All the Pretty Little Horses

Traditional American, collected by John Avery Lomax and Alan Lomax
I just learned that Bess Hawes died a few months ago, on November 27, 2009. She was a musician, performer (I know her from the Almanac singers, but she did much more) a guitar teacher, and folklorist. She was also John Lomax's daughter and Alan's sister.
Obituary 1
Obituary 2
Rise Up Singing chapter: Lullabies, p.130

Chords:
Em G D Am Bm B Em - / Em G D Am Bm B Em - / C - Am - Em E Am -
Hush-you-bye, don't you cry, go to sleep-y little baby
When you wake, you shall have all the pretty little horses
Blacks and bays, dapples and grays, coach and six-a little horses

Way down yonder in the meadow, there's a poor little lambie
The birds and the butterflies pecking out his eyes; the poor little thing cried "Mammy"
[No third line in this verse. You can play the chords instrumental, or just stop]

Alternately: "The birds and the butterfiles flutter 'round his eyes." but I've never seen birds flutter around a lamb's eyes. I've never seen them pick out a lamb's eyes either, but I know that they, on occasion, do.