As the legend goes, there was a cobbler named Andreas Kresmer living in the colony during the late 18th century. He was killed in a construction accident while preparing the foundation for the colony's house for unmarried men. After his death, people claim to have heard the sound of a cobbler at work when in the vicinity of this building. Eventually, people began to report seeing a small man, wearing a red cap (as Kresmer himself did) in the vicinity of the building.
Over time, the building came to be used as the home for widows. On one occasion, the granddaughter of one widow, a girl named Betsy, ran in to her grandmother's room, telling a story about a small man in a red cap who wanted Betsy to come and play.
Eventually, the ghost was exorcised by a minister following a run-in with one of the community leaders. Since then, the ghost has passed into obscurity.
Commentary: What a great story! What appears to be going on here is a mixing of two types of folklore. The first concerns the classic ghost story - a man dies during an accident and thereafter elements of his life continue to echo in the setting in which he died - specifically the sound of a cobbler's tools at work. Classic stuff.
The other type of folklore concerns the spirit people* of northern European folklore. The little red man resembles the trolls, elves, and faeries of Northern Europe, and his association with a a domestic task (in this case, shoemaking) is reminiscent of mythological creatures such as brownies. The melding of the two is not entirely odd, as some European folklore from the Renaissance onward (possibly continuing an earlier tradition) conflated the spirit people of folklore with dead humans.
The stories of European spirit people would have come with the Morovians when the arrived in the Americas. That such a story would get attached to their new colony is unsurprising. That it would be attached to a particular person as it was is rather more interesting (and given Morovian record-keeping habits, it appears likely that Kresmer was, in fact, a real person). One is left wondering why this occurred.
*Most cultures have folklore concerning spirit people, be they "the ancestors", angels, trolls, kobolds, faeries, devils, or any number of other names. These are usually conceived of as the intelligent forces, benign or malevolent, behind nature, and descendants of them are seen in even the "big three" monotheistic religions of the world.