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In Washington, D.C., John W. Rogers, the Secretary of the Navy, weighs allegations that a long-time Naval Department employee is a member of the Communist Party. Swayed by a pattern of seemingly subversive behavior, Rogers decides to file charges suspending the employee. Soon after, at the Riverview Housing Cooperative outside Washington, Bernie Goldsmith, the employee in question, beams as his daughter Shirley is awarded the Outstanding Citizen's Prize for her essay on patriotism. That night, Perry, who also works at the Naval Department, tells Bernie that he is being investigated as a security risk because in his youth, he briefly joined the Communist Party. Shocked by Perry's naïveté, Bernie defends the government's actions. The next day, Bernie is summoned to his superior's office and summarily suspended. Shaken and humiliated, Bernie returns home and is comforted by his wife Helen. Determined to keep up appearances, Bernie attends a town meeting that night. As Bernie ascends the podium to speak, a man accuses him of being a Communist. The allegation rapidly spreads, and soon the Goldsmith family is receiving harassing phone calls, and Bernie's children, Shirley and Harry, are ostracized by their schoolmates. Concerned, Pastor Browning visits the family and urges them to stand up to their accusers. As Browning accompanies them on a walk through town, the Goldsmiths find that although they are snubbed by some, many people come forth to support them. When Mayor Henry Jensen suggests establishing a legal defense fund, they decide to hire attorney Joe Di Marco to represent Bernie. After Bernie fiercely declares his loyalty to the United States, Di Marco accepts the case for a nominal fee. On the day of Bernie's hearing, Di Marco pleads with Capt. Winfield, Lt. McCoy and the other members of the board to help maintain the good name of the Goldsmith family. He then calls Jensen to the stand, who testifies that those who impugned Bernie's patriotism were his political opponents in the housing cooperative. Jensen explains that Bernie alienated a number of people when, as secretary of the cooperative, he signed a letter notifying the members that they were being forced to buy rather than rent their property. After Lt. McCoy rattles Jensen during her cross-examination, Di Marco asserts that the investigators relied on the testimony of Bernie's enemies. Once the hearing is adjourned for the day, a disheartened Bernie is cheered when Enos Warren, one of his principle opponents in the housing battle, volunteers to testify on his behalf. The next day, Enos affirms that those who spoke to the investigators were bent on blackening Bernie's reputation. When Victoria Scott, the town clerk, voices her support of Bernie and declares that the investigators falsified her testimony against him, Di Marco rests his case. Soon after, a sympathetic McCoy states that the board is dismissing all charges against Bernie. Eagerly anticipating his return to work, Bernie hurries to the office but is refused admittance by the guard and informed that he has not been officially reinstated. Three months later, Bernie, still waiting for his reinstatement, is unable to find employment. To help support his family, Harry, who dreams of attending the Naval Academy, quits high school and takes a job as a janitor. One day, Bernie receives a letter from the government. Thinking that it is his reinstatement papers, Bernie is elated until he reads that he has been fired and that Rogers has decided to reverse the board's recommendation. Rallying behind Bernie, the town plans a press conference to publicize his plight. Influenced by public pressure, Rogers agrees to meet with Bernie and Di Marco. When Rogers refuses to divulge the sources of information against Bernie on the grounds that he is defending the country against Communism, Di Marco angrily accuses him of persecuting an innocent man. His conscience troubled, Rogers reopens the case and after re-interrogating the witnesses, discovers that the charges are groundless. After several of the witnesses recant their testimony and others are discredited, Rogers convenes a new hearing. At a press conference, Rogers publicly apologizes to Bernie, exonerates him of all charges and proclaims that Bernie is a loyal American citizen.