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At an auction in London, identical music boxes made at a local prison are sold to patrons Julian "Stinky" Emery, William Kilgour and Evelyn Clifford. Immediately after the sales, the underhanded Colonel Cavanaugh bribes Ebenezer Crabtree, the auctioneer, to give him the purchasers' addresses. The next night, Stinky visits his old friend, Dr. Watson, at the home of detective Sherlock Holmes, and tells them how he was robbed of a music box which resembled the cheaper one he bought at the auction. Intrigued, Holmes asks to see the cheaper box at Stinky's, and there admires the unusual tune it plays. After they leave Stinky's, Hilda Courtney, a beautiful acquaintance of Stinky, visits and asks him for his music box as a gift. When Stinky refuses, Hamid, the driver for Cavanaugh and Hilda, enters and kills him. Holmes soon investigates the crime scene, and, seeing the music box is gone, questions Crabtree, who reveals the addresses of the purchasers and describes Cavanaugh. Holmes and Watson hurry to Kilgour's to examine his music box, and after the housekeeper reluctantly lets them in and then leaves, they find a young girl tied up in the closet, who tells them the housekeeper, whom they realize was really Hilda, attacked her and stole her music box. The next day, Hilda and Cavanaugh follow Evelyn to the toy store at which she works, only to discover that Holmes has already purchased her music box. Outside, Hilda realizes that a Scotland Yard man, Sergeant Thompson, is following them, and they kill him. Meanwhile, Holmes deduces that the three boxes must work together to form a coded message, and learns that they were crafted by a prisoner named John Davidson, who years earlier stole and hid a set of five-pound note engraving plates from the Bank of England, from which counterfeit money could be made. When Holmes notices that Evelyn's music box plays a slightly different tune than Stinky's, he rushes to find Joe Cisto, an entertainer who can identify any song. After Joe affirms that the tune, an Australian folk song, is a few notes off and writes the correct notes for him, Holmes struggles throughout the night to decode it. Finally, due to a remark of Watson's about numbering the keys of a piano, Holmes understands that the off notes correspond to numbers which correspond to letters. He decodes the message: "Behind books third shelf secretary Dr. S," but knows that this is only one third of the statement. Soon after, his study is ransacked, but Holmes discovers that one of the criminals left behind an exotic cigarette, which he traces back to Hilda. He visits her, only to be ambushed by Cavanaugh and Hamid, who take him to a warehouse, handcuff him, set off a deadly chemical smoke bomb and hang him by the cuffs. As Holmes struggles to escape, Hilda visits Watson and, after tricking him into revealing the location of the box, steals it. When Holmes returns, Watson happens to recite a Samuel Johnson quote, which tips off Holmes as to the identity of "Dr. S." They rush to the Samuel Johnson memorial museum, in which the bookcase is located, and arrest the three thieves just as they are retrieving the plates.