Charlie Chan, Sidney Toler, is drawn into a tense race in Panama City as a shadowy spy named Reiner plans to sabotage the Panama Canal and strand a Navy fleet moving toward the Pacific after maneuvers in the Atlantic. The looming danger rises as a seaplane bound for Balboa drops off a fresh wave of suspects, including novelist Cliveden Compton, [Lionel Atwill], Miss Sarah Finch, [Mary Nash], Dr. Rudolph Grosser, [Lionel Royce], Manolo, [Jack La Rue], Kathi Lenesch, [Jean Rogers], Achmed Halide, [Frank Puglia], Richard Cabot, [Kane Richmond], and government agent Godley, [Addison Richards]. The stage is set for a high-stakes confrontation in a city brimming with secrets.
At the center of the investigation is Godley’s desperate appeal to Chan, delivering a request to unmask the elusive saboteur known as Reiner. He heads to a hat shop owned by Fu Yuen, where the sleuth begins threading clues, but tragedy strikes before the truth can be spoken: Godley collapses from a poison-tipped cigarette, a clever trap that hints the killer was aboard the seaplane and among the suspects staying at the hotel. From that moment, Chan keeps a vigilant eye on everyone during their hotel holdover, deftly weighing alibis and motives.
No.2 Son Jimmy Chan, the ever-curious junior sleuth, runs afoul of the authorities for taking pictures, and in the process spills a crucial detail about his father’s real identity. A tense moment occurs when Jimmy is discovered hiding under the bed in Cliveden Compton’s hotel room. The arrival of Kathi Lenesch—who pleads with Chan not to reveal her passportless status, since she fled Czechoslovakia after the Nazi takeover—adds another layer of complexity to the case. After she departs, Jimmy hurls a porcelain tobacco-container at a gun-wielding figure peering through the door, and the broken container reveals a map to a nearby cemetery. This leads Chan and Jimmy to search the room, where Cliveden Compton’s body is found in the closet, fatally shot, and it becomes clear he was undercover for the British Secret Service.
The map points the investigators to the Manolo family tomb, which has been converted into a modern spy hideout. Miss Finch blunders onto the scene, and before the truths can surface, someone locks the group inside the tomb. Disguised as a water delivery man, a henchman delivers a “water cooler” full of nitro to the Main Power Plant building. The hunter becomes the hunted when the henchman, returning to the tomb, inadvertently releases Chan, Jimmy, and Captain Lewis from their confinement. A graveyard pursuit unfolds, and the henchman is shot dead, revealed to be Manolo. Yet the mystery lingers—no one among the “good guys” admits firing a shot, leaving who killed him a lingering question.
Chan pieces together that the canal’s Miraflores locks are scheduled to be blown at ten that night. With a climactic standoff at the plant, he sequesters the suspects and coerces Miss Finch to reveal her true identity as Reiner, bringing the spy to justice. Reiner is finally arrested, and the fleet sails safely through the locks, preserving democracy at a critical moment. In a final twist, Chan discloses that he had already defused the explosive device, preventing catastrophe and ensuring the canal remains open for the ships that guard the Pacific.
