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The titles below were recommended in Books that Build Character: A Guide to Teaching Your Child Moral Values Through Stories by William Kilpatrick and Gregory and Suzanne M. Wolfe, Simon & Schuster: New York (1994).

Dear Mili
Wilhelm Grimm (Farrar, Straus and Giroux, 1988)
Mili is sent into the forest by her mother to hide her from soldiers who are threatening their village. Lost in the forest, Mili is lead by a white bird to a saintly old man who cares for her for three days. When she returns home, she discovers that not three days but thirty years has past.
Character traits:
kindness, courage, respect

Dream Peddler
Gail E. Haley (E. P. Dutton, 1993)
John Chapman loves stories and believes "words, wisdom, ideas, and dreams" cannot be bought for any price. When he looks at the rags his children has to wear, he wonders if books are worth the poverty he has brought upon his children. John dreams he is to travel to London Bridge where he will receive news that will change his life.
Character traits:
responsibility, generosity, caring

The Unicorn and the Lake
Marianna Mayer (Dial Books for Young Readers, 1982)
This is a haunting tale of good against evil that reminds us that it is goodness mingled with compassion and mercy that will ultimately triumph over evil--not superior force alone.
Character traits: fairness, courage, kindness