon's neck.

Once, the old yellow dragon was sleeping deeply and soundly, ah, so very soundly. The little yellow dragon gingerly and quietly slipped out from under the old dragon's claw. He came to the opening of the cave and the minute he swished his tail, the purple clouds covering the entrance dispersed. He came out of the cave and saw the green mountains and blue waters, the tender green crops and gorgeous red flowers. He was so overjoyed that he turned a somersault on the ground and he immediately transformed himself into a fine young man. Little yellow dragon saw that his naked body was still covered with dragon scales on the back, so he pulled two pieces of the purple clouds over, blew on them and turned them into a set of purple clothes, which he put on.

When the little yellow dragon walked down the hill, he ran into a young cowherd sitting there crying.

“My little brother, why are you crying?” he asked the cowherd.

The cowherd wiped his tears with the back of his hands. “I lost a cow that belongs to the rich Master Two and he has asked me to give him back a cow. I don't have a cow to give!”

“So what if you don't have a cow. Why should you cry?”

“He said that if I do not come up with a cow in three days, he will club me to death.”

Hearing this, the little yellow dragon blinked his eyes and thought for a moment: “Little brother, don't cry. I will give the cow back for you!”

The cowherd scratched his head and went with the little dragon.

The little yellow dragon went into a forest with the cowherd and there they saw an old man weeping under a tree.

“Dear uncle, why are you crying?”

The old man cleared his throat: “I owe the rich Master Two two bushels of grain in rent and he has just pressed me to pay him. I don't have the grain!”

“So what if you don't have the grain. Why should you cry?”

“He said that if I don't come up with the rent in three days, he will put me in prison!”

Hearing this, the little yellow dragon blinked his eyes and thought for a moment: “Don't worry, I will pay the rent for you!”

The old man straightened his back and went along with the little yellow dragon.

The little yellow dragon walked along the cobble road with the cowherd and the old man until they came upon an old lady crying in front of a house.

“Dear granny, why are you crying?”

The old lady cleaned her nose: “I owe the rich Master Two some money and he has just pressed me to pay him back. I don't have the money!”

“So what if you don't have the money. Why should you cry?”

“He said that if I don't pay him back in three days, he will wreck my house!”

Hearing this, the little yellow dragon blinked his eyes and thought for a moment: “Please don't cry. I will pay the money back for you!”

The old lady dusted off her garment and went along with the little yellow dragon.

After walking for some time, they finally arrived at the gate of rich Master Two's home.

The old lady noticed that the little dragon was empty handed, so she asked:“ What the rich Master Two wants is money. You didn't bring any money. How can you pay my debt?”

The old man also saw that the little dragon was empty handed, and asked: “What the rich Master Two wants is grain. You didn't bring any grain. How can you pay him back for me?”

The young cowherd also noticed that the little yellow dragon was empty handed, so he asked:“ What the rich Master Two wants is a cow. You did not bring a cow. How can you pay him back for me?”

The little yellow dragon answered,“ Dear uncle, dear granny, little brother, let me ask you this: what does he like most?”

They all answered together: “What he likes most is gold! money!”

The little yellow dragon slapped his ankle: “That's right! That's right! And I have gold. We'll pay gold for the rent, gold for the debt, and gold for the cow.” So saying, he discreetly reached into his garment. With a jerk, he ripped off a gold scale from his back. Then with another jerk, he nipped off another gold scale. He went on ripping the scales from his body. The old saying goes, “A dragon fears the nipping off of the scales.” Now since the little dragon was tearing off his own scales, you can imagine how painful it was for him. He clenched his teeth together and bore the pain. At last he had peeled all the golden scales from his back and divided them among the old man, the old lady and the cowherd.

They all went into the rich Master Two's house. When Master Two saw them, he shouted:“ Hey you, cowherd, give me my cow! And you, old man, pay me my rent! And you, old woman, return my money!”

The old man gave him gold scales to pay his rent; the old lady gave him gold scales to pay her debt; and the cowherd gave him gold scales for the lost cow.

Holding a pile of gold scales in his hands, the rich Master Two wrinkled his brow and murmured,“ These flakes are really gold. And they are so shiny. What a pity they are loose and without dignity!”

At this point, the little yellow dragon stepped in: “Master Two, if you make a big fire, you can melt them into a soft jelly, then you can make it into one huge ingot of gold so big you can't even move it out of your door!”

When the rich Master Two heard this, he was so pleased that his face was covered with bumps from laughter, his eyes became a slit and his smiles reached his ears.

When the little yellow dragon came out of the rich man's gate, he blinked his eyes, thought for a moment and said to the old man: “Why don't I take you as my own dear father?” The old man stroked his beard and agreed with pleasure.

Then the dragon said to the old lady: “Why don't I take you as my very own mother?” The old lady smiled and agreed with pleasure.

Then the little yellow dragon turned around and addressed the cowherd: “Little brother, why don't you take me as your big brother!”

The young cowherd was so happy with this that he jumped up and wrapped his arms tightly around the little yellow dragon's neck.

From that time on, the old man, the old lady, the cowherd and the little yellow dragon became one family. The dragon learned how to plant crops with the old man but he would only work in the dry fields and not in the water paddies. He helped the old lady do the chores, but he only chopped wood and was unwilling to fetch water. The little dragon went to tend the cow with the cowherd, but he only walked on bridges and did not want to step on the wet sand or into the river. The others all felt that this was rather strange, but they did not quite understand why.

After the rich Master Two had received all the gold scales, he was in a daze for three whole days. On the fourth day, he told his servants to  build a big blazing fire in the house in order to melt the gold scales into a huge ingot. He also prepared a feast and invited all his rich and powerful relatives and friends to observe this event and allow him to show off his wealth.

Unexpectedly, as soon as the gold scales entered the fire, the flames leaped thirty-three feet high with a swoosh. The beam of the house immediately caught fire and in the twinkling of an eye, the rich man's house was burnt down flat onto the ground. Now it turns out that the little yellow dragon was a fire dragon, and that the scales from his body were none other than the “fire dragon scales.” Once these scales caught fire, there was no way that the flames could be extinguished.

Once the rich man's house caught fire, the air was full of dense smoke. Clouds upon clouds of smoke rushed into the sky. The smoke and flames floated up and up to the hills and came into Purple Cloud Cave. Thus the smoke wafted into the old yellow dragon's nose. His nose started to feel itchy and he sneezed. Now a sneeze was nothing to him, but his sneeze blew smoke and flames right out of the cave with a swoosh and burnt up al trees, crops and houses within one mile of the cave.

With this sneeze, the old yellow dragon woke up. He sniffed and smelled about, and concluded something was wrong. He instinctively started to call for the little yellow dragon but the little dragon was nowhere to be seen in the dark cave. The old dragon was enraged and rushed out of the cave to look for him.

Flying through the air, the old yellow dragon searched to the west and to the east. He flew over one hill after another until finally he came to the burning house. After a careful look, he shouted:“ Oh, my goodness, my goodness! This house belongs to the rich Master Two! He always sacrifices three different kinds of animals to me on festive days and in return I have always avoided his house when spitting fire on others. How could it have started burning on its own today?” He sniffed carefully some more and shouted,“ This smells like burning fire dragon scales. That little yellow dragon must have done this! I'm going to find him and throttle him to death!”

The old dragon flew back and forth in the air but he could not find the little yellow dragon no matter how he tried. He was so angry that he began breathing very hard. As he breathed, flames darted out from his mouth and nose and plunged the city of Hangzhou and its immediate environs into a sea of flames.

The grain was burnt, and nothing was left to eat. Clothes were burnt, and there was nothing left to wear. Houses were burnt, leaving no place to live. How could the people endure a life like this? The little dragon knew this must have been the evil doing of the old yellow dragon. He blinked his eyes for a whole morning and thought hard for a whole afternoon.

At last, he became brave and said to the villagers:“ My dear villagers! The fire dragon has been too wicked. He has done too much evil. We must unite and subdue him!”

“But the fire dragon is a deity, how can we subdue him?"

“Earth overcomes water. Water overcomes fire. The fire dragon fears water. First let's all go and get water from West Lake, then I'll take you to find the fire dragon!”

This idea worked like a wild wind to raise the interest of villagers in three hundred and sixty villages in all directions when they learned of it. That very evening, people started to bring water from West Lake by every means available to them. West Lake was drawn dry in no time at all. The villagers followed closely after the little yellow dragon as the crowd stumbled their way to Purple Cloud Cave.

At this time, the old yellow dragon was asleep after having become very tired from all the day's flying, and he had not the faintest idea what was going on outside. As the crowd climbed up the hill, they saw nothing but a huge patch of dense fog, and they searched back and forth with no success in finding the entrance to the cave. Then the little dragon waved his arms in the fog and the purple clouds covering the cave dispersed. The crowd rushed to the cave and started to pour, sprinkle and splash water into Purple Cloud Cave. Soon, water had filled the cave and the old yellow dragon was soaked and drowned shortly after.

With the crowd busily and frantically splashing water into the cave, everybody was splashed, and even the little yellow dragon was sprinkled with drops of water. Soon he felt rather faint and his body went limp. As the old man, the old lady and the cowherd ran over to support him, they saw horns come out of his head and his hands and feet turn into claws. The little yellow dragon had revealed his true form. Then he tumbled down and died at the foot of the hill. Only then did they realize that this young man was actually the transformation of a fire dragon.

Now that the old yellow dragon had died, the fire in the city died out too. But the little dragon had sacrificed his life for the people, and this saddened them very much. People from all the three hundred and sixty villages gathered together to bury the little yellow dragon on the slope of the hill.

Their tears fell as they dug the grave, but they kept on shoveling the soil and the little yellow dragon was buried. Soon a large mound was piled up and hundreds and thousands of tear drops were falling down. They penetrated the thick soil and flowed straight into the little yellow dragon's heart. His heart was soon full, and as it could no longer contain all the tear drops, they started to flow out from his mouth. Gradually, a crack appeared in the grave mound and a waterfall poured down from it. The clear waters splashed down all through the year without end.

Later on, to commemorate the little yellow dragon, a statue of a dragon's head was erected at the source of the waterfall and the water then flowed from the dragon's mouth. The spot where the little dragon was buried then came to be known as "Yellow Dragon Cave.”