Our first glimpse of Sherlock Holmes and Dr. Watson is in their home office at 221b Baker Street in London. Watson examines a mysterious cane left in the office by an unknown visitor, and Holmes sits with his back facing his friend. Holmes asks Watson what he makes of it, and Watson declares that his friend must "have eyes in the back of [his] head," since he saw what he was doing. Holmes admits that he saw Watson's reflection in the coffee service, proving to Watson and us that he is an astute observer.
Watson offers up his theory as to the origin of the walking stick, declaring that the inscription, "To James Mortimer, M.R.C.S., from his friends of the C.C.H.," suggests an elderly doctor who was awarded the object after years of faithful service. Holmes encourages Watson's speculation, and the doctor continues, saying that the well-worn stick implies a country practitioner who walks about quite a bit. In addition, the C.C.H., he suggests, is probably the mark of "the something hunt," a local group to whom Mortimer provided some service.
Holmes congratulates Watson, and goes on to examine the cane himself as Watson basks in the glory of Holmes' compliment. However, Holmes quickly contradicts almost all of Watson's conclusions. Holmes suggests that while the owner is clearly a country practitioner, C.C.H. actually means Charing Cross Hospital. The cane was probably presented on the occasion of the man's retirement from the hospital, and only a young man would have retired from a successful city practice to move to a rural one. Holmes goes on to suggest that the man must possess a small spaniel, given the bite marks on the cane, and, he playfully announces, given the appearance of master and dog at their front door.
Mortimer arrives, introduces himself, and talks to the embarrassed Watson. An ardent phrenologist, Mortimer admires Holmes' skull and announces his desire to consult with "the second highest expert in Europe," a moniker which Holmes disputes.
This first chapter is appropriately titled "Mr. Sherlock Holmes," as it introduces us to the great detective, while describing his abilities, and comparing him to Dr. Watson. Watson serves as Holmes' chronicler throughout the Sherlock Holmes series, but he does more than that. Watson is a foil for Holmes' brilliance—as Holmes himself says, "in noting your fallacies I was occasionally guided towards the truth." Dr. Watson gives Holmes the opportunity to show off, to disprove a plausible but erroneous set of conclusions by offering a superior talent for observation.
Conan Doyle also uses the character of Dr. Watson as a stand-in for us, Holmes' credulous readership, who connect with Watson both by virtue of his narration and to his common sense analysis of the situation. Holmes will always be able to trump Watson and us, providing more insight, analysis, and cleverness. Holmes always has an insider's edge. Conan Doyle often gives Holmes the advantage, because he provides him with more information than we get. When Holmes determines the size and breed of Mortimer's dog, for example, it is because he sees the animal outside the window. Later, when wrapping up the case, Holmes benefits from some secret research he has done on the side. Holmes is supposed to beat us to the punch in every instance; we are all supposed to have the same puzzle pieces, but only Holmes can fit them together. Conan Doyle cheats sometimes, letting Holmes look brilliant when in fact he is just better informed. Giving Holmes' privileged information, however, goes toward establishing the depth of Holmes' character. Holmes rub it in to Watson and us when he comes up with the correct conclusions, only to reveal that he has knowledge of the most obvious of clues. For example, he had seen the dog or hound outside of the office, which is how he knew its breed. Also, he had seen Watson in the silver coffee service, which is why he knew Watson was inspecting the cane, even though he was not facing him. Holmes is able to play these common observations off as the most brilliant of insights or even as part of a supernatural ability, showing that he is also conceited and egotistical.