Mike finds out that his brother's money comes not from politics, as Tom claims, but from  bootlegging,  and declares that Tom's success is based on nothing more than "beer and blood"  (the title of the book upon which the film is based). Tom retorts in disgust:

                          "Your hands ain't so clean. You killed and liked it. You didn't get them medals for holding hands with them                                                Germans."

                                        Tom and Matt acquire girlfriends, Kitty (an uncredited  Mae Clarke ) and Mamie (Joan Blondell)                                                 respectively. Tom eventually tires of Kitty; in a famous scene, when she complains once too often,                                             he pushes half a grapefruit into her face. He then drops her for Gwen Allen (Jean Harlow), a                                                      woman with a self-confessed weakness for bad men. At a restaurant on the night of Matt's wedding                                          reception to Mamie, Tom and Matt recognise Putty Nose and follow him home. Begging for his life,                                            Putty plays a song on the piano that he had entertained Tom and Matt with when they were kids.                                                Tom shoots him in the back.

                                        Tom gives his mother a large wad of money, but Mike rejects the gift. Tom tears up the banknotes                                              and throws them in his brother's face. "Nails" Nathan dies in a horse riding accident, prompting                                                  Tom to find the horse and shoot it. A rival gang headed by "Schemer" Burns takes advantage of the                                          disarray resulting from Nathan's death, precipitating  a gang war. 

                                        Later, Matt is gunned down in public, with Tom narrowly escaping the same fate. Furious, Tom                                                    takes it upon himself to single-handedly settle scores with Burns and some of his men. Tom is                                                    seriously wounded in the shootout, and ends up in the hospital. When his mother, brother and                                                    Matt's sister Molly come to see him, he reconciles with Mike and agrees to reform. However, Paddy                                          warns Mike that Tom has been kidnapped by the Burns mob from the hospital. Later, his dead body                                          is returned to the Powers home.

                                        The screenplay which was written by  Harvey F. Thew  was based on a novel which was never                                                  published called Beer and Blood, by John Bright and Kubec Glasmon. Bright and Glasmon based                                              their novel on actual people, having witnessed some of Al Capone's murderous gang rivalries in                                                Chicago. Warner Brothers studio head Darryl F. Zanuck bought the rights to the novel and                                                          assigned director William A. Wellman to direct the film. Wellman, who had served in World War I                                                like the brother of the main character, told Zanuck:

                                                                                                                        "I'll bring you the toughest, most violent picture                                              you ever did see".

 Edward Woods  was originally cast in the lead role of Tom Powers and James Cagney was cast as  Tom's best friend Matt Doyle, until director Wellman decided Cagney would be more effective in the part and switched the two actors but never re-shot the sequences with the characters as children, which is why the child playing Cagney's role looks like Woods while the one playing Woods' role looks like Cagney. Another reason for the switch is that the sound technology used in The Public Enemy was superior to that used in earlier films, making it no longer imperative to have an actor in the lead role who had impeccable enunciation. Although it was still a risk giving Cagney the starring role, his distinctive interpretation of the character, especially his machine-gun speaking style, was now technically feasible. Cagney was also short and seemed uncouth, compared to the typical finesse of a more conventionally cinegenic actor like Woods, helping to establish Warner Brothers' reputation for film that explicitly targeted working class audiences during the Great Depression. At the time of the role switch, Woods was promised by the studio that it would be made up to him with later assignments, but this was never followed through and Woods subsequently fell into obscurity.