Jabez Wilson tells Sherlock Holmes a long back-story in connection with his request to have the detective help him regain his job with the Red-Headed League, or at least to find out why someone played such an elaborate "prank" on him. Wilson drops several hints in his back-story without realizing he is doing so. Holmes sees things in Wilson's story that Wilson himself does not see.
For example, Wilson tells Holmes:
"I used to be able to keep two assistants, but now I only keep one; and I would have a job to pay him but that he is willing to come for half wages so as to learn the business.”
This suggests to Holmes, and should suggest to the reader, that this assistant has some ulterior motive for wanted to gain access to Wilson's shop. This should further suggest that the motive must have something to do with the shop's location.
In connection with this example, Wilson says:
“Oh, he has his faults, too,” said Mr. Wilson. “Never was such a fellow for photography. Snapping away with a camera when he ought to be improving his mind, and then diving down into the cellar like a rabbit into its hole to develop his pictures.
Wilson does not see a possible connection between the assistant's being willing to work for half wages and his interest in "photography." But Holmes senses that the assistant, who calls himself Vincent Spaulding, is doing something other than developing pictures in the cellar. Wilson himself is described as elderly and obese. He is unlikely to want to walk down the dark and steep cellar steps and climb back up again just to see what Spaulding is doing.
There are many hints in Wilson's back-story that the new assistant is behind the Red-Headed League hoax. It is Spaulding who first tells Wilson about the newspaper ad for red-headed applicants for the lucrative sinecure. It is Spaulding who goes to the office with Wilson and keeps encouraging him to persist in his quest even though there are hordes of applicants.
“I never hope to see such a sight as that again, Mr. Holmes. From north, south, east, and west every man who had a shade of red in his hair had tramped into the city to answer the advertisement. Fleet Street was choked with red-headed folk, and Pope's Court looked like a coster's orange barrow. I should not have thought there were so many in the whole country as were brought together by that single advertisement. Every shade of colour they were—straw, lemon, orange, brick, Irish-setter, liver, clay; but, as Spaulding said, there were not many who had the real vivid flame-coloured tint. When I saw how many were waiting, I would have given it up in despair; but Spaulding would not hear of it. How he did it I could not imagine, but he pushed and pulled and butted until he got me through the crowd, and right up to the steps which led to the office.
Spaulding pushes Wilson through the throng and personally introduces him to the man who calls himself Duncan Ross. It would have been impossible for Duncan Ross to pick Wilson out of the throng if Spaulding hadn't come with him. The back-story itself is interesting, amusing, and intriguing; but Holmes is seeing many hints in it which are not understood by Wilson himself, nor by Dr. Watson who is listening to every word. The reader should be picking up many of these hints and should understand that Vincent Spaulding is an imposter who is using Wilson and his shop for some ulterior, and probably criminal, purpose.
These "hints" are not the same as "clues." When Holmes knocks at the door of Wilson's pawn shop and sees that the knees of Spaulding's trousers are "worn, wrinkled and stained," that is a definite clue. It shows that the assistant is doing some digging and must be digging in the cellar. His only reason for digging in the cellar would be to dig a tunnel, and his only reason for digging a tunnel would be to break into the cellar of another buildinig.
Holmes already has the mystery half solved while he listens to Wilson's back- story. He asks Wilson if this Vincent Spaulding has had his ears pierced and learns that this is the case. This should be a hint to the reader that Holmes is already practically certain that he knows Spaulding's true identity. But Spaulding's real name is not mentioned until near the climax when Peter Jones, the Scotland Yard agent, tells Mr. Merryweather:
“John Clay, the murderer, thief, smasher, and forger. He's a young man, Mr. Merryweather, but he is at the head of his profession, and I would rather have my bracelets on him than on any criminal in London.