I was not aware that Baby Peggy made this film--I am only aware of the later remake starring Shirley Temple. Now that I've seen the Baby Peggy version, I'll get the Temple version and compare them sometime in the next few days.
The story begins with Peggy living with an old lighthouse keeper she calls 'Daddy Judkins'. It seems that five years earlier, the old man found a dead mother and her baby clinging to life---and he raised the girl as his own. They are very happy together and she's been nicknamed 'Captain January' and helps him run the place and catch lobsters. However, a few busybodies in the nearby community want to take her away from him--supposedly for her own good. Before they can try to do this, however, the child's aunt and uncle discover her and want to take her back to their mansion to live. Legally, Daddy Judkins cannot keep the child but Captain January can't live without him. What are they to do?
The film clearly was meant to pull on the heartstrings of the audience and I am pretty sure theaters were filled with bawling patrons. However, the sentimentality is very well done. Part of this is Hobart Bosworth (as Daddy Judkins) was a very experienced and able actor. While Peggy was no Shirley Temple (her acting range isn't quite as great), she also was very good--and more importantly, she was freaking adorable. Overall, it's a very slickly produced and sentimental old film--the sort that has managed to retain much of its charm today. For lovers of old silents, this is a must-see.
UPDATE: I just watched the Shirley Temple version tonight. The plot was a bit different and, not surprisingly it had some singing and dancing. Overall, I was surprised that I actually preferred the Baby Peggy version--mostly because it less often got schmaltzy and the singing actually didn't help the story. Just my opinion.