A boy defends a black boy from a bully, and his friends keep the bully out of their detective club; but he gets to join after they catch robbers.
Mr. Frank Schofield (Frank Craven) works for Mr. Bitts (Charles Halton) in a bank. Bully Rodney Bitts (Jackie Morrow) throws chestnuts at black Verman (Philip Hurlic), and Penrod Schofield (Billy Mauch) fights Rodney, who tells his father that Penrod started it with his gang. Rodney lies that they steal tires. Penrod's club meets in a barn while Verman keeps watch. Penrod supervises their detective work. They approve a new operator but vote against admitting Rodney. Mr. Schofield tells Mrs. Schofield (Spring Byington) that Penrod thrashed Rodney. Mr. Schofield tells Penrod not to fight, but he says he was defending someone. Mrs. Schofield believes Penrod and secretly sends Delia (Bernice Pilot) with his dinner. In his room the dog eats Penrod's dinner while he washes. Mr. Schofield asks Penrod what happened and says what Rodney said, asking Penrod to get along with Rodney. Penrod's father asks him what he does after school; but Penrod won't say until his father takes an oath to prevent crime and keep the club secret.
While Mr. Schofield is assuring Mr. Bitts, Rodney comes in crying. Bitts and Schofield get into a fight, and Bitts fires Schofield. Mrs. Schofield sees that Penrod and his father were fighting. Four bank robbers in a car are chased by police amid shooting. Verman's mother is shot dead. Penrod consoles crying Verman. One robber was found dead. Penrod wants to adopt Verman, but his father says no. Buzz tells them Verman is gone. On a rainy night Penrod and his parents go out and find Rodney in the cemetery. They take him home, and Delia feeds him.
Three robbers hide in a corn field and go to the barn. Penrod calls a meeting in the barn. The robbers listen from the loft. Penrod sends operatives out to search, and they make Verman a G-man. Penrod and Sam (Harry Watson) find the robbers in the loft and are captured. Penrod warns entering Rodney, and Verman sees Rodney get captured. Wanted man Dude Hanson (Craig Reynolds) attacks Penrod's dog. Penrod and Rodney become friends. Verman tells Delia that a man grabbed Rodney. Delia tells Mrs. Schofield, and Mr. Schofield calls the sheriff. Penrod tries to escape, and the police arrive outside. The three boys fight the robbers and let the police in to take them. In the final scene at a dinner Mr. Schofield reads a letter from the FBI, and Mr. Bitts presents the reward to be divided; but Rodney and Penrod suggest it should go to help Verman.
This idealized drama of boys catching dangerous bank robbers shows the trend to make government crime-fighters heroes instead of the criminals.