it's clear from the conversation had before young Tom and Matt come into the club (1915 I think, and also I think the first scene in which Tom's old enough to be played by Cagney) that Putty Nose was very much using them, rather than taking them under his wing or helping them or bringing them into the game, as others claim in his defence. And, as the last poster commented, the earlier scenes showed that he thought nothing of trying to rip them off.
Yes, Tom screws up the job by needlessly firing his gun, thus bringing the policeman's attention, who they then shoot, increasing the heat from the robbery to the point where it's every man for himself afterwards, and you could argue that Putty's promise to help didn't extend to cop killings. However, from the conversation I started this post with and from everything we see of Putty's behaviour, I don't believe Putty would have looked after them even if something minor and not their fault had happened (such as, say, a passer-by recognising them or the store owner coming back and things getting ugly).
And all those years later, on the night of the killing, he lies that he's got a girl in the house, proving to Tom that he's still scheming - how can he trust him - Putty could shoot them in the back as they're leaving if they did spare him.
While it's not for us to decide if someone did or didn't deserve to die, I think Putty was a dead man walking as soon as Tom hit the big-time and gained a rep as a feared and hot-headed bruiser and killer. Putty should have skipped town and stayed away the minute he learned that Tom and Matt were under Nails Nathan's protection and were very senior enforcers for Paddy Ryan's bootlegging.
He can't have been around the underworld and not known that.
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