A factory worker joins a KKK group that gets rid of a foreigner who got the job he wanted; but he is unable to leave the group and kills his friend.
Frank Taylor (Humphrey Bogart) is hoping to be made foreman at his factory, while his friend Ed Jackson (Dick Foran) tries to end his relationship with Pearl Davis (Helen Flint). Joe Dombrowski (Henry Brandon) is appointed foreman. Frank sulks and on the radio hears a speech against foreigners taking jobs. Betty Grogan (Ann Sheridan) gets Ed to propose to her by asking how he would do so. At work Frank ruins several drills, and Joe corrects him. Cliff (Joe Sawyer) tells Frank that people can protect him against foreigners. In Osgood's backroom Frank finds a meeting recruiting for the Black Legion. Members get a uniform. While a hooded man points a pistol at him, Frank takes the oath with a horrendous curse if he disobeys. The men take off their hoods, and Hargrave (Alonso Price) orders Frank to buy a revolver.
Cliff calls Frank and asks him to pick him up. In hoods they tell Dombrowski and his son Joe to leave town; they take them and burn their house and poultry business. Frank and Cliff celebrate drinking beer, and Ruth Taylor (Erin O'Brien-Moore) finds her husband Frank coming in after 4 a.m. Frank shows Ed his new car and tells him about the lodge. Frank tells Ruth he is the new foreman and gives her a new vacuum cleaner. A drugstore window is broken, and a man is whipped by the Ku Klux Klan. Fred calculates the Black Legion has $200,000 from dues and sales of uniforms and revolvers; but he says each member must recruit two more. At work Frank talks to Ted about protecting his job and invites him to a meeting; but supervisor Tommy Smith tells Frank that Ted's machine was ruined. Michael Grogan gets Frank's foreman job; then he is abducted and flogged by the Black Legion. Ed asks Frank if he was at the lodge late. Ruth tells Frank he is lying, and he slaps her. Ruth takes her son to her parents. Pearl gets drunk with Frank, who was fired. Ed carries Pearl out. Frank while drunk tells Ed that the Black Legion got Dombrowski. Frank says he can't get out of the Black Legion. Ed threatens to inform the police. Frank calls Cliff, and Pearl tells him that Ed beat her. The Black Legion grabs Ed and takes him to the woods. Ed tries to run away and is killed. Frank is left behind and is arrested.
Radio exposes the Black Legion. Frank cries when Ruth visits him. Brown tells Frank the self-defense story to use. Pearl testifies that she broke off the engagement to Ed and that Ed was jealous of Frank; but Frank testifies that the Black Legion made him do it and that Pearl lied. Frank identifies Cliff, Hargrave, and others as Black Legion. The judge (Samuel S. Hinds) lectures them on human rights and sentences them to life in prison.
The racist Ku Klux Klan was active at this time, and this story dramatically exposes the violence and manipulation of hate groups that prey upon dissatisfied workers, especially when jobs are hard to get.