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In Monterey, California, paisano Danny Alvarez inherits a gold watch and two houses in the area known as Tortilla Flat from his grandfather. Because Danny is in jail for public drunkenness, his friends, Pilon and Pablo, convince jailer Tito Ralph to "parole" Danny to celebrate and invite Tito to come along. Pilon warns Danny that property and watches bring unwanted responsibilities and cajoles him into selling the watch for some wine. On the way to celebrate in one of the houses, Danny meets Dolores Ramirez, a "Portagee" girl to whom Danny is attracted and names "Sweets." During the party, Pilon talks Danny into renting the other house to him, then convinces Pablo to live with him and pay the fifteen dollars rent. The next day, while Danny serves out the rest of his jail term, Pilon and Pablo find Portagee Joe and Jose Maria Corcoran drunk in the back yard and invite them to live in the house for the three dollars which Jose Maria has. That night, Danny goes to see Sweets, who likes Danny, but has ambitions for a husband, a home and children who don't have to pick beans for a living. When Pablo summons Danny because Pilon's house is on fire, Danny does not care and passionately kisses Sweets, but she throws him out after threatening him with a knife. After the fire, Pilon and the other paisanos, accompanied by a young widower with a baby they met watching the fire, go to Danny's house. Because the baby is starving, Danny goes to Sweets to get milk from her goats and, seeing how gentle Sweets is with the baby, Danny becomes even more smitten. The next morning, Pilon worries about paying his rent and becomes intrigued by The Pirate, a shabby old man who lives with several dogs in a chicken coop. Pilon surmises that Pirate must be a miser because he sells twenty-five cents worth of wood each day, yet never spends anything. Hoping to get Pirate's money, Pilon convinces the old man to come and live at Danny's, saying that his friends worry about him. Meanwhile, Danny visits Sweets at the sardine cannery where she works and gets into a scuffle with the foreman when he is told to leave. Walking by the bay, Danny sees a small fishing boat for sale for $210, then goes to pawn his guitar in exchange for a vacuum cleaner for Sweets. Back at home, Danny is not happy that Pirate and "his boys" are new tenants until Pilon tells him about Pirate's money. Danny then confesses to Pilon that he needs money to buy a boat. The next day, when Pirate reveals that he needs one thousand quarters to buy a gold candlestick for St. Francis, which he had promised the saint if one of his dogs recovered from a serious illness, Pilon is ashamed and resolves to safeguard Pirate's bag of quarters. Now knowing that he has no other choice, Danny gets a job at the cannery. When Pilon finds out, he knows that it is because of Sweets and fears that she will make the paisanos leave the house if she marries Danny. Pilon lies to Danny that she has been bragging that they are engaged, then steals the vacuum and uses it to buy wine. That night, Sweets angrily accuses Danny of the theft and he counters by accusing her of spreading a story about their engagement. She then slaps him and orders him out. Meanwhile, at the house, after Portagee Joe takes six quarters from Pirate's bag, an angry Pilon recounts the money and discovers that Pirate has more than enough to buy the candlestick. When Danny comes home, he knocks Pilon down when Pilon insults Sweets, then grabs a jug of wine and leaves. The next day, after washing and grooming Pirate, the paisanos take him to church to see the candlestick and hear Father Juan Ramon, who gives a sermon about the candlestick and the miracle of Pirate's dog's recovery. That same morning, a drunken Danny goes to the cannery to see Sweets and is again told to leave. In a fight with several foremen, Danny is accidentally crushed in one of the machines. Later, at the hospital, Pilon learns that Danny's lung has been punctured and he is near death. When Sweets hysterically lashes out at Pilon, he goes to the woods and overhears Pirate telling his dogs about the sermon. Pilon then goes to the church, where his prayers to St. Francis are overheard by Father Juan, who is touched when Pilon offers to buys another candlestick if Danny gets well. Some time later, Father Juan finds Pilon cutting squid and tells him that "someone's prayers have been answered" because Danny is much better. Father Juan adds that Sweets is sorry for her anger and that all of his friends are worried. As the priest leaves, he says that St. Francis does not need another candlestick but would be grateful if Danny somehow had a boat. Some time later, Danny and Sweets are married and a raffle is held for Danny's guitar. Unknown to all but Father Jaun, Pilon himself paid for the tickets, and the money was used to buy Danny the boat. That night, as Pilon and the paisanos drink in Danny's house, Pilon concludes that it was the house that caused all of Danny's troubles. When a fire accidentally starts, the paisanos decide to sleep on the beach and let the house burn.