MAN WITH KNIFE: You're a very nosy fellow, kitty cat. Huh? You know what happens to nosy fellows? Huh? No? Wanna guess? Huh? No? Okay. They lose their noses. (Flicks knife, cutting open Jake's nostril). Next time you lose the whole thing. Cut it off and feed it to my goldfish. Understand? Understand!?
This knife-wielding gangster doesn't hesitate to slit Jake Gittes' nostril open. This demonstrates the lengths the bad guys are going to in order to keep the reservoir off bounds, making sure no one discovers their plan to steal the water.
GITTES: I thought I was keeping someone from being hurt and actually I ended up making sure she was hurt.
This is the irony behind the whole movie. The same thing that happened to Jake with this unknown woman when he was working in Chinatown happens again with Evelyn Mulwray. He goes through all the work to uncover the mystery and bring the criminals to justice—but the criminals still win in the end.
CROSS: You may think you know what you're dealing with—but believe me, you don't… Why is that funny?
GITTES: It's what the District Attorney used to tell me in Chinatown.
When he was in Chinatown, Jake didn't know what he was dealing with because the culture and languages were so different from the world he was used to. In this case, Noah Cross's evil is at a whole different level, and the culture of corruption he's created goes way beyond the kind of sleaze that Jake normally encountered as a P.I.
GITTES: It was in Chinatown. EVELYN: What were you doing there? GITTES: Working for the District Attorney. EVELYN: Doing what? GITTES: As little as possible.
Jake did as little as possible in Chinatown because he didn't want to mess anything up. He didn't know what was going on there, and figured (apparently, rightly) that if he tried to meddle he would end up falling into the criminals' own designs.
CROSS: 'Course I'm respectable, I'm old. Politicians, ugly buildings, and whores all get respectable if they last long enough.
Cross's respectability is, ironically, a product of his ruthlessness. He's survived for so long by being ruthless—and that longevity has made him respectable.
CROSS: What does it mean?
GITTES: That you killed Hollis Mulwray—right here—in that pond. You drowned him, and you left these (holds up the bifocals). Coroner's report shows Mulwray had saltwater in his lungs.
CROSS: You see, Mr. Gittes, most people never have to face the fact that at the right time and right place, they're capable of anything.
Cross is justifying his own acts of murder and incest. He has no shame or guilt about anything, and views his actions as a product of the conditions he's under. He's a hollow man with no real moral center.
WALSH: Forget it, Jake—it's Chinatown.
Walsh tells Jake that he's just run up against the same problem he ran into when he worked in Chinatown. It's yet another bewildering situation that seemed resolvable or under control, but really wasn't.