Ted's Company is led by 13-year-old Edward Marshall, whose second-in-command is George, the narrator, and also includes Nick Yates, Charlie Muswell and Young Wakeley.

Compounding the problem, the orphaned Nick now lives with his aunt and uncle, who resent the unlooked-for responsibility and do not treat him well, and he cannot face confessing to them for fear of their reaction.

Ted arouses a sense of collective responsibility for Nick's plight amongst the boys of both companies, in the spirit of 'One for all and all for one' from The Three Musketeers, which their English teacher is currently reading to them.

Toppy initially accuses Ted – who is ostracised by all but George and the ever-loyal Nick Yates – but then realises the real culprits are the deeply unpleasant local spiv, Johnny Sharp and his seedy accomplice, known as "The Wart".

Ted and Toppy use the combat-planning skills they have developed during their war-games to lead a raid on Skinner's warehouse, where they uncover evidence of far more extensive criminal activities, including trading in black-market goods and production of counterfeit coinage.

At the school assembly later, the boys are simultaneously castigated by Police Inspector Brook for their illegal raid on Skinner's premises and their "disreputable" money-raising schemes, but praised as heroes for their detective abilities.

One critic commented that "George [the narrator] very much styles himself the official war historian, writing up the history of 'The Otterbury Incident' in the high serious language of an epoch changing event.