When several women are murdered and their forefingers severed, Holmes (Basil Rathbone) and Watson (Nigel Bruce) are called into action, but Holmes is baffled by the crimes at the start. Four women murdered in various parts of London, each woman from a different walk of life in a different area of the city and each with the right fore finger surgically removed. Holmes examines the body of the fourth victim in the morgue with Inspector Gregson. Holmes notes the only clue so far is the manner in which the fingers were surgically removed, meticulous and cleanly. They retire to Pembroke House for a drink. At the bar of Pembroke House discussing the murders with Gregson, Sir George Fenwick and Sherlock Holmes acknowledge one another, each with a nod. Holmes notices the woman with Sir George, a beautiful blond woman, as they leave the establishment, headed for her house, for a nightcap. The woman is named Lydia, her servant is Crandon. Widower Sir George Fenwick (Paul Cavanagh), after a romantic night alone with his girlfriend Lydia Marlowe (Hillary Brooke), is hypnotized into believing that he is responsible for the crimes. George leaves the hotel, goes straight to Lydia's, there were ten hours he cannot account, there he encounters a man describing his moves the prior night, putting something in his pocket, Sir George sits on a couch dumbfounded at the man's precise accounting of his moves the prior evening. The man is Moriarity. He is certain that he is guilty after he awakes from a stupor and finds a woman's forefinger in his pocket. His daughter Maude (Eve Amber) comes to Holmes and Watson without realizing that Moriarty's henchman is following her. She tells Holmes and Watson that she found her father burying a forefinger under a pile of soil. She has dug up the forefinger and shows it to them. Fenwick is then found dead, obviously murdered by someone to keep him from talking. Holmes theorizes that Moriarty (Henry Daniell), who was supposed to have been hanged in Montevideo, is alive and responsible for the crimes. Holmes sees George's right hand clenched, indicating he wanted to inform others of the item in his hand, a matchbook from Pembroke House. Holmes is certain Sir George wanted to alert someone of the person or persons seeing him at Pembroke House the prior evening. Holmes receives a notice from Sir George's bank of the closure of an account of 10,000 pounds indicating a blackmail payoff. Sir George emptied his bank account before he was killed and was likely to pay blackmail to some individual. He was shot before he could divulge the plot around the murders, the method of the criminals, and those involved in the crime. Watson is then called to help a woman who fell over while feeding her pet bird. He leaves, and minutes later, Moriarty appears and explains that he faked the phone call so he could talk to Holmes. He then leans one of the chairs back, obviously signaling someone. Holmes sees an open window in an empty house. When Moriarty leaves, Watson arrives. Holmes explains what Moriarty did, notices that a window shade that was shut in the empty house is now open and tells Watson to investigate. Inside the empty house Watson, looking through the window, believes that he sees a sniper shoot Holmes in his apartment. Holmes then appears at the house and explains that he put a bust of Julius Caesar there because of the bust's resemblance to his own face. Holmes realized that as soon as he sat there, Moriarty would have him killed. The two discover a hypnotized discharged army officer shot at the decoy. Seeing the ex-officer in the state he was after the attempted killing, and have him state emphatically "she" ordered him to shoot, Holmes now knows it was hypnotism behind the finger murders. Inspector Gregson (Matthew Boulton) takes the sniper, a hypnotized ex-soldier, away, but the sniper is later killed on Holmes's doorstep. Holmes now realizes that Moriarty's plan involves: 1) killing women and cutting off their forefingers, 2) making rich, single men believe they have committed the crime, 3) using this fake information to blackmail them, and 4) counting on the victims being too terrified to expose the scheme. Holmes explains how the scheme works where the severed finger is placed on the person to be blackmailed, waking the person is told of things occurring to him while he was under hypnosis, and not knowing he was under hypnosis, pays the blackmailer. The person blackmailed thinks he may have committed the actual crime during some actual lapse in sanity. With hypnosis behind these crimes, Holmes and Watson are anxious to pursue Holmes suspicions which lead to the hypnotist, and inevitably, to the criminals. Moriarity enters Lydia's house, encounters the doctor performing the finger removals, goes to Lydia, informing her Holmes and Watson have just left for Mesmer Club, the hypnotists meeting place, for a demonstration. He insists Holmes' insatiable curiosity will get him to follow Lydia back to her house for his final meeting. Dr. Watson is subject to hypnosis at the direction the host Onslow, who proceeds to prove to the audience hypnotism works. As Watson returns to his chair, newly educated on the subject, Lydia enters Mesmer Club, and sees the hypnotist performance and Holmes sees her. They agree Dr. Onslow's demonstration was not a serious display where she accepts Holmes' invitation for a drink at Pembroke House. He discusses a case he is working on that has him baffled. Holmes befriends Lydia (Hillary Brooke), whom he had seen with Sir George at a restaurant, suspecting that is she in cahoots with Moriarty. She takes him to her house, where he is apparently hypnotized. Moriarty enters and has one of his men cut Holmes with a knife to verify that he is hypnotized. He then tells Holmes to write a suicide note (which he does), walk out of Lydia's apartment onto the ledge, and jump to his death. Watson and the police then appear and grab the criminals. Holmes then reveals he was never really hypnotized, but secretly ingested a drug to make him appear as if he had been hypnotized and also insensitive to pain. Moriarty then escapes from the hold of a policeman and jumps from the top of Lydia's house to another building. However, he hangs onto a pipe which becomes loose from the building, causing him to fall to his death. This is the third Basil Rathbone Sherlock Holmes film in which Moriarty dies. In all three films, he falls to his death. He is always presumed dead until he turns up in the next film.
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