Disappointed at the opportunites for work afforded them, Italian immigrants Enrico Scaffa and Giuseppe Badjagaloupe get jobs as ditch diggers on a busy New York street. After the foreman gives Rico a red flag to stop traffic before an explosion, he begins to savor the taste of power that the flag gives him. Among the cars he enjoys stopping are the limousine of Beatrice Newnes, who complains that she is late for the races at Belmont, and that of the mayor, who becomes impressed with Rico's character and hires him as an assistant. Rico soon is feared as an unseen power, and when he learns that his district's branch of the Hudson Investment Trust is about to go under, he orders the district attorney to summon a special session of the grand jury to investigate because his people have their life savings invested there. Rico visits Rodman Drake, the head of the trust, who has married Beatrice, and tells him that the only way he can avoid the penitentiary is to give him four million dollars which, he says, he will see gets put back into the corporation before the examiner goes over the books. Drake agrees, but flies to Cuba in case there are problems. Rico, who says he has never had Beatrice out of his mind since he first saw her, persists in pursuing her and wagers a chance to take her to dinner that his horse, White Wing, will beat her horse, Lady Ann, in the upcoming race at Saratoga. After White Wing wins by a nose, Beatrice invites him to dinner, but after a romantic night, she finds that Drake has returned. She asks him for a divorce and says that she wants to marry Rico, but Drake begs her to remain because, he says, he needs her badly now. Beatrice and Rico agree not to see each other for two months. When one of the district attorney's men, John Pelkey, who has a grudge against Rico, tells Drake that Rico never deposited the four million dollars in the corporation, Drake agrees to cooperate in a grand jury investigation. Beatrice refuses to believe the accusation against Rico, and Drake orders her out of his house. After Rico tells Beatrice that he put the money into the trust, she agrees to marry him. Rico refuses to testify before the grand jury and thus implicate some innocent people who helped him secretly deposit the four million after the state examiner got hold the books so that Drake would not get caught. After his attorney advises him to leave the country until he can beat the indictment, Rico plans to go with Beatrice to Canada, where she can file for a divorce, but she walks out on him because she thinks he wants to run away like Drake instead of facing the charges like a man. Rico then grabs his red flag and interrupts the grand jury proceedings. He admits that he falsified records, but proves, through questioning Drake, that he did deposit the four million dollars. After he explains that he did it to avert a public scandal which threatened to undermine the confidence of depositors and investors, the district attorney concedes that he has been misled, and the proceedings are disbanded. Rico punches Pelkey and then awakens Beatrice, and still holding the red flag, tells her to get dressed and go to Reno for her divorce. He says he has to remain to take care of the people in town who accused him of taking a bribe, and after informing her that it is her job to love him until she dies, he orders her to kiss him, which she does again and again.