With the intention of contrasting older, harsh methods of treatment of prisoners with the reforms advocated by the Mutual Welfare League (a prisoners' organization based on the honor system), the story is told of two boys - one poor and one rich - and their prison experiences. The Poor Boy, a victim of his slum environment, goes to a reformatory for a minor offense and there learns to become a perfect crook. Thanks to a stool pigeon, he is eventually sent to a prison, which is conducted under traditional methods of lockstep, prison labor, silence, contract labor, brutal punishment and torture. Meanwhile, The Rich Boy is sentenced to the same prison - now under a newer, more humane regime - for forging his father's signature. He becomes friends with The Poor Boy, who had been released and returned to prison for assaulting the stool pigeon. The Smiler, another member of The Poor Boy's gang, is unjustly condemned to electrocution for the murder of the stool pigeon. Although they are trusted members of the Mutual Welfare League, the boys escape and find evidence that clears The Smiler; but they are too late, and an innocent man is executed. For their efforts, however, the boys are paroled, to the joy of their waiting sweethearts.