Klink wants a forest area cleared, and tells Hogan that Berlin will pay them 25 pfennigs an hour. Hogan retorts that it is more likely they will be paid 10 pfennigs an hour while Klink pockets the rest. Just then, Captain Bohrmann of the Gestapo arrives.
Over the coffee pot, Hogan and Co learn that Bohrmann has a photograph and the negative of Klink with General Mulendorf, who has been implicated in a plot to assassinate Hitler. The implied guilt by association could have Klink executed. Bohrmann starts demanding blackmail money, and has the negative as his insurance.
Bohrmann's squeeze on Klink is soon felt at the lower levels; Hogan and Co are not being paid at all and Schultz is on half pay. Clearly, Klink is putting his hand in the till to meet Bohrmann's demands, which would get him in serious trouble if the auditors discover it. Also, Hogan figures that Bohrmann will have Klink executed anyway, to cover up. And if Klink goes, so does their operation.
The only way to save Klink is to steal the negative, so they set about doing so. Bohrmann had mentioned he was staying at room 209 at Hauserhof Hotel. If they can get the next room, they will be able to get into Bohrmann's room because there is a door connecting the two rooms. Hogan and Newkirk check into Hauserhof Hotel posing as Gestapo officers. A little bribery secures the room they need, and Newkirk's lock-picking soon has the door open. Newkirk simulates a fire in the corridor using a smoke bomb while Hogan oberves what Bohrmann takes with him. He takes a small leather box; the negative is clearly in there.
Back in camp, the squeeze is getting worse. Hogan gives Schultz a loan to cover his half pay in exchange for help in disappearing from the work detail for a short period so they can steal the negative. But Klink is so short of money he cancels the project. He will not listen to Hogan's attempts to negotiate, including working for free. Their plan is ruined, but they go out anyway. Newkirk and Le Beau simulate a drunken row in the corridor to draw Bohrmann out while Hogan slips into his room and takes the negative.
Next morning, Klink is so desperate that he will accepts Hogan's offer to work for free. But Hogan tells him it was for a limited time only and now demands the full 25 pfennigs per hour. Klink starts begging Hogan to do the job when he finds an envelope on his desk. Of course, Hogan put it there, and it contains the negative. Seeing that he is now free of Bohrmann, Klink tells Hogan that they will now work for 10 pfennigs an hour and dismisses him. After Hogan leaves, Klink destroys the negative.
Schultz receives his back pay and repays the money he borrowed. Then the other men take most of the remaining money as repayment for what Schultz is owing them.