In a forest clearing, a black hat dances in the wind; sometimes it almost touches the ground before another gust lifts it up again. What does it mean – Who can say? That hat is the heart of the Coen Brothers marvellous pastiche of, and tribute to, gangster films – probably the only early Coen brothers film I really like (and the one I’ve seen the most). The Coens, bless ‘em, always liked to claim it was just a film about a man and his hat. But it’s also a rewarding, complex, jet-black film noir comedy about ethics and morals, with intriguingly unknowable characters. And lots of hats.

Tom Reagan (Gabriel Byrne) is the friend and fixer of Irish crime boss Leo O’Bannon (Albert Finney) who runs a prohibition era city. Cool, calm and collected Tom is the smartest guy in the city – and a compulsive gambler with a self-destructive streak a mile wide. Leo’s rival, Italian gangster Johnny Caspar (Jon Polito) wants to whack crooked bookie Bernie Bernbaum (John Turturro), who’s spreading the word on boxing matches Caspar has fixed, making Bernie a packet and eating into Johnny’s profit. Problem is Leo says no – because he’s in love with Bernie’s sister Verna (Marcia Gay Harden, very good), a ruthless femme fatale, who also happens to be sleeping with Tom. When Leo finds out, Tom finds himself in the middle of a struggle to control the city – and forced to play both ends against the middle to save his skin.

Miller’s Crossing is a masterpiece of pastiche. Shot with a coolly steady-hand by Barry Sonnenfield – deliberately apeing classic film noir– and production designed within an inch of its life to look like the perfect Hollywood idea of a 1920s-era gangster film, it’s a perfect mix of everything from Hammett to Chandler to Puzo. It’s a sort of hyper-remake of Hammett’s The Glass Key, where a crooked boss and his fixer are split apart by a woman, but fundamentally remain loyal to each other. Everything you could expect from a classic gangster film appears, but dialled up to eleven: from the grandiose design, to bullet-spraying Tommy gun ruthlessness and the bloody mess left behind.

Miller’s Crossing is great because, unlike those other early Coen films, it combines loving pastiche and quirky humour, with a genuinely gripping story and fully rounded, complex characters. You can enjoy it as a homage, but also on its own terms as a compelling piece of story-telling. It’s sense of atmosphere is faultless, with a delightful mood of whistful regret behind all the killing that comes from Carter Burwell’s pitch-perfect score, riffing brilliantly off Irish folk songs. The film is crammed with brilliant sequences, ranging from comedy, gun-toting action and stomach-churning tension.

It opens with an obvious, crowd-pleasing Godfather homage, with Caspar sitting across from Leo entreating him for action. But take a listen to what Caspar is talking about as he asks for the right to kill Bernie: Ethics. Ethics is what the film is really about. Every character in Miller’s Crossing makes a choice about their moral stand. Because, even in a world of killing and violence, man (and woman) gotta have a code. That’s not about right and wrong, but simple rules you live by.

A code is what Tom has. Superbly played by Byrne – Hollywood handsome, but world-weary with a touch of self-loathing and tired of always seeing several steps ahead of everyone else – Tom is one of the most intriguing enigmas in a Coen film. How can someone this smart be such a mess? He owes thousands to bookies and he’s screwing his best friend’s girl. For all his smarts, and ability to see all the plays (something he proves time and again), there is something fragile about Tom. The Coens remind us of this with their running joke of Tom being smacked about endlessly (every major character lands a blow at some point on him). For all this, Tom very rarely fights back: not only does he not like getting his hands dirty, there is also a sense of sado-masochistic guilt about Tom. Like he’s smart enough to know he’s in a dirty business, and deserves all this physical abuse.

The thing that makes Tom’s world work is ethics – in his case loyalty to Leo. Not even being kicked out by his furious friend changes that. Miller’s Crossing has a strangely sweet bromance at the heart of it, gaining a lot from Finney and Byrne’s natural chemistry and forging a relationship that’s part brotherly, part father-and-son. Of course, a girl can’t come between them. Tom’s clings to his loyalty to Leo – the thing that makes him able to exist in this world – and no threat from Berne or promise of a good deal from Caspar will make him compromise. Rather he will play all of Leo’s enemies (and Leo himself) off against each other, to make sure his friend emerges on top.

It’s all symbolised by that hat. Tom dreams about that hat dancing in the wind – his literal nightmare is losing that hat (his ethics) in the wind. In so many scenes, Tom keeps in constant contact with his hat, balancing it on his knee or rolling it around his hands. When Verna wants to grab his attention, it’s the hat she steals back to her apartment. It’s a physical representation of his grounding, of his contact with reality. Without the hat he’s vulnerable: it’s inevitably tossed away before a threat or beating.

Tom’s not alone: every character has their own ethics. Bernie is an appallingly mercenary, selfish, two-faced, cheating little rogue – but he’s just made that way, it’s nothing personal it’s how he gets ahead. Caspar is obsessed with loyalty, justifying to him the amount of violence he hands out. Leo has a little boy’s loyalty to old friends and family, the sort of guy shocked when bad things happen to friends but who is happy to literally shred people with a tommy gun. Verna is out for herself, but wants to protect her brother. Even the ruthless Dane is loyal to Caspar and to those he’s “soft on” to the bitter end. All these characters justify their actions by adherence to ethical rules they’ve made for themselves.

But only Tom is really worried about getting his hands dirty. That’s something Bernie exploits in the film’s pivotal – and most famous – scene as Tom is unwillingly forced to prove his new ‘loyalty’ to Johnny by executing Bernie in the woods. In a tour-de-force by Turturro, Bernie begs, pleads and weeps for his life urging Tom to “Look into your heart”. It’s the first – and only – decision Tom makes for sentiment in the film. Naturally, it comes back to bite him. Tom’s journey in the film is perhaps to remove sentiment and heart from the equation – after all it’s all leading to a Third Man-ish ending where our hero is left standing alone while the only person he cares about walks away.

Aside from Byrne, the film is crammed with sublime performances. Finney is excellent as a big puffed-up, violent Teddy bear. Polito is hilarious as a wound-up ball of violent energy and poor judgement. JE Freeman is terrifyingly sadistic but also strangely loyal. Harden is a nightmare image of a femme fatale, ruthless to an extreme. There is a great cameo from Buscemi as a fast-talking fixer. Best of all is Turturro – grasping, selfish, cowardly, cocky, weasily and brilliantly amoral.

It’s all superbly directed by the Coens, even if sometimes their delight in shocking violence goes too far (like the childish delight in seeing bodies shredded by bullets) – not only do they get the mood perfect, but if you have any doubts about their ability to direct a set-piece take a look at Finney’s masterful Danny Boy scored shoot-out. Their script is also a knock-out of pastiche gangster parlance, as well as building a fascinating exploration of how we use morals to justify any actions we want. Miller’s Crossing is about those fatal moments where we decide whether we can justify to ourselves the actions we take and the people we have become. Or maybe it is all just about a hat.