[1] Late one night on New York's poor East Side, a man is stabbed to death on a street corner, and his body is searched by his attacker.

Muggs and Glimpy then return to their tenement and learn from neighbor Mrs. Darcy, a war refugee from Toscania, that a thief just stole a valuable necklace from her.

Mallet, who has convinced Toscania's recently arrived prime minister that he is a concerned supporter of the princess, has hired Compeau to kill Saundra so that he can inherit the throne, and has offered the thief the necklace, a crown jewel, as payment.

The next morning, Muggs calls the East Side Kids together for a meeting, and after they learn that Compeau's victim was a known thief, they decide to have one diamond from the necklace appraised at Kessel's pawnshop.

At the same time, Marty, Glimpy's Merchant Marine cousin who is in love with Saundra, unwittingly reveals to the police that he went to Kessel's just before he was found dead to buy an engagement ring, and is arrested on suspicion of murder.

The boys pledge to retrieve the real necklace and head for the mansion, while at the police station, Saundra and Mrs. Darcy reveal their identities to Capt.

Jacobs informs Saundra and Mrs. Darcy that the prime minister is in the country, the boys, who are staking out the mansion, see the women being taken inside and assume they have been kidnapped.