A prince, the heir apparent to a large empire, was once the lover of Alice Faulkner's sister. During their love affair, he had written some incriminating letters to her. Alice was given these letters for safe keeping on the deathbed of her sister. Count von Stalburg, the prince's assistant, and Sir Edward Palmer, a high British official, have been given the task of negotiating the restitution of the letters to the prince prior to his upcoming marriage.
However, Alice Faulkner is being held captive by the Larrabees, a husband and wife team of crooks who realize the value of the letters and are trying to get them from Alice in order to blackmail the prince. Failing to secure the letters for themselves, they decide to involve Professor Moriarty in the affair. The film unfolds as a battle of wits ensues between Moriarty and Holmes.
Dr. Watson is only marginally involved until the final third. Holmes receives more assistance from an associate named Forman and a young bellboy named Billy.
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