If you can't read the caption it says, "I may be a silly", Mr. Bear answered, "but I know when a naughty little girl needs a spanking." Little Bear couldn't watch. He was afraid his turn was next.
He was right!
The reason Edith, the lonely doll, and Little Bear were getting a spanking from Mr. Bear was because they had gotten into some makeup and jewelry that wasn't theirs, and Edith isn't old enough to wear makeup. Scrawled on the mirror in lipstick is, "Mr. Bear is just a silly old thing".
If you want to see more pictures and excerpts from the book I found some here. Daisy couldn't understand why HF and I were dying laughing while we were reading this book to her. It was just so weird.