This trend-setting gangster film has two forwards and an epilog apologizing that they are not trying to glorify hoodlums and criminals but emphasizing that the evils of prohibition violently portrayed are not a man or a character but a public problem the public must solve.
The story begins in a neighborhood where beer is so prevalent that even the boys Tom and Matt drink it on the street. Matt's sister accuses Tom of stealing roller skates, saying he is the meanest boy and will end up in jail. Tom's father is a policeman and often whips his boy with a razor strap, revealing the early abuse that formed his character. Tom and Matt steal some watches that Putty Nose will fence for them. In 1915 Putty gives Tom (James Cagney) and Matt (Edward Woods) guns for a burglary job; but Tom panics and fires his gun at a stuffed bear. In the resulting shoot-out a cop kills one of the boys, and Tom shoots a policeman; then Putty refuses to take them in. In 1917 Tom and Matt are driving a truck and trying to pass off some stolen cigars. Tom's brother Mike has enlisted in the war, and Tom promises his mother that he won't. Mike hits Tom for being a criminal.
1920 brings prohibition and sends the price of alcohol way up. Barman Paddy gives Tom and Matt lots of cash for loading a gasoline truck with stolen booze. They get a fancy car and find two women. Paddy gives them a job selling beer, and Nails Nathan tells them no one is allowed to buy any other beer. When Tom finds a bar doing so, he opens the taps and beats up the bartender. Home from the war, Mike scowls at the beer keg on the dinner table and calls his brother a murderer; but Tom counters that Mike killed Germans. Tom is in such a bad mood when Nails calls him to collect $1200 from a bad check that he shoves his breakfast grapefruit into his girl-friend's face. Tom and Matt pick up Gwen (Jean Harlowe) hitchhiking. Matt is getting married to Mamie (Joan Blondell); but he goes along with Tom when he goes to kill Putty. Tom gives his mother money, but Mike objects strongly. Gwen tells Tom he is spoiled; even though he is not gentle, she likes him because he is strong.
Nails dies in an accident with a horse; so Tom buys the horse for $1000 and kills it. With Nails gone, a gang war breaks out with a drive-by bombing and setting the brewery on fire. Paddy collects the guns and money to keep his men off the street, while Tom gets drunk. The next morning Tom gets upset at his hostess and goes out with Matt. A machine gun kills Matt but misses Tom. He holds up a gunstore with their own merchandise and then shoots the rival gang, while getting wounded. In the hospital he makes friends with his mother and brother Mike. Paddy tells Mike the Burns gang got Tom but are bringing him home; in the final scene his corpse is delivered at the door.
The obvious points of this story are stated at the beginning and the end; but how Tom became an abusive personality can be seen in his childhood. It is also implied that his outward violence may be compensation for feelings of sexual inadequacy.