Tse Chan, a Chinese viceroy, believing his wife to be unfaithful, sentences her to death. After learning of her innocence too late, he sends his son, Li Chan, to America and goes into seclusion. Li Chan returns to the fatherland as a successful engineer and falls in love with Hyacinth, daughter of a poor basket-weaver. She is kidnaped by the viceroy, and thinking she has deserted him, Li Chan goes to the city and becomes famous as a teacher. Engaged to give private lessons to the niece of Ho Ling, he soon learns that his pupil is none other than Hyacinth, and he plans an escape for her. They seek refuge in the caverns of "The Sleeping Dragon," an active volcano, but overcome by fumes, they are forced to surrender and are sentenced to the torture of Ling Chee by the lifting of the "Vermilion Pencil." During an eruption of the volcano, the lovers escape and flee from the city.