A group of visitors are gathered around a fireplace discussing the possible horror of a ghost appearing to a young, innocent child. A man named Douglas wonders if one child "gives the effect another turn of the screw," what would a story involving a ghostly visitation to two children do? Everyone wants to hear his story, but Douglas explains that he must send for a manuscript. The story he wants to relate was narrated by a governess who has been dead twenty years. She was once his sister's governess and Douglas has heard the story firsthand.
When the group has heard more about the governess, everyone wonders if she was in love. Douglas admits that she was and that the beauty of her love was that she saw the man she loved only twice. He was her employer and had hired her on the condition that she never trouble him, "never appeal nor complain nor write about anything," and that she was to handle all problems herself. In other words, she was to take complete charge of the two children to be placed under her authority.
In this introductory section — note that James does not call it a prologue — we are given just the bare essentials of the story. It will be left for the manuscript, that is, the governess, to tell the main story. The only outside or objective facts we have in the entire narrative come from this section. But at the same time, we must be aware that these come from Douglas, who is accused of having been in love with the governess, and thus his view may be colored.