Terry arrives at Johnny’s bar, carrying a pistol. The bar is empty, and the bartender tells him that Johnny isn’t there right now, but Terry doesn’t believe him. Reluctantly, Terry kicks open the door to the back room, which is empty except for one bar patron. After he orders a shot at the bar, the man from the back room starts coming forward. “Why don’t you go home before Big John gets here?” the bartender tells him, but Terry wants his shot of whiskey. Suddenly, Tillio and another man come into the bar and Terry draws his gun. Upon seeing the gun, Tillio begins to run out of the bar, but Terry gets him to sit down slowly. Another man rushes to the telephone booth, but Terry threatens him with the pistol as well.
All of a sudden Father Barry enters the bar, and tells Terry he wants to talk to him. Terry still holds the pistol, as Father Barry walks towards him and asks for his gun. “You go to hell,” Terry tells him, and Barry punches him in the face. The men run out of the bar, as Barry helps Terry to his feet. The two men argue angrily, with Father Barry telling him that resorting to violence isn’t brave, and that Johnny will surely kill him. “You’ll fight him in the courtroom tomorrow with the truth, as you know the truth.” Ominous music plays as Terry walks around the bar, Father Barry urging him to get rid of his gun. Father Barry orders a beer for himself, sees that Terry is looking at a picture of Johnny posing with a city official on the wall nearby and orders him a beer as well. Terry and Father Barry sip their beers as dramatic music plays. Suddenly Terry throws his pistol at the photo of Johnny.
The scene shifts to a courtroom. Terry enters as a man is testifying on the stand. We see Johnny sitting near Terry. A lawyer invites various members of the dockworkers’ union to stand one at a time. They then call Terry to the stand. He gets up and goes to testify, as Mr. Doyle, Father Barry, and Edie watch expectantly. Terry admits that he was the last person to see Joey on the night that he died, adding, “except for the ones who pushed him off.” As Terry continues to testify, the scene shifts and we see the back of a wealthy man smoking a cigar, watching the trial unfold on television in his home. As the tension in the courtroom heightens, and the judge presses Terry about his involvement in the murder of Joey Doyle, the man’s servant turns off the television. “Will that be all?” he asks, and the man walks out of the room, telling the servant not to accept any calls from Johnny Friendly.
Terry is dismissed from the stand. The lawyer thanks Terry for his testimony, saying, “You’ve begun to make it possible for honest men to work the docks with job security and peace of mind.” They call Johnny Friendly to the stand, who walks past Terry and says, “You just dug your own grave. You’re dead on this waterfront and every waterfront from Boston to New Orleans.” Growing more and more angry, Johnny suddenly tries to attack Terry, but is held back by the court authorities.
The scene shifts and we see Terry being escorted to Edie’s apartment by two policemen. He orders them to stop following him, telling them, “You’re making me feel like a canary!” As Terry climbs the stairs he greets an acquaintance, who ignores him. Terry runs up the stairs and finds Edie, who tells him she made some coffee. Terry laments that his friends don’t want to talk to him anymore after his testimony, and Edie asks, “Are you sure they’re your friends?” As Edie tries to embrace him, Terry leaves out the window and climbs a ladder to the pigeon coop. There, he greets one of the boys who work there, but the boy just runs away, throwing a dead pigeon at him. “A pigeon for a pigeon,” the boy yells at him, crying. Walking over to the coop, Terry realizes that the boy has killed all of the pigeons.
Edie approaches him in the coop, where she finds him sitting on the ground, mourning the deaths of all his pigeons. “Terry, there’s no place for you that’s safe on the waterfront,” Edie says, suggesting that they move to a farm in the country. As she tells him that they need to escape the corruption of the waterfront, Terry looks out at a boat, pulls the handle off the door to the coop and stands to leave. Edie instantly becomes anxious about Terry going down to the waterfront and confronting the men, and insists that he doesn’t have to prove anything to them. Edie is upset, worried that he will get himself killed if he goes down there. Terry reassures her, saying, “They always said I was a bum. Well I ain’t a bum, Edie. Don’t worry, I’m not gonna hurt nobody. I’m just gonna go down there and get my rights.” He leaves.
We see the docks from above, as Terry walks past the throngs of men towards Big Mac, who smirks and blows his whistle. The men crowd around, and Big Mac announces that everyone will be working that day. As Terry looks around, he notices the other dockworkers scowling at him, as Big Mac begins to call out the names of various workers. In his office, Johnny Friendly looks at the newspaper headline about the scandal. A man tells Johnny that Terry is there, to which Johnny responds, “Wait till we get off this front page, and he’s mine,” and gets up to look out the window.
Terry stands alone as the men go to work. When Big Mac doesn’t give him a job, he asks him why he hasn’t been assigned a post, and Big Mac sends someone to find several homeless men to take a post instead of Terry. When Big Mac tells Terry to come back the following day, Terry stares at him and the group of men, who stare at him menacingly. He then looks over at Johnny’s office. Meanwhile in Johnny’s office, Johnny says that he hopes Terry comes down there, before yelling at his employees about the precariousness of their financial situation as a result of the trial. “We’law-abidingiding union, understand?” he yells at his men, who nod back at him.
The scene shifts back to Terry who walks towards Johnny’s office, followed by the throngs of dockworkers. Terry calls Johnny out of the office and throws the handle of the coop at the door. Johnny comes out and tells Terry that he’ll get his revenge one day, before telling him to “beat it.” Terry won’t back down though, telling Johnny that he’s nothing without corruption, yelling “Your guts is all in your wallet and your trigger finger!” Livid, Terry admonishes Johnny for his murder of Joey, Dugan, and Charley, calling him a “mug” and reiterating his remorselessness at having sold him out to the authorities. When Johnny taunts him again, Terry rushes towards him, and Johnny beats him up. The two men engage in a fist fight on the docks. As the dockworkers watch the fight, Terry gains the upper hand, but Johnny calls his men over for reinforcement.
Seeing that Johnny is going to overpower Terry, the dockworkers, who have been waiting for a distance, move closer to get a better look. When it is clear that Terry has been beaten, Johnny orders his thugs to stop beating him up and “just let him lay there.” Suddenly, Father Barry and Edie arrive, and Barry asks the men what happened. When Edie tries to get by Tillio, he pushes her and she screams, obstructing the group’s path to see what happened to Terry. Johnny and his men come around the corner and Johnny yells, “You want him? You can have him!”
Father Barry and Edie rush down to find Terry face down on the dock, badly beaten. They revive him, as Johnny orders the dockworkers to get back to work. None of the men move, and Johnny becomes furious, ordering them to work and pushing them towards the ship. The men fight back, telling Johnny that they won’t work if Terry doesn’t. Johnny fires back, “You wanna know who works? The ones I pick to work!” The men do nothing, and Johnny grabs Mr. Doyle by the arm, who grows impatient and pushes Johnny off the dock into the water. The men laugh heartily at the soaked union leader.
Terry is badly beaten up, and two men walk over to Father Barry and Edie, telling them that if Terry walks into work they will walk in with him. Father Barry urges Terry, “You lost the battle, but you have a chance to win the war,” trying to encourage Terry to walk in. No one is sure that Terry's can walk yet, but the men assure him that if he stands and walks in, they will be able to take back their union from Johnny Friendly. Barry whispers in his ear, “Johnny Friendly’s laying odds that you won’t get up.” On his prompting, Barry and Edie help Terry to his feet and he sways. When Father Barry urges him to finish what he started, Terry walks up the dock. He stumbles up the ramp, with Father Barry urging the men not to help him. As Edie runs towards him, Father Barry holds her back. Terry walks towards the pier entrance, and goes in, his face still bloodied and battered. The owner of the ship looks at him, and urges everyone to start working. The men flood into the pier past Johnny, who stands alone, yelling threats. The door of the pier entrance closes behind the men as Edie takes Father Barry’s arm.
Again, Father Barry is an important catalyst in this section of the film, representing the moral arbiter of the circumstances. Just when things threaten to become truly chaotic and corrupted, Barry steps in and attempts to talk sense to those involved. When Terry becomes enraged and holds up Johnny’s bar at gunpoint, threatening his own life and the lives of others, Barry urges him to lose the gun and go to the courts. Barry’s gift as a persuader is in his ability to appeal to Terry’s sensibilities; the priest is neither condescending nor coarse. Rather, he has a kind of moral toughness that can convince the reluctant Terry to lay down his weapon and tell the truth. He becomes something like a spiritual coach, urging Terry to fight a fair fight instead of rig the game. Terry, a former boxer, can understand the benefits of the fair fight, and heeds Barry’s council, however difficult it may be to betray his community.
While the entire film has been structured around the corruption of the union as a social institution that does not stand up for the people, in this section, Father Barry urges Terry to turn to the courts for help. Up until this point, no one has felt able to approach the law for help, for fear of being strong-armed by Johnny and his thugs. Here, Father Barry offers Terry a way out of his situation, and it is through the courts and various institutions that are built to help him. Johnny might be able to defeat him on the streets, but he is conquerable in the courts. Now, Father Barry teaches Terry that violence is not brave and that it does not solve the larger problem of widespread corruption.
Even when Terry does the right thing, however, and seeks help through the courts, he is punished for it. Having testified honestly against Johnny Friendly, Terry is left friendless and lonely, with old acquaintances ignoring him, and even the young boy he mentored at the pigeon coop calling him names. The final blow occurs when Terry realizes that all of his pigeons have been killed. Pigeons are a complicated symbol in the film; while Terry has identified with them—their freedom, the simplicity of their lives—he has also not wanted to be a “pigeon” in the more derogatory meaning of the word, as someone who sells out his friends. Even though Terry knows that he did the right thing, it does not afford him any kind of integrity or justice in his community. Rather, it has only isolated him further.
Terry’s transformation from Johnny’s minion into a man with a conscience gives him the strength to confront the men and believe in the justice of his own act. While the other men have characterized him as a “bum” throughout the film, in this section of the film Terry begins to believe that he is not a bum at all, but a strong man capable of getting what is owed to him. Having eschewed the notion of a “conscience” or of having an ethical center throughout much of the film, Terry becomes a changed man, who has the integrity to believe in his own convictions and do what is right, not just what is convenient. By the end of the film, we see that Terry has gone through a complete moral transformation. What had started as simply an inkling of remorse for Joey Doyle’s fate at the start of the film has become a sold sense of self respect that he carries with him even through derision and abuse.
The entire drama of the film comes down to the struggle for a fair and honest fight. After so much corruption and dishonesty, Terry’s struggle with Johnny becomes a fist fight on the very docks to which he sold his soul. This image is all the more potent because Terry gave up his title as a prizefighter for the sake of Johnny’s corrupt gambling ring. Here, Terry enacts revenge not only for the union corruption, but also for the fact that Johnny deprived him of the chance of becoming a professional boxer, with all its attendant glory and integrity. How fitting that he should enact his revenge with his biggest assets, his fists and his strength. Terry refuses to go down without a fight, and the struggle between good and evil that has overshadowed the entire film comes down to a physical squabble, one without guns, deceit, or coercion.