Father Flanagan needs money for construction but manages to help new boys with help from the mayor Whitey.
Boys Town mayor Whitey Marsh (Mickey Rooney) tells boys to welcome Dave Morris (Lee J. Cobb). Bankers show Father Flanagan (Spencer Tracy) a construction bill for $200,000. Whitey and Flanagan greet Dave, who notices the new buildings. Flanagan gets a call and lets two new boys use his room. Flanagan goes to the trial of the boy Ted Martley (Larry Nunn), who killed a guard at a reform school after the guard broke his back, paralyzing him. Flanagan takes Ted to the Boys Town infirmary, asking Whitey to help. Flanagan tells Dave that the reform schools need good will. Whitey conducts music for Ted but can't get him to laugh with a slow-motion wrestling skit. When Mr. Maitland (Henry O'Neill) and Mrs. Maitland (Mary Nash) arrive, Whitey takes their dog and lets Ted have it. Flanagan persuades Ted to see a doctor, who was all-American. The Maitlands tell Whitey that Ted can keep the dog. They tell Flanagan they want to adopt Whitey, and Flanagan suggests a trial period. Whitey asks Flanagan and agrees. Ted tells Whitey to look up Miles Fenely. Whitey tells Pee Wee (Bobs Watson) he will radio him.
Whitey goes to a dance and plays golf with Mr. Maitland. Flanagan plays handball with Mo (Sidney Miller) as Dave brings rich visitors. The doctor can operate, and Flanagan gets Ted's consent. Whitey comes home and radios Pee Wee. Whitey goes to see Fenely, but a mean guard (Arthur Hohl) says he is in solitary. The boy Flip (Darryl Hickman) climbs into Whitey's car and shows him the marks on his back. Flip takes a gun, and Whitey finds him, learning he stole money. They are arrested. Whitey says Flip is not a bad boy, but Mr. Maitland says he and Flanagan have some wrong ideas. Whitey and Flip are taken back to the reform school, and the guard hits Whitey with his club. Whitey sees that Fenely is dead and is put in solitary. In the rain Flanagan by being tough manages to get in to see Whitey. Mrs. Fenely begs Flanagan to improve the reform school. Flanagan lectures that punishing boys is wrong.
The judge lets Flanagan have Flip, and White goes back with him too. Ted is sad because Flanagan was not there. Dave tells Whitey that Boys Town is in financial trouble. So Whitey radios Mr. Maitland he wants to come back; but Mr. Maitland says no. The bank takes over, and Flanagan announces that he failed. The dog is run over, and Pee Wee cries. Flanagan tells Ted and carries him to the funeral, where Ted walks. The Maitlands arrive and offer to help. Flanagan speaks at graduation and urges them to walk among giants.
The spirit of charity is alive and well in this sequel
to the 1938 Boys Town as kind discipline that motivates with love
is contrasted to ignorant punishing that only promotes violence
and more crimes.