Why was the Red-headed League established?
The Red Headed League was an organization devised solely to divert the attentions of Mr Jabez Wilson. Wilson had a pawnbrokers business but, urged by Vincent Spaulding, his recently appointed assistant, took the job offered by the League; which involved pointless copying of an encyclopedia. Holmes was suspicious of the high salary from the League, and the low salary Spaulding agreed to work in the shop for. He concluded that the advertised position was a set –up to ensure that Wilson spent les time at the pawnbroker's shop, and that Spaulding was in on the plan.
Wilson had been told by Mr Duncan Ross that the League was set up as a sort of benevolent society for read-headed persons-
The fund was, of course, for the propagation and spread of the red-heads as well as for their maintenance.
Spaulding had devised the plan so he could work undisturbed on his tunnel in the cellar of the pawnbrokers to reach a neighboring bank vault. His bid is thwarted by Holmes.
It should be noted that Mr. Wilson had abundant red hair of a striking appearance. It was this fact that gave Spaulding the idea of inventing the purely fictitious Red-Headed League to get Wilson out of the way. In a later Sherlock Holmes story the reader learns that the master criminal Dr. Moriarty was involved in the scheme to rob the bank of a large quantity of gold coins.