When we last left off with Dick Tracy in 1937, the detective was beginning his investigation of alien-smugglers, a trail that ultimately leads to the mayor of Chinatown, by the name of Chang. Chang is very cooperative in assisting Tracy with his investigation, even lending fellow Chinese who can speak both languages so Tracy's questions will not be lost in translation. He discovers that "Stud" Bronzen was linked to the mystery boat that has been making trial trips on the river, used to smuggle Chinese into the country.
The entire affair is typical of the Dick Tracy yarns. Men get whipped, shot through the chest, drowned and one man named Rottur gets smashed in the face with Tracy's fist, causing blood to splatter wider than depicted in motion-pictures. Stud gets shot in the forehead during the crossfire. On board the ship, Tracy finds a statue of a nude (topless) woman and inside was a beautiful woman named Noana, a woman raised in the seacoast town of Halia on the Isle of Tihyu. Dorothy Lamour was obviously the model for the female character who, it is discovered later, speaks English -- thanks to Tess Trueheart and her cunning method of discovering if she spoke English. Noana was a shanghai victim and agrees to help assist Tracy in capturing more masterminds behind the smuggling operation.
The South Sea Island girl visits the nightclub of Mr. Ramm (modeled after Clark Gable), and with Pat Patton hired as a waiter, the two work undercover to find evidence against Ramm and his crooked involvement. After discovering how secret messages are exchanged between Ramm and the head operator, thanks to Pat Patton stealing one of the notes, Tracy fakes a message that encourages Ramm to visit his boss... a trail that leads to Mayor Chang. Under policy custody, Mayor Chang's life is pre-maturely cut short when a mob of Chinese seek justice and like a flash of lightning, a poison dart shoots Chang in the neck, killing him instantly.
Hearing the news, Ramm makes a quick getaway, using Noana as a human hostage. After finding a new hideout, and having her hair dyed blonde, Ramm explains how Noana will play a part in his new scheme -- running a protection racket. Noana hesitates, but forced at the point of a gun, plants bombs in front of stores where the owners will not pay for protection. The new ring of shakedown racketeers is thwarted momentarily when Dick Tracy collapses from nervous exhaustion. Tracy even suffers a spell of delirium and mistaking one of the doctors as a hoodlum, knocks the medical man out and escapes from the hospital. When the police follow the trail to the Dale Street Bridge, evidence suggest Tracy jumped in and committed suicide.
Meanwhile, Ramm is operating at full force with his protection racket, raising rates on those who paid and bombing stores for those who fail to pay. Noana is upset. Having read the news item in the paper, she wishes Dick Tracy was on the case. "He was the only decent white man I ever knew," Noana remarks. Pete Reppoc (Copper spelled backward, typical of Gould), a new villain who convinces Ramm he knows his explosives and proves his worth. But after a few days, something is foul in the air. Either Reppoc doesn't know how to rig dynamite sticks with the proper fuse, or Noana isn't lighting the fuse. After two failed attempts, Ramm gets desperate and decides to take action. He won't have a chance, however, as Reppoc rigged the venetian blinds to signal the police, who were tipped off. Chief Brandon and Pat Patton show up at the hideout and arrest everyone... including Reppoc. It's no secret that Tracy was in disguise, but the fun with this adventure was waiting to see when he revealed his true identity. Behind bars, Ramm gets desperate and discovering Reppoc's attorney is going to get him free, hands Reppoc a key from a hidden compartment in his shoe and asks him to seek out his brother who knows where a box listing all of the names and books and accounts of his "Protective Club." As soon as the key is in his hands, Reppoc calls for the Chief. A fond reunion with Tess, Junior, Pat and Brandon convinces Tracy that his scheme was a success.
Noana returns home and a young man named Brighton Spotts visits the police station, hoping to secure a job as a detective. Brighton and Junior become good friends and Spotts is apparently Chester Gould's attempt to be a serious comic artist by adding comedy to the strip. At first the gang thinks Spotts is a crazy loon who escaped from an asylum, until he proves his worth by revealing a severed forefinger of a thief who helped rob two freight cars on a B&H siding in Layton Valley Junction. Now in July of 1938, this sets the stage for Dick Tracy's next adventure.
While Tracy conducts his own investigation, tracking down and chasing JoJo Nidle, leading to the town of Holden where the criminal attempts to evade the law, Junior and Spotts do their own investigation. The boys ride on top of a speeding box car to track down the notorious gang operating in Layton Valley Junction and witness the thieves stealing tires out of a box car. They attempt to hold up the criminals with a rifle but Nidle, who escaped from Tracy, apprehends the boys and puts them into an empty tanker that was once filled with gasoline.
When Tracy learns Jojo is on a runaway freight locomotive and is forcing the engineer to aid him in an escape, the detective sets out to capture the crook... and discovers Junior and Spotts' dilemma. Thankfully, the semi-empty tanker had molasses, not gasoline. After Jojo is shot in the forehead by Tracy, the detective meets a woman who looks like Marlene Dietrich and through her receives a big tip about the molasses.
An investigation of the consignee of the tank car of molasses, Tracy discovers that the molasses was being shipped to an extremely mountainous section of the Northwest. A notorious criminal who looks like Boris Karloff, named Karpse, is using molasses to manufacture poison gas and plans to sell tanks of the poison to Bovanian agents. Jim Trailer from the FBI returns to help Dick Tracy in the investigation. The female agent and Karpse are eventually uncovered and in an attempt to make a getaway, rig a detonation device that blows up and spreads a cloud of gas across the mountainous area. Trailer and Tracy attempt to flee, only to plunge into an abandoned mine shaft. Tracy is badly wounded. Up on the surface, the female Bovanian agent is attacked by a grizzly and her throat is torn out. Karpse manages to escape a police dragnet.
Back in town, Dick Tracy is being nursed to health. His vision is temporarily blinded as a result of the gas. An iron lung is needed to keep him breathing and exercise his lungs. The poison gas was causing a slow partial paralysis of the lungs. Meanwhile, Karpse has found himself in the Trueheart bakery and delicatessen and having baked for the royal houses in the old country, offers his services as a new cook which Tess' mother desperately needs. Momentarily going straight, Karpse (now under an alias of Janings) has succeeded in creating new pecan rolls and other items that gives Ms. Trueheart a spike in business. But when a hot water heater blows up and scalds Karpse, the villain is taken to the nearby hospital and by divine intervention or strange twist of fate, finds himself in the same room as Dick Tracy who remains blinded from the poison gas.
It doesn't take long for Karpse to figure out who his room mate is and his attempt to cover up his deed by burning all incriminating evidence. Jim Trailer and Pat Patton rush in and attempt to arrest Karpse, having discovered his scheme, but the criminal pulls out two guns he had smuggled into the hospital and forces the lawmen into two lockers, where he uses ethylene gas in an attempt to put them to sleep. Grabbing ether from a nurse, he splashes it on the lockers, accidentally splashing the fluid on his robe. When he lights a cigarette, his hand holding the match drops to his side and flame meets the ether vapor on the robe. Karpse is on fire and panicking, races into the street and burns to death.
For Christmas Day 1938, Dick Tracy surprises Junior, Pat Patton and Tess Trueheart... he can see again. As a holiday gift to Dick Tracy, Chief Brandon insists Tracy rest and relax on Pop's Health Farm, 300 miles away, where the detective can recover before returning to his job. Little does Tracy know that his stay at this resort will lead into another exciting adventure. But that's for 1939.