Falco coerces/bribes another columnist to write an article accusing Dallas of drug use and being a communist (remember this is 1957). Dallas loses his job, but Susan is sticking by him. Falco plans a meeting where, Hunsecker will offer to use his connections to help Dallas. However, the meeting is planned where Hunsecker and Falco continuously make offensive comments to irritate Dallas, until Dallas explodes and insults Hunsecker. It works, and Susan breaks off with Dallas for the way he treated her brother "who was trying to help".
Hunsecker is not content with this, and wants to really destroy Dallas. He wants Falco to plant drugs in Dallas's pocket. This is too low for the slimy Falco, but when Hunsecker promises to let Falco write his column, Falco gives in. Hunsecker has a dirty cop in his service, Kelso. As soon as the drugs are on Dallas, Kelso moves in. Kelso arrests and beats Dallas viciously, putting him in the hospital.
Falco thinks he has it made, and goes to Hunsecker's luxury high rise apartment. He finds Susan about to jump over the ledge. Hunsecker walks in right then, and claims he thinks Falco is assaulting his sister. Hunsecker begins beating on Falco, to look good in Susan's eyes. With Hunsecker turning on him, Falco reveals the whole plot to Susan. As Falco leaves, Hunsecker calls his crooked cop pal, Kelso. Kelso grabs Falco and begins beating on him. Since Falco told Hunsecker that he was going to go public with all their dirty dealings, the implication is that Falco is not going to survive this beating. However, since Susan now knows everything, including that Hunsecker ordered Kelso to take in Falco, Hunsecker and Kelso will be exposed anyway.
Thanks Joseph C!