When the police do not catch a serial child murderer, the criminal underground organizes to capture him and put him on trial.
Wanted posters offer a reward for the murderer of eight children. A mother calls her little girl; but Hans Beckert (Peter Lorre) gave her balloons, and she has disappeared. Men suspect each other and hold a man who merely talked with a child. The police search for clues, check vagrants, and raid the underworld, arresting those without proper papers. There are more police on the streets than whores. The union leaders of the racketeers meet to solve the problem that is hurting their businesses. They assign the beggars places to watch the children, while the police search for the writing materials of the murderer's letters. Hans whistles the same tune and buys a balloon. The blind balloon seller recognizes the tune and has the beggars follow him. Hans uses his knife to peel an orange for a little girl. The leaders learn that the beggars are following him. The girl wipes an "M" off his coat. Hans runs away but is cornered in an office building. He tries to open a locked door with his knife and is eventually found in the attic. He turns out the light, and the watchman pulls the alarm; but the men grab him before the police arrive. Franz is left behind and is arrested and questioned but says nothing. The inspector learns from the watchman that nothing was stolen. Accused of murder, Franz says they were looking for the child murderer.
Hans is brought before a large underground meeting. He asks to go free. The balloon seller says there is no mistake. They show Hans photos of the victims, as people shout to kill him. They are experts in law, having been in prisons. Hans asks to be turned over to the police for a fair trial; but they laugh. He says he couldn't help what he did, that they are criminals because they want to be; but some force he can't escape drove him. After the murders he could not remember them; he can't bear it. The prosecutor argues a compulsive murderer must be wiped out; but the defense lawyer says that clears him of responsibility; he is sick and needs a doctor. The state should see that he is no longer a danger. A woman speaks for the mothers, and people say, "Kill him." The defense lawyer says turn him over to the police. Then suddenly a voice saying, "In the name of the law" causes everyone to put up their hands. In the final scene a woman asks, "If they take his life, will that bring our babies back to us?"
This film creates a powerful mood of danger, fear, and suspicion, as the innocence of children is threatened by an unknown murderer. The underworld proves to be more effective than the police, though their trial has to give way to society's laws. The final question haunts the issue of whether capital punishment merely makes society murderers too.