An unemployed theater director puts together short prologs to play in movie theaters around the country.
Talking pictures that come in a can have replaced the silents and thrown live theater people out of work. Producer Silas Gould (Guy Kibbee) shows Chester Kent (James Cagney) a prolog that cost more than the picture. Chester's wife asks him for a divorce, and he signs the paper. From a chain drugstore Chester gets the idea of producing live prologs to tour around the country's movie theaters. Chester tells his secretary Nan (Joan Blondell) his cats idea. Gould's wife (Ruth Donnelly) asks Chester to hire singer Scotty Blair (Dick Powell). His competitor Gladstone has been stealing his ideas, and Chester fires Thompson. Chester reluctantly keeps on Mrs. Gould's relative Charlie Bowers (Hugh Herbert) even though he acts as censor, later telling him to jump out the window.
Vivian (Claire Dodd) asks to stay with Nan and gets Chester to make her head of his new idea department. The producers are cheating Chester out of his share of the profits. Bea Thorn (Ruby Keeler) takes off her glasses and suddenly becomes the lead dancer. Chorus girls as cats sing "Sittin' on the Backyard Fence." Chester works with Nan at home and decides to cut down unproduced musical comedies and use them as prologs even though Gladstone is doing the same. The owner of the Apollo wants to see three prologs in one night and then will award the contract for forty. Chester gets drunk and engaged to Vivian, who is thrown out by Nan. Chester locks the whole company in for three days to prevent leaks and rehearse the three prologs, driving director Francis (Frank McHugh) to exhaustion. Chester's wife is not divorced and asks for $25,000, which Nan gets from the robbing Gould. Vivian threatens to sue Chester for breach of promise until she is caught with Charlie.
Three lavish prologs directed by Busby Berkeley are presented in three theaters an hour apart. Scotty and others sing about the "Honeymoon Hotel." Bathing beauties are artistically displayed in "By a Waterfall." Finally Chester has to replace a drunk amateur as a sailor looking for "Shanghai Lil" that closes with a U. S. Navy drill. Apolinaris signs the contract, and Chester decides to wed Nan.
Ironically it was extravagant musicals like this that put so many troupers out of business. Such "prologs" could never be economically staged in person, especially the water show. "Honeymoon Hotel" satirized a hotel that catered to couples all named Smith, and "Shanghai Lil" reflected the imperialism of the U. S. navy abroad.