One of the trappers at Lottie's goads Jeremy into spending all of his birthday-present-for-Candy money on a gamble, and Jeremy loses. This is just another example of the ill will flaming between loggers and trappers in Seattle. There is no love lost, and a particular family matriarch, Ma Oates (Jeanette Nolan in a scene-stealing, scenery-chewing tour de force) wants more trouble, in revenge for perceived wrongs.
When Jeremy finds the man to whom he lost his card game murdered in the woods, he also sees an older Indian walking through the trees nearby, but someone clouts him and he falls unconscious.
With the Oates boys swearing Jeremy did it, Aaron has no choice but to take Jeremy to jail, even though he doesn't believe Jeremy is guilty. Jeremy and Joshua track the Indian, who it turns out is "headed for the Cascades" to die. They talk him into coming back to Seattle with them, on the condition that he doesn't have to decide whether to testify until the time comes.
Jeremy's friends and family think of many ways to convince him to testify, but each one only leaves the old Earthling more in contempt of white people than ever. But the Oates have a solution to their problem. They will merely kill the Indian. This they plan and execute, believing themselves successful.
When the judge arrives and the trial starts, the evidence is mounting against Jeremy until finally Jeremy's only hope is that the old Indian will testify on his behalf. From what he's heard in the courtroom from his hiding place in the back, the old Indian has decided to point out the murderer -- Eben, who immediately jumps up and fingers the real murderer. "But why did you point to Eben?" Because who would believe an old Indian, who came to realize there is good and bad in all color of men, and Jeremy is one of the good whites.