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Slip Mahoney and Sach, two members of New York's Bowery Boys gang, operate a sidewalk star-gazing business utilizing a powerful telescope. One evening, while looking through the telescope, Slip sees a man being strangled in a room at the El Royale Hotel several blocks away. Slip, Sach and their friend, Gabe Moreno, who has joined the police force and has been assigned to their neighborhood, rush to the hotel. Mr. Schmidlap, the hotel manager, takes them to the suite in question, which belongs to "Silky" Thomas, but they find no one there and no body. Meanwhile, Gabe's superiors, Madison and Jones, who have been observing him, enter the hotel and discover Sach demonstrating the strangler's hold on Schmidlap. While Gabe tries to justify his actions to Madison, Thomas returns and, as they are unable to prove that anything criminal happened in the room and the strangler had his back to Slip, he and the others leave. Sometime later, after Gabe summons the police to raid a gambling den on the opposite side of the street from the boys's telescope operation, Slip tells Gabe about another illegal operation, and another successful raid occurs. The raids interfere with Thomas' gambling operations, but henchman Feathers, an old friend of Gabe, tells Thomas that he can bribe Gabe to stop the raids. However, when Feathers tries, Gabe threatens to arrest him. After Slip sees a newspaper headline stating that Frederick X. Prescott has been murdered, he recognizes the man in the accompanying photograph as the strangler's victim. However, Gabe points out that Prescott's body was found fifteen miles away and refuses to help them. Slip and Sach then go to the morgue to confirm the dead man's identity and are present when Prescott's daughter Ann visits. When they tell her that they saw her father being killed, she tells them that he owned stock in the El Royale Hotel, which he had recently turned over to her. Ann arranges for Slip and Sach to get jobs at the hotel as bellboys, in order to investigate further. After Thomas recognizes them, Schmidlap tells him that Miss Prescott insisted that they be hired. Thomas, who runs the hotel's bar and nightclub, then introduces himself to Ann. Later, gangster "Hatchet" Moran, who is just out of prison after serving a twenty-year stretch, enters the hotel, says he is a close friend of Thomas and demands a room. Slip and Sach are assigned to take him to his room and Moran confuses Sach for a former associate, "Chopper" McGee. Later, Slip and Sach use their pass keys to search Thomas' suite and Sach finds a coin. Moran visits his old pal Thomas and wants to resume their partnership, but Thomas feels he no longer needs a partner. Slip summons Gabe to the hotel and while he is there Feathers stages a robbery at a tailor's shop on his beat. As a result, Madison and Jones are compelled to go to help the tailor and Gabe receives a temporary suspension. When Sach later delivers a meal to Moran's room, Moran tells him that he is going to do a bank robbery and assigns Sach to drive the getaway car. Slip then shows Gabe the rare coin Sach found, which Ann says her father wore on his watch chain. After Thomas finally convinces Moran that Sach is not "Chopper," Moran summons Sach and Slip. When Thomas demands the coin from Slip, Slip correctly accuses him of having killed Prescott in an attempt to take over the hotel. Slip and Sach then trick the gangsters, but have to escape through a window and find themselves on a narrow ledge many stories above the street. However, fellow gang member Whitey sees their predicament through the telescope, and he and friends Butch and Chuck rush to the hotel. Slip and Sach manage to get back inside, but are chased by Moran, Feathers and henchman Gimpy through the halls. The boys escape via a laundry chute and when Moran and company follow them down the chute, the boys position hampers at the bottom, into which the gangsters fall and are hit over the head by Sach. Meanwhile, Thomas tries to slip away, but is stopped by Gabe and Madison. Later, Slip is back at the telescope pitch when Gabe and Ann visit and Sach decides to impersonate a policeman.