In Ispahan, Persia, Hajji Baba is leaving his father's shop to seek a greater fortune, while the Princess Fawzia is trying to talk her father, the Caliph into giving her in marriage to Nur-El-Din, a rival prince known far and wide as mean and fickle. Her father intends Fawzia for Fawzia to marry a friend and ally, and makes plans to send her to him.