Who is Mike Dolan?
Jimmy Dolan obviously has a lot of criminal connections and also a lot of political connections, but O. Henry does not explain any of these in his story. He just suggests that Jimmy is well connected by things the warden says to him and things Mike Dolan says. Mike Dolan runs a cafe in a building which apparently has rooms for rent upstairs. It is probably only a two-story building. Mike himself is well connected, and he was at least partly responsible for getting Jimmy pardoned by the governor. The story opens with Jimmy being called into the warden's office.
There the warden handed Jimmy his pardon, which had been signed that morning by the governor. Jimmy took it in a tired kind of way. He had served nearly ten months of a four year sentence. He had expected to stay only about three months, at the longest. When a man with as many friends on the outside as Jimmy Valentine had is received in the “stir” it is hardly worth while to cut his hair.
Jimmy keeps a permanent room at Mike Dolan's place, which is apparently just a front for unspecified underworld meetings and criminal activities.
“Sorry we couldn't make it sooner, Jimmy, me boy,” said Mike. “But we had that protest from Springfield to buck against, and the governor nearly balked. Feeling all right?”
Jimmy was sentenced to four years and expected to serve only three months! Jimmy must do work for important people, but O. Henry barely hints at what sorts of things Jimmy might do for them. Undoubtedly they are all connected with burglaries, since that is his specialty. O. Henry hints at the existence of a whole network of underworld activity which involves politicians as well as professional criminals. Jimmy may be paying a number of people for protection. He may also be paying people for information about where and when to pull his safecracking jobs. This sort of thing was apparently far more common in O. Henry's time than today. O. Henry seems to be referring to Jimmy Valentine's connections in order to show what a big-time, sophisticated professional criminal he is, a man at the top of his profession. This makes his transition to a small-town shoe-dealer more of a radical transition. He is giving up a lucrative criminal career for the sake of love. He is stepping out of one world into an entirely different world. In the future he will be a simple small-town businessman and family man. He finds that he prefers that simple and honest lifestyle to the flashy lifestyle he has put his faith in for so many years. This is the whole point of O. Henry's story. Honesty is the best policy.
The Springfield referred to in the story is evidently Springfield, Illinois, which is the state capital.