The Wizard imposter can grant their wishes for healing their defects, however. He is forced to show Dorothy's three friends that they already have the qualities they are asking for within themselves. Talking common-sense, he explains that they demonstrated these qualities in the brave and clever rescue of Dorothy. The well-meaning, witty Wizard presents each of them with a symbol of their granted wish - in fact, his presentation of gifts are the only demonstration of his magical wizardry.

- The Wizard reminds the "brainy" Scarecrow about the universality of brains and then presents him with a rolled up parchment/diploma:

Why, anybody can have a brain. That's a very mediocre commodity. Every pusillanimous creature that crawls on the Earth or slinks through slimy seas has a brain. Back where I come from, we have universities, seats of great learning, where men go to become great thinkers. And when they come out, they think deep thoughts and with no more brains than you have! But they have one thing you haven't got - a diploma. Therefore, by virtue of the authority vested in me by the Universitatus Committeatum E Pluribus Unum, I hereby confer upon you the honorary degree of Th. D...that's Doctor of Thinkology.

[In Baum's book, the Wizard concocts a bran cereal mixture and places it into the Scarecrow's head, and declaring that he has 'bran-new brains.'] The Scarecrow demonstrates his brain power by placing his finger to his head and incorrectly reciting a mathematical formula - the Pythagorean Theorem: "The sum of the square roots of any two sides of an isoceles triangle is equal to the square root of the remaining side. (He is overjoyed.) Oh joy, rapture, I've got a brain. How can I ever thank you enough?"

- The Wizard discounts the Lion's lack of courage, because he merely confuses courage with wisdom. Under certain circumstances, it's acceptable to be afraid. The Lion is presented with an elaborate medal of valor for all his bravery against Wicked Witches:

As for you, my fine friend, you're a victim of disorganized thinking. You are under the unfortunate delusion that simply because you run away from danger you have no courage. You're confusing courage with wisdom. Back where I come from, we have men who are called heroes. Once a year, they take their fortitude out of moth balls and parade it down the main street of the city and they have no more courage than you have. But they have one thing that you haven't got - a medal. Therefore, for meritorious conduct, extraordinary valor, conspicuous bravery against Wicked Witches, I award you the Triple Cross. You are now a member of the Legion of Courage.

The Lion is overwhelmed by the honor and instantly made timid:

Shucks, folks, I'm speechless.

- The Wizard first explains to the Tin Woodsman the advantages of being heartless.

Back where I come from, there are men who do nothing all day but good deeds. They are called phila-, er, er, philanth-er, yes, er, good-deed doers, and their hearts are no bigger than yours. But they have one thing you haven't got - a testimonial.

But since the Tin Woodsman still desires a heart, he is given some additional therapeutic, home-spun wisdom from the Wizard and then presented with a testimonial: a clock award - a large red, heart-shaped watch made of metal that hangs from the end of a golden chain. A loudly-ticking clock is in the center of the heart:

Therefore, in consideration of your kindness, I take pleasure at this time in presenting you with a small token of our esteem and affection. And remember, my sentimental friend, that a heart is not judged by how much you love, but by how much you are loved by others.

In all three cases, they thought they lacked something - intellect (the head), courageous strength (the hand), and a sensitive heart (the heart) - but they were only deluding themselves. [The rock band America wrote a song called Tin Man, which noted "But Oz never did give nothing to the Tin Man That he didn't, didn't already have."] Each of them decisively proved that they had those leadership qualities inside from the very start - but they hadn't looked deep enough to find them. As a token of the recognition of their qualities, they are rewarded with outward symbols: a diploma, a medal, and a testimonial. [In Baum's book, the Scarecrow is also given leadership of The Emerald City, while The Tin Woodsman leads up the Winkies, and the Lion actually becomes the King of the Forest.]

- Dorothy's wish to return to Kansas still needs to be fulfilled, but she has grave doubts: "I don't think there's anything in that black bag for me." The Wizard promises to literally take her back to Kansas by balloon: "You force me into a cataclysmic decision. The only way to get Dorothy back to Kansas is for me to take her there myself." She distrusts the Wizard's ability to fly a balloon, but he reassures her: "Oh will you? Could you? Oh! Oh, but are you a clever enough Wizard to manage it?" In his past, he had been a circus balloonist from a Kansas fair and had been accidentally blown to Oz while performing. Like Dorothy - also from Kansas, he had to cope in the new world by becoming the city's first Wizard:

Wizard: I'm an old Kansas man myself. Born and bred in the heart of the Western wilderness. Premiere Balloonist par excellence for the Miracle Wonderland Carnival Company until one day while performing spectacular feats of stratospheric skill, never before attempted by civilized man, an unfortunate phenomena occurred. The balloon failed to return to the fair.
Lion: It did?
Dorothy: Weren't you frightened?
Wizard: Frightened? You are talking to a man who has laughed in the face of death, sneered at doom, and chuckled at catastrophe. I was petrified. Then suddenly, the wind changed and the balloon floated down into the heart of this noble city, where I was instantly acclaimed Oz, the first Wizard Deluxe. Times being what they were, I accepted the job, retaining my balloon against the advent of a quick getaway. And in that balloon, my dear Dorothy, you and I will return to the land of E Pluribus Unum.

The Emerald City's square is filled with people bidding Dorothy and the Wizard goodbye in his gigantic hot-air balloon, labeled with the words: "STATE FAIR OMAHA" on the big bag. As the Wizard bids farewell to his cheering subjects to embark on "a hazardous and technically unexplainable journey into the outer stratosphere to confer, converse, and otherwise hobknob with my brother Wizards," he confers his ruling authority in Oz upon Dorothy's three companions. He nominates the Scarecrow to take his place as ruler, to be assisted by the Tin Man and the Lion:

And I hereby decree that until what time, if any, that I return, the Scarecrow by virtue of his highly superior Brains, shall rule in my stead, assisted by the Tin Man by virtue of his magnificent Heart, and the Lion by virtue of his Courage. Obey them as you would me.

Toto spies a Siamese cat in the arms of one of the spectators and jumps out of the balloon's gondola/basket [for the third time in the film] just as the ropes holding the balloon to the moorings loosen - aided by the Tin Man's untying of the mooring rope. Dorothy climbs out after him and chases after runaway Toto at the last minute. Stranded in Oz, she fails to ascend in the uncontrollable balloon, leaving the Wizard to sail up and fly away without her:

This is a highly irregular procedure - absolutely unprecedented. It'll ruin my exit.

Dorothy pleads: "Don't go without me," but the mortal Wizard can only wave goodbye as he floats away - powerless to control it: "I can't come back. I don't know how it works." Dorothy cries: "Oh, now I'll never get home," although her friends wish her to stay. The Lion tearfully tells her: "Stay with us, then, Dorothy. We all love ya. We don't want ya to go." Dorothy loves them too but she is still homesick and depressed for Kansas - her home:

That's very kind of you. But this could never be like Kansas. Auntie Em must have stopped wondering what happened to me by now. Oh Scarecrow, what am I gonna do?

Before he can answer, he points to the Good Witch of the North ("Look, here's someone who can help you") who makes one final appearance. She descends to the ground in her familiar, shimmering, rainbow-hued bubble from the sky. Glinda steps out of the ball of light and kindly tells Dorothy that she has always had the power to go home with the magical power of her ruby slippers, but she had to discover it for herself.

Dorothy: Oh, will you help me? Can you help me?
Glinda: You don't need to be helped any longer. You've always had the power to go back to Kansas.
Dorothy: I have?
Scarecrow: Then why didn't you tell her before?
Glinda: Because she wouldn't have believed me. She had to learn it for herself.

Dorothy insightfully explains what she has learned from her experience - during her dream of being in Oz. In a self-revelation, she realizes that everything she could ever have wanted was right in her own backyard - IF she had wanted it hard enough. [She relinquishes the miracle-working power of the Wizard - he has floated away - and relies upon her own power and personality to find her independent identity and way home. By returning to the Gale home after fantasizing about the enchanting world beyond and experiencing it along the Yellow Brick Road, she has confronted her childhood fears and grown up emotionally with strength enough to meet her adult future. In some ways, the journey was as rewarding as the accomplishment of her goal.] Glinda reveals the meaning of the ruby slippers - they will carry her (and Toto) back:

Dorothy: Well, I-I think that it, that it wasn't enough just to want to see Uncle Henry and Auntie Em, and it's that if I ever go looking for my heart's desire again, I won't look any further than my own backyard because, if it isn't there, I never really lost it to begin with. Is that right?
Glinda: That's all it is!
Scarecrow: But that's so easy! I should've thought of it for you -
Tin Man: I should have felt it in my heart -
Glinda: No, she had to find it out for herself. Now those magic slippers will take you home in two seconds!
Dorothy: Oh! Toto too?
Glinda: Toto too.
Dorothy: Now?
Glinda: Whenever you wish.

Dorothy exclaims: "Oh dear, that's too wonderful to be true" - but she must first bid tearful farewells to her friends one last time: "It's gonna be so hard to say goodbye. I love you all too."

• She kisses the Tin Woodsman, who sadly remarks as tears threaten to rust his tin: "Now I know I've got a heart, because it's breaking."
  
• She also turns to the Cowardly Lion, kisses him, and remembers his pre-courage fear: "I'm gonna miss the way you used to holler for help before you found your courage." Trying to remain strong, he thanks Dorothy for helping him: "I would never have found it if it hadn't been for you."
  
• She hugs and kisses the Scarecrow and whispers: "I think I'll miss you most of all." She reserves a special place in her heart for him. [This scene was parodied in Zucker/Abrahams/Zucker's Top Secret! (1984), with Hillary Flammond's (Lucy Gutteridge) last line: "Goodbye Chocolate Mousse! Goodbye Everyone! and Goodbye, Scarecrow! I'll miss you most of all!"]

When Dorothy is ready (with Toto held tightly in her arms), the Good Witch instructs her on how to return home from Oz to Kansas:

Then close your eyes and tap your heels together three times. And think to yourself, 'There's no place like home'.

So Dorothy clicks her heels together three times and repeats the magic phrase that takes her home: "There's no place like home...There's no place like home..." A spiral spins downward onto Dorothy, and the tornado-swept farm-house spins and falls back down to the ground. She is transferred back to the sepia-toned, real world of her drab Kansas farm home.

She awakens lying on her bed with her loving Auntie Em placing a cold compress on her forehead: "Wake up, honey." Her Aunt and Uncle are bent over her bed, watching her worriedly: "Dorothy, Dorothy dear, it's Aunt Em, darling." Kindly Professor Marvel passes by the window, relieved to see that she is OK following the tornado: "I just dropped by, because I heard the little girl got caught in the..." According to her Uncle, "she got quite a bump on the head. We kinda thought there for a minute she was gonna leave us." [Her brush with death was symbolized by the hourglass with the sand running out.]:

But I did leave you, Uncle Henry. That's just the trouble. And I tried to get back for days and days.

Dorothy insists her journey was real and not just a "bad dream." She is surrounded by the anxious faces of the three familiar farmhands who speak to her at her bedside:

Hunk: Remember me? Your old pal Hunk?
Hickory: Me? Hickory?
Zeke: You couldn't forget my face, could ya?

She is confused - are they her three Oz companions without their fantastic costumes? She excitedly tells all of them about the wonders of the Land of Oz - it was all a dream - but maybe not:

Dorothy: But it wasn't a dream. It was a place, and you [Hunk] and you [Hickory] and you [Zeke] and you [Professor Marvel] were there. (Everyone laughs) But you couldn't have been, could you?
Auntie Em: We dream lots of silly things when we...
Dorothy: No, Aunt Em. This is a real, truly live place. And I remember that some of it wasn't very nice. But most of it was beautiful. But just the same, all I kept saying to everybody was, 'I want to go home.' And they sent me home. (Everyone chuckles again) Doesn't anybody believe me?
Uncle Henry: Of course we believe you, Dorothy.

She is so grateful to be back in her familiar home after her adventures that she hugs her beloved Toto [with the Miss Gulch situation unresolved] and tells everyone an uplifting, inspiring moral:

Oh, but anyway, Toto, we're home! (She hugs her dog.) Home! And this is my room - and you're all here! And I'm not gonna leave here ever, ever again because I love you all! - And oh, Auntie Em, there's no place like home.

After repeating the magical phrase, the film fades out on her radiant face.